10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended September 30, 2012

Commission File Number 000-52748

FIRST GUARANTY BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

Louisiana	26-0513559
(State or other jurisdiction incorporation or organization)	(I.R.S. Employer Identification Number)
400 East Thomas Street
Hammond, Louisiana	70401
(Address of principal executive office)	(Zip Code)
(985) 345-7685
(Telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o  Accelerated filer o    Non-accelerated filer oSmaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o   No x

As of November 9, 2012 the registrant had 6,291,332 shares of $1 par value common stock outstanding.

Table of Contents

		Page
Part I.	Financial Information
Item 1.	Financial Statements (unaudited)
	Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011	3
	Consolidated Statements of Income for the Nine months and Three months ended September 30, 2012 and 2011	4
	Consolidated Statements of Shareholders' Equity for the Nine months ended September 30, 2012 and 2011	5
	Consolidated Statements of Cash Flows for the Nine months ended September 30, 2012 and 2011	6
	Notes to Unaudited Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	36
Part II.	Other Information	36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Exhibits	36
Signatures		37

2

PART I.   FINANCIAL INFORMATION

Item 1.   Consolidated Financial

FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except share data)	September 30, 2012			December 31, 2011
Assets
Cash and cash equivalents:
Cash and due from banks	$	71,942		$	43,810
Interest-earning demand deposits with banks		20			2
Federal funds sold		4,931			68,630
Cash and cash equivalents		76,893			112,442
Interest-earning time deposits with banks		754			-
Investment securities:
Available for sale, at fair value		619,762			520,497
Held to maturity, at cost (estimated fair value of $25,222 and $113,197, respectively)		24,976			112,666
Investment securities		644,738			633,163
Federal Home Loan Bank stock, at cost		1,143			643
Loans held for sale		80			-
Loans, net of unearned income		606,162			573,100
Less: allowance for loan losses		9,507			8,879
Net loans		596,655			564,221
Premises and equipment, net		19,664			19,921
Goodwill		1,999			1,999
Intangible assets, net		2,511			2,811
Other real estate, net		4,435			5,709
Accrued interest receivable		6,895			8,128
Other assets		5,467			4,829
Total Assets	$	1,361,234		$	1,353,866
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing demand		192,282			167,925
Interest-bearing demand		297,579			289,408
Savings		60,135			57,452
Time		656,174			692,517
Total deposits		1,206,170			1,207,302
Short-term borrowings		11,774			12,223
Accrued interest payable		3,135			3,509
Long-term borrowing		1,250			3,200
Other liabilities		4,449			1,030
Total Liabilities		1,226,778			1,227,264
Stockholders' Equity
Preferred stock:
Series C - $1,000 par value - authorized 39,435 shares; issued and outstanding 39,435 shares		39,435			39,435
Common stock:
$1 par value - authorized 100,600,000 shares; issued 6,294,227[*]		6,294			6,294
Surplus		39,387			39,387
Treasury stock, at cost, 2,895 and 0 shares, respectively		(54	)		-
Retained earnings		41,560			37,019
Accumulated other comprehensive income (loss)		7,834			4,467
Total Stockholders' Equity		134,456			126,602
Total Liabilities and Stockholders' Equity	$	1,361,234		$	1,353,866
See Notes to the Consolidated Financial Statements.
[*]2011 common share amounts have been retroactively adjusted to reflect the ten percent stock dividend paid February 24, 2012 to stockholders of record as of February 17, 2012

3

FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
	Nine Months Ended September 30,						Three Months Ended September 30,
(in thousands, except share data)	2012			2011			2012			2011
Interest Income:
Loans (including fees)	$	26,537		$	25,930		$	8,903		$	9,230
Loans held for sale		1			8			-			2
Deposits with other banks		56			35			20			13
Securities (including FHLB stock)		15,110			14,504			4,172			4,707
Federal funds sold		10			14			2			5
Total Interest Income		41,714			40,491			13,097			13,957
Interest Expense:
Demand deposits		1,050			644			349			239
Savings deposits		40			37			14			15
Time deposits		8,905			10,637			2,782			3,607
Borrowings		98			50			25			36
Total Interest Expense		10,093			11,368			3,170			3,897
Net Interest Income		31,621			29,123			9,927			10,060
Less: Provision for loan losses		3,014			6,855			909			3,504
Net Interest Income after Provision for Loan Losses		28,607			22,268			9,018			6,556
Noninterest Income:
Service charges, commissions and fees		3,565			3,352			1,180			1,235
Net gains on securities		3,230			3,102			1,747			885
Loss on securities impairment		-			(97	)		-			-
Net gains (losses) on sale of loans		(47	)		106			(20	)		10
Gain on acquisition		-			1,391			-			1,391
Other		1,234			1,081			424			443
Total Noninterest Income		7,982			8,935			3,331			3,964
Noninterest Expense:
Salaries and employee benefits		10,125			9,363			3,394			3,380
Occupancy and equipment expense		2,818			2,552			963			942
Other		9,995			9,263			3,454			3,533
Total Noninterest Expense		22,938			21,178			7,811			7,855
Income Before Income Taxes		13,651			10,025			4,538			2,665
Less: Provision for income taxes		4,603			3,071			1,505			500
Net Income		9,048			6,954			3,033			2,165
Preferred Stock Dividends		(1,479	)		(1,433	)		(493	)		(768	)
Income Available to Common Shareholders	$	7,569		$	5,521		$	2,540		$	1,397
Per Common Share:[*]
Earnings	$	1.20		$	0.89		$	0.40		$	0.22
Cash dividends paid	$	0.48		$	0.44		$	0.16		$	0.15
Weighted Average Common Shares Outstanding[*]		6,293,367			6,175,802			6,292,479			6,294,227
See Notes to Consolidated Financial Statements
[*]2011 common share amounts have been retroactively adjusted to reflect the ten percent stock dividend paid February 24, 2012 to stockholders of record as of February 17, 2012

4

FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited)
	Series A			Series B			Series C												Accumulated
	Preferred			Preferred			Preferred		Common										Other
	Stock			Stock			Stock		Stock				Treasury			Retained			Comprehensive
(in thousands, except per share data)	$1,000 Par			$1,000 Par			$1,000 Par		$1 Par[*]		Surplus		Stock			Earnings			Income/(Loss)			Total
Balance December 31, 2010	$	19,859		$	1,116		$	-	$	6,116	$	36,240	$	-		$	34,866		$	(259	)	$	97,938
Net income		-			-			-		-				-			6,954			-			6,954
Change in unrealized loss on AFS securities, net of reclassification adjustments and taxes		-			-			-		-				-			-			4,091			4,091
Total Comprehensive Income		-			-					-				-			-			-			11,045
Common stock issued in acquisition, with retrospective stock dividend adjustment, 178,619 shares[*]		-			-			-		178		3,147		-			(295	)		-			3,030
Preferred stock issued, Series C		-			-			39,435		-		-		-			-			-			39,435
Cash dividends on common stock ($0.44 per share)		-			-			-		-				-			(2,695	)		-			(2,695	)
Preferred stock repurchase, Series A & B		(20,030	)		(1,098	)		-		-		-		-			-			-			(21,128	)
Preferred stock dividends, amortization and accretion		171			(18	)		-		-		-		-			(1,433	)		-			(1,280	)
Balance September 30, 2011 (unaudited)	$	-		$	-		$	39,435	$	6,294	$	39,387	$	-		$	37,397		$	3,832		$	126,345
Balance December 31, 2011	$	-		$	-		$	39,435	$	6,294	$	39,387	$	-		$	37,019		$	4,467		$	126,602
Net Income		-			-			-		-		-		-			9,048			-			9,048
Change in unrealized gain on AFS securities, net of reclassification adjustments and taxes		-			-			-		-		-		-			-			3,367			3,367
Total Comprehensive Income		-			-			-		-		-		-			-			-			12,415
Treasury shares purchased, at cost, 2,895 shares		-			-			-		-		-		(54	)		-			-			(54	)
Cash dividends on common stock ($0.48 per share)		-			-			-		-		-		-			(3,028	)		-			(3,028	)
Preferred stock dividends		-			-			-		-		-		-			(1,479	)		-			(1,479	)
Balance September 30, 2012 (unaudited)	$	-		$	-		$	39,435	$	6,294	$	39,387	$	(54	)	$	41,560		$	7,834		$	134,456
See Notes to Consolidated Financial Statements
[*]2011 common share amounts have been retroactively adjusted to reflect the ten percent stock dividend paid February 24, 2012 to stockholders of record as of February 17, 2012

5

FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
	Nine Months Ended September 30,
(in thousands)	2012			2011
Cash Flows From Operating Activities
Net income	$	9,048		$	6,954
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		3,014			6,855
Depreciation and amortization		1,561			1,240
Amortization/(accretion) of investments		1,419			703
Gain on acquisition		-			(1,391	)
Net gains on securities		(3,230	)		(3,102	)
Net losses (gains) on sale of assets		138			(112	)
Other than temporary impairment charge on securities		-			97
ORE writedowns and losses on disposition		937			287
FHLB stock dividends		(1	)		(3	)
Net increase in loans held for sale		(80	)		(156	)
Change in other assets and liabilities, net		1,809			3,518
Net Cash Provided By Operating Activities		14,615			14,890
Cash Flows From Investing Activities
Funds invested in certificates of deposit		(747	)		-
Proceeds from maturities and calls of HTM securities		128,640			151,474
Proceeds from maturities, calls and sales of AFS securities		621,340			369,196
Funds invested in HTM securities		(40,901	)		(165,268	)
Funds invested in AFS securities		(713,748	)		(442,166	)
Proceeds from sale/redemption of Federal Home Loan Bank stock		3,441			1,796
Funds invested in Federal Home Loan Bank stock		(3,940	)		(1,440	)
Net (increase) decrease in loans		(39,666	)		19,875
Purchase of premises and equipment		(1,214	)		(1,812	)
Proceeds from sales of premises and equipment		168			-
Proceeds from sales of other real estate owned		4,555			445
Cash received in excess of cash paid in acquisition		-			4,992
Net Cash Used In Investing Activities		(42,072	)		(62,908	)
Cash Flows From Financing Activities
Net (decrease) increase in deposits		(1,132	)		86,682
Net decrease in federal funds purchased and short-term borrowings		(449	)		(8,387	)
Proceeds from long-term borrowings		-			3,500
Repayment of long-term borrowings		(1,950	)		(3,650	)
Repurchase of preferred stock		-			(21,128	)
Proceeds from issuance of preferred stock		-			39,435
Purchase of treasury stock		(54	)		-
Dividends paid		(4,507	)		(4,257	)
Net Cash (Used In) Provided By Financing Activities		(8,092	)		92,195
Net (Decrease) Increase In Cash and Cash Equivalents		(35,549	)		44,177
Cash and Cash Equivalents at the Beginning of the Period		112,442			44,837
Cash and Cash Equivalents at the End of the Period	$	76,893		$	89,014
Noncash Activities:
Loans transferred to foreclosed assets	$	4,218		$	4,797
Common stock issued in acquisition	$	-		$	3,030
Cash Paid During The Period:
Interest on deposits and borrowed funds	$	10,467		$	11,235
Income taxes	$	4,900		$	2,850
See Notes to the Consolidated Financial Statements.

6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles. The consolidated financial statements and the footnotes of First Guaranty Bancshares, Inc. (the “Company”) thereto should be read in conjunction with the audited financial statements and note disclosures for the Company previously filed with the Securities and Exchange Commission in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2011. 

The consolidated financial statements include the accounts of First Guaranty Bancshares, Inc. and its wholly owned subsidiary First Guaranty Bank. All significant intercompany balances and transactions have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary for a fair presentation of the consolidated financial statements. Those adjustments are of a normal recurring nature. The results of operations for the three and nine month periods ended September 30, 2012 and 2011 are not necessarily indicative of the results expected for the full year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Material estimates that are susceptible to significant change in the near term are the allowance for loan losses, valuation of goodwill, intangible assets and other purchase accounting adjustments.

Note 2.  Recent Accounting Pronouncements

In July 2012, the Financial Accounting Standards Board (“FASB”) issued ASU No 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, which permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with the FASB Accounting Standards Codification (“ASC”) Subtopic 350-30. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. The Company adopted this standard in the fourth quarter of 2011. Adoption of this guidance did not have a material impact on the Company’s statements of income and financial condition.

7

Note 3. Securities

A summary comparison of securities by type at September 30, 2012 and December 31, 2011 is shown below.

	September 30, 2012									December 31, 2011
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale:
U.S. Treasury Bills	$	12,000	$	-	$	-		$	12,000	$	-	$	-	$	-		$	-
U.S. Government Agencies		402,125		1,571		(57	)		403,639		319,113		1,422		(328	)		320,207
Corporate debt securities		172,661		9,485		(285	)		181,861		171,927		6,250		(1,222	)		176,955
Mutual funds or other equity securities		2,564		47		-			2,611		2,773		38		-			2,811
Municipal bonds		18,548		1,103		-			19,651		19,916		609		(1	)		20,524
Total available for sale securities	$	607,898	$	12,206	$	(342	)	$	619,762	$	513,729	$	8,319	$	(1,551	)	$	520,497
Held to maturity:
U.S. Government Agencies	$	24,976	$	246	$	-		$	25,222	$	112,666	$	535	$	(4	)	$	113,197
Total held to maturity securities	$	24,976	$	246	$	-		$	25,222	$	112,666	$	535	$	(4	)	$	113,197

The scheduled maturities of securities at September 30, 2012 and December 31, 2011, by contractual maturity, are shown below. As evidenced by the following table, the Company has substantially decreased the contractual maturity of its securities investment portfolio in 2012.  Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2012				December 31, 2011
(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available For Sale:
Due in one year or less	$	30,543	$	30,863	$	13,267	$	13,505
Due after one year through five years		132,852		135,765		59,897		61,320
Due after five years through 10 years		332,965		339,828		214,467		218,280
Over 10 years		111,538		113,306		226,098		227,392
Total available for sale securities	$	607,898	$	619,762	$	513,729	$	520,497
Held to Maturity:
Due in one year or less	$	-	$	-	$	-	$	-
Due after one year through five years		4,004		4,010		10,015		10,157
Due after five years through 10 years		20,972		21,212		50,535		50,828
Over 10 years		-		-		52,116		52,212
Total held to maturity securities	$	24,976	$	25,222	$	112,666	$	113,197

At September 30, 2012 approximately $440.8 million in securities were pledged to secure public funds deposits, and for other purposes required or permitted by law.

The following is a summary of the fair value of securities with gross unrealized losses and an aging of those gross unrealized losses at September 30, 2012.

	Less Than 12 Months					12 Months or More					Total
(in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Available for sale:
U.S. Government Agencies	$	38,083	$	(57	)	$	-	$	-		$	38,083	$	(57	)
Corporate debt securities		6,201		(78	)		2,487		(207	)		8,688		(285	)
Mutual funds or other equity securities		-		-			-		-			-		-
Municipals		-		-			-		-			-		-
Total available for sale securities	$	44,284	$	(135	)	$	2,487	$	(207	)	$	46,771	$	(342	)
Held to maturity:
U.S. Government Agencies	$	-	$	-		$	-	$	-		$	-	$	-
Total held to maturity securities	$	-	$	-		$	-	$	-		$	-	$	-

8

At September 30, 2012, 52 debt securities have gross unrealized losses of $0.3 million or 0.7% of amortized cost. All securities with unrealized losses were classified as available for sale at September 30, 2012. The Company believes that it will collect all amounts contractually due and has the intent and the ability to hold these securities until the fair value is at least equal to the carrying value. The Company had 13 U.S. Government agency securities and 30 corporate debt securities that had gross unrealized losses for less than 12 months. The Company had 8 corporate debt securities which have been in a continuous unrealized loss position for 12 months or longer. Securities with unrealized losses greater than 12 months had a total amortized cost of $2.7 million. Securities with unrealized losses less than 12 months had a total amortized cost of $44.4 million.

If an equity security has an impairment that is other than temporary, then an impairment loss shall be recognized in earnings equal to the entire difference between the investment's cost and its fair value at the balance sheet date of the reporting period for which the assessment is made. The fair value of the investment would then become the new amortized cost basis of the investment and is not adjusted for subsequent recoveries in fair value. For debt securities, other than temporary impairment loss is recognized in earnings if the Company is required to sell or is more likely than not to sell the security before recovery of its amortized cost. If the Company is not required to sell the security or does intend to sell the security, the other-than-temporary impairment is separated into the amount representing credit loss and the amount related to all other factors. The amount related to credit loss is recognized in earnings and the amount related to all other factors is recognized in other comprehensive income. The previous amortized cost basis less the other-than-temporary impairment recognized in earnings shall become the new amortized cost basis of the investment. Management evaluates securities for other-than-temporary impairment at least quarterly and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, (iii) the recovery of contractual principal and interest and (iv) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer’s financial condition, Management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred and industry reports.

The number of investment securities issued by U.S. government and government agencies with unrealized losses and the amount of unrealized losses on those investment securities are primarily the result of market interest rates. At September 30, 2012 the Company had the ability and intent to hold these securities in its current portfolio until recovery, which may be until maturity.

The corporate debt securities consist primarily of corporate bonds issued by the following types of organizations: financial, insurance, utilities, manufacturing, industrial, consumer products and oil and gas. Also included in corporate debt securities are trust preferred capital securities, many issued by national and global financial services firms. The Company believes that the each of the issuers will be able to fulfill the obligations of these securities. At September 30, 2012 the Company had the ability and intent to hold these securities until they recover, which could be at their maturity dates.

The held to maturity portfolio is comprised of government sponsored enterprise securities such as FHLB, FNMA, FHLMC, and FFCB. The securities have maturities of 15 years or less and the securities are used to collateralize public funds. As of September 30, 2012 public funds deposits totaled $433.2 million. The Company has maintained public funds in excess of $175.0 million since December 2007. Management believes that public funds will continue to be a significant part of the Company's deposit base and will need to be collateralized by securities in the investment portfolio.

Securities with unrealized losses are currently performing according to their contractual terms. Management has the intent and ability to hold these securities for the foreseeable future. The fair value is expected to recover as the securities approach their maturity or repricing date or if market yields for such investments decline. As a result of uncertainties in the market affecting companies in the financial services industry, it is at least reasonably possible that a change in the estimate will occur in the near term.

The Company did not record an impairment write-down on its securities for the first nine months of 2012. During the first quarter of 2011, the Company recorded an impairment write-down on securities from one issuer of $0.1 million. This write-down was partially offset by a subsequent gain on sale of the securities of $45,000 in the third quarter of 2011.

At September 30, 2012, the Company's exposure to investment securities issuers that exceeded 10% of stockholders’ equity as follows:

	At September 30, 2012
(in thousands)	Amortized Cost		Fair Value
Federal Home Loan Bank (FHLB)	$	108,002	$	108,247
Federal Home Loan Mortgage Corporation (Freddie Mac-FHLMC)		86,849		87,488
Federal National Mortgage Association (Fannie Mae-FNMA)		118,323		118,600
Federal Farm Credit Bank (FFCB)		113,926		114,525
Total	$	427,100	$	428,860

9

Note 4. Loans

The following table summarizes the components of the Company's loan portfolio as of September 30, 2012 and December 31, 2011:

	September 30, 2012					December 31, 2011
(in thousands)	Balance			As % of Category		Balance			As % of Category
Real Estate:
Construction & land development	$	55,380		9.1	%	$	78,614		13.7	%
Farmland		10,643		1.8	%		11,577		2.0	%
1- 4 Family		88,771		14.6	%		89,202		15.6	%
Multifamily		15,495		2.6	%		16,914		2.9	%
Non-farm non-residential		298,469		49.1	%		268,618		46.8	%
Total Real Estate		468,758		77.2	%		464,925		81.0	%
Non-real Estate:
Agricultural		26,281		4.3	%		17,338		3.0	%
Commercial and industrial		87,758		14.5	%		68,025		11.9	%
Consumer and other		24,445		4.0	%		23,455		4.1	%
Total Non-real Estate		138,484		22.8	%		108,818		19.0	%
Total loans before unearned income		607,242		100.0	%		573,743		100.0	%
Less: Unearned income		(1,080	)				(643	)
Total loans net of unearned income	$	606,162				$	573,100

The following table summarizes fixed and floating rate loans by contractual maturity as of September 30, 2012 and December 31, 2011 unadjusted for scheduled principal payments, prepayments, or repricing opportunities. The average life of the loan portfolio may be substantially less than the contractual terms when these adjustments are considered.

	September 30, 2012							December 31, 2011
(in thousands)	Fixed		Floating		Total			Fixed		Floating		Total
One year or less	$	29,544	$	143,729	$	173,273		$	108,276	$	124,052	$	232,328
One to five years		208,689		121,511		330,200			160,191		98,972		259,163
Five to 15 years		22,422		44,409		66,831			8,393		36,891		45,284
Over 15 years		7,273		6,077		13,350			8,464		6,054		14,518
Total (excluding nonaccrual loans)	$	267,928	$	315,726		583,654		$	285,324	$	265,969		551,293
Nonaccrual loans						23,588							22,450
Total loans before unearned income						607,242							573,743
Less: Unearned income						(1,080	)						(643	)
Total loans net of unearned income					$	606,162						$	573,100

The majority of floating rate loans have interest rate floors. Of the floating rate loans, $225.5 million were at the floor rate as of September 30, 2012. Nonaccrual loans have been excluded.

The following tables present the age analysis of past due loans at September 30, 2012 and December 31, 2011:

	September 30, 2012
(in thousands)	30-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Loans			Recorded Investment  90 Days Accruing
Real Estate:
Construction & land development	$	141	$	1,735	$	1,876	$	53,504	$	55,380		$	-
Farmland		120		781		901		9,742		10,643			-
1 - 4 family		2,837		5,439		8,276		80,495		88,771			376
Multifamily		742		-		742		14,753		15,495			-
Non-farm non-residential		2,023		12,641		14,664		283,805		298,469			678
Total Real Estate		5,863		20,596		26,459		442,299		468,758			1,054
Non-Real Estate:
Agricultural		-		785		785		25,496		26,281			-
Commercial and industrial		279		3,239		3,518		84,240		87,758			-
Consumer and other		117		22		139		24,306		24,445			-
Total Non-Real Estate		396		4,046		4,442		134,042		138,484			-
Total loans before unearned income	$	6,259	$	24,642	$	30,901	$	576,341		607,242		$	1,054
Less: unearned income										(1,080	)
Total loans net of unearned income									$	606,162

10

	December 31, 2011
(in thousands)	30-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Loans			Recorded Investment  90 Days Accruing
Real estate:
Construction & land development	$	240	$	1,520	$	1,760	$	76,854	$	78,614		$	-
Farmland		45		562		607		10,970		11,577			-
1 - 4 family		2,812		5,957		8,769		80,433		89,202			309
Multifamily		617		-		617		16,297		16,914			-
Non-farm non-residential		878		12,818		13,696		254,922		268,618			419
Total Real Estate		4,592		20,857		25,449		439,476		464,925			728
Non-Real Estate:
Agricultural		90		315		405		16,933		17,338			-
Commercial and industrial		147		1,986		2,133		65,892		68,025			-
Consumer and other		389		28		417		23,038		23,455			8
Total Non-Real Estate		626		2,329		2,955		105,863		108,818			8
Total loans before unearned income	$	5,218	$	23,186	$	28,404	$	545,339		573,743		$	736
Less: unearned income										(643	)
Total loans net of unearned income									$	573,100

The Company's management monitors the credit quality of its loans on an ongoing basis. Measurement of delinquency and past due status are based on the contractual terms of each loan.

For all loan classes, past due loans are reviewed on a monthly basis to identify loans for nonaccrual status. Generally, when collection in full of the principal and interest is jeopardized, the loan is placed on nonaccrual. The accrual of interest income on commercial and most consumer loans generally is discontinued when a loan becomes 90 to 120 days past due as to principal or interest.  When interest accruals are discontinued, unpaid interest recognized in income is reversed.  The Company's method of income recognition for loans that are classified as nonaccrual is to recognize interest income on a cash basis or apply the cash receipt to principal when the ultimate collectability of principal is in doubt.  Nonaccrual loans will not normally be returned to accrual status unless all past due principal and interest has been paid.

The following is a summary of nonaccrual loans by class at September 30, 2012 and December 31, 2011:

(in thousands)	September 30, 2012		December 31, 2011
Real Estate:
Construction & land development	$	1,735	$	1,520
Farmland		781		562
1 - 4 family		5,063		5,647
Multifamily		-		-
Non-farm non-residential		11,963		12,400
Total Real Estate		19,542		20,129
Non-real Estate:
Agricultural		785		315
Commercial and industrial		3,239		1,986
Consumer and other		22		20
Total Non-Real Estate		4,046		2,321
Total Nonaccrual Loans	$	23,588	$	22,450

11

The Company assigns credit quality indicators of pass, special mention, substandard, and doubtful to its loans. For the Company's loans with a commercial and consumer credit exposure, the Company internally assigns a grade based on the creditworthiness of the borrower. For loans with a consumer credit exposure, the Bank internally assigns a grade based upon an individual loan’s delinquency status. Loans included in the Pass category are performing loans with satisfactory debt coverage ratios, collateral, payment history, and documentation.

Special mention loans have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loans or in the Company's credit position at some future date. Borrowers may be experiencing adverse operating trends (declining revenues or margins) or an ill proportioned balance sheet (e.g., increasing inventory without an increase in sales, high leverage, tight liquidity). Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a special mention rating. Nonfinancial reasons for rating a credit exposure special mention include management problems, pending litigation, an ineffective loan agreement or other material structural weakness, and any other significant deviation from prudent lending practices.

A substandard loan with a commercial and consumer credit exposure is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt by the borrower. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. These loans require more intensive supervision by management. Substandard loans are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity, or marginal capitalization. Repayment may depend on collateral or other credit risk mitigates. For some substandard loans, the likelihood of full collection of interest and principal may be in doubt and thus, placed on nonaccrual. For loans with a consumer credit exposure, loans that are 90 days or more past due or that have been placed on nonaccrual are considered substandard.

Doubtful loans have the weaknesses of substandard loans with the additional characteristic that the weaknesses make collection or liquidation in full questionable and there is a high probability of loss based on currently existing facts, conditions and values.

The Company periodically reassesses its credit quality indicators and has revised its methodology in 2012 contributing to the increase in special mention credits over the previous periods. As of September 30, 2012, $29.4 million of the loans in the special mention category had a current status, $3.9 million were between 30 and 89 days past due, and $0.1 million were 90 days or greater past due.

The following table identifies the commercial and consumer credit exposure of the loan portfolio by specific credit ratings at September 30, 2012 and December 31, 2011:

	September 30, 2012											December 31, 2011
(in thousands)	Pass		Special Mention		Substandard		Doubtful		Total			Pass		Special Mention		Substandard		Doubtful		Total
Real Estate:
Construction & land development	$	40,169	$	4,757	$	10,454	$	-	$	55,380		$	67,602	$	82	$	10,930	$	-	$	78,614
Farmland		10,099		75		469		-		10,643			11,485		-		92		-		11,577
1 - 4 family		72,510		8,425		7,836		-		88,771			80,053		1,770		7,379		-		89,202
Multifamily		8,173		-		7,322		-		15,495			9,545		-		7,369		-		16,914
Non-farm non-residential		253,285		16,712		28,472		-		298,469			235,448		372		32,798		-		268,618
Total real estate		384,236		29,969		54,553		-		468,758			404,133		2,224		58,568		-		464,925
Non-Real Estate:
Agricultural		25,800		56		425		-		26,281			17,304		-		34		-		17,338
Commercial and industrial		79,238		3,273		5,247		-		87,758			65,553		93		2,379		-		68,025
Consumer and other		24,275		104		66		-		24,445			23,345		43		67		-		23,455
Total Non-Real Estate		129,313		3,433		5,738		-		138,484			106,202		136		2,480		-		108,818
Total loans before unearned income	$	513,549	$	33,402	$	60,291	$	-		607,242		$	510,335	$	2,360	$	61,048	$	-		573,743
Less: unearned income										(1,080	)										(643	)
Total loans net of unearned income									$	606,162										$	573,100

12

ASC 310-30 Loans

The Company has loans that were acquired in the acquisition of  Greensburg Bancshares, for which there was, at acquisition, evidence of deterioration of credit quality since origination and for which it is probable, at acquisition, that all contractually required payments would not be collected. These loans are subject to ASC Topic 310-30. The carrying amount of those loans is included in the balance sheet amounts of loans receivable at September 30, 2012. The amounts of loans subject to ASC Topic 310-30 at September 30, 2012 and December 31, 2011 are as follows:

	September 30, 2012				December 31, 2011
(in thousands)	Contractual Amount		Carrying Value		Contractual Amount		Carrying Value
Real Estate:
Construction & land development	$	-	$	-	$	536	$	301
Farmland		-		-		-		-
1 - 4 family		190		190		704		573
Multifamily		-		-		-		-
Non-farm non-residential		130		130		352		352
Total real estate		320	$	320		1,592		1,226
Non-real Estate:
Agricultural		-		-		-		-
Commercial and industrial		-		-		-		-
Consumer and other		-		-		-		-
Total Non-Real Estate		-		-		-		-
Total	$	320	$	320	$	1,592	$	1,226

There have been no additional provisions made to the allowance for loan losses subsequent to acquisition of these loans. The loans acquired in the acquisition of Greensburg Bancshares, that are within the scope of Topic ASC 310-30, are not accounted for using the income recognition model of the Topic because the Company cannot reasonably estimate cash flows expected to be collected.

13

Note 5. Allowance for Loan Losses

The allowance for loan losses is reviewed by the Company's management on a monthly basis and additions thereto are recorded pursuant to the results of such reviews. In assessing the allowance, several internal and external factors that might impact the performance of individual loans are considered. These factors include, but are not limited to, economic conditions and their impact upon borrowers' ability to repay loans, respective industry trends, borrower estimates and independent appraisals. Periodic changes in these factors impact the assessment of each loan and its overall impact on the allowance for loan losses.

The monitoring of credit risk also extends to unfunded credit commitments, such as unused commercial credit lines and letters of credit. A reserve is established as needed for estimates of probable losses on such commitments.

A summary of changes in the allowance for loan losses, by portfolio type, for the nine months ended September 30, 2012 and 2011 is as follows:

	As of September 30, 2012
	Real Estate Loans:														Non-Real Estate Loans:
(in thousands)	Construction and Land Development			Farmland		1-4 Family			Multi-family			Non-farm non-residential			Agricultural			Commercial and Industrial			Consumer and other			Unallocated			Total
Allowance for Credit Losses:
Beginning balance (12/31/11)	$	1,002		$	65	$	1,917		$	780		$	2,980		$	125		$	1,407		$	314		$	289		$	8,879
Charge-offs		(58	)		-		(1,409	)		(187	)		(459	)		(27	)		(455	)		(356	)		-			(2,951	)
Recoveries		13			1		27			-			106			1			212			205			-			565
Provision		228			15		1,547			(162	)		818			(40	)		508			137			(37	)		3,014
Ending Balance	$	1,185		$	81	$	2,082		$	431		$	3,445		$	59		$	1,672		$	300		$	252		$	9,507

	As of September 30, 2011
	Real Estate Loans:													Non-Real Estate Loans:
(in thousands)	Construction and Land Development			Farmland		1-4 Family			Multi-family		Non-farm non-residential			Agricultural			Commercial and Industrial			Consumer and other			Unallocated			Total
Allowance for Credit Losses:
Beginning balance (12/31/10)	$	977		$	46	$	1,891		$	487	$	3,423		$	80		$	510		$	390		$	513		$	8,317
Charge-offs		(935	)		-		(1,233	)		-		(3,790	)		(20	)		(1,596	)		(486	)		-			(8,060	)
Recoveries		1			-		95			-		12			3			319			145			17			592
Provision		410			15		815			47		2,833			126			2,790			220			(401	)		6,855
Ending Balance	$	453		$	61	$	1,568		$	534	$	2,478		$	189		$	2,023		$	269		$	129		$	7,704

14

The following is a breakdown of loans individually and collectively evaluated for impairment and the corresponding allowance by loan category at September 30, 2012 and December 31, 2011.

	September 30, 2012
	Real Estate Loans:										Non-Real Estate Loans:
(in thousands)	Construction and Land Development		Farmland		1-4 Family		Multi-family		Non-farm non-residential		Agricultural		Commercial and Industrial		Consumer and other		Unallocated		Total
Allowance individually evaluated for impairment	$	512	$	-	$	279	$	426	$	1,182	$	-	$	20	$	-	$	-	$	2,419
Allowance collectively evaluated for impairment		673		81		1,803		5		2,263		59		1,652		300		252		7,088
Allowance at September 30, 2012	$	1,185	$	81	$	2,082	$	431	$	3,445	$	59	$	1,672	$	300	$	252	$	9,507
Loans individually evaluated for impairment	$	7,396	$	-	$	2,149	$	7,322	$	25,416	$	-	$	4,431	$	-	$	-	$	46,714
Loans collectively evaluated for impairment		47,984		10,643		86,622		8,173		273,053		26,281		83,327		24,445		-		560,528
Loans at September 30, 2012 (before unearned income)	$	55,380	$	10,643	$	88,771	$	15,495	$	298,469	$	26,281	$	87,758	$	24,445	$	-	$	607,242
Unearned income																				(1,080	)
Total loans net of unearned income																			$	606,162

	December 31, 2011
	Real Estate Loans:										Non-Real Estate Loans:
(in thousands)	Construction and Land Development		Farmland		1-4 Family		Multi-family		Non-farm non-residential		Agricultural		Commercial and Industrial		Consumer and other		Unallocated		Total
Allowance individually evaluated for impairment	$	139	$	-	$	392	$	701	$	1,224	$	-	$	-	$	-	$	-	$	2,456
Allowance collectively evaluated for impairment		863		65		1,525		79		1,756		125		1,407		314		289		6,423
Allowance at December 31, 2011	$	1,002	$	65	$	1,917	$	780	$	2,980	$	125	$	1,407	$	314	$	289	$	8,879
Loans individually evaluated for impairment	$	7,998	$	-	$	3,591	$	7,369	$	31,397	$	-	$	738	$	-	$	-	$	51,093
Loans collectively evaluated for impairment		70,616		11,577		85,611		9,545		237,221		17,338		67,287		23,455		-		522,650
Loans at December 31, 2011 (before unearned income)	$	78,614	$	11,577	$	89,202	$	16,914	$	268,618	$	17,338	$	68,025	$	23,455	$	-	$	573,743
Unearned income																				(643	)
Total loans net of unearned income																			$	573,100

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by Management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. As an administrative matter, this process is only applied to impaired loans or relationships in excess of $250,000.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, individual consumer and residential loans are not separately identified for impairment disclosures, unless such loans are the subject of a restructuring agreement.

15

The following is a summary of impaired loans by class at September 30, 2012:

	At September 30, 2012
(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Cash Basis
Impaired Loans with no related allowance:
Real estate:
Construction & land development	$	900	$	949	$	-	$	923	$	50	$	26
Farmland		-		-		-		-		-		-
1 - 4 family		1,074		1,734		-		1,905		124		48
Multifamily		-		-		-		-		-		-
Non-farm non-residential		7,228		7,426		-		9,643		1,395		1,335
Total Real Estate		9,202		10,109		-		12,471		1,569		1,409
Non-Real Estate:
Agricultural		-		-		-		-		-		-
Commercial and industrial		3,935		3,935		-		165		31		23
Consumer and other		-		-		-		-		-		-
Total Non-Real Estate		3,935		3,935		-		165		31		23
Total Impaired Loans with no related allowance	$	13,137	$	14,044	$	-	$	12,636	$	1,600	$	1,432
Impaired Loans with an allowance recorded:
Real estate:
Construction & land development	$	6,496	$	6,496	$	512	$	6,601	$	604	$	609
Farmland		-		-		-		-		-		-
1 - 4 family		1,075		1,234		279		1,161		80		77
Multifamily		7,322		7,322		426		7,367		618		627
Non-farm non-residential		18,188		20,902		1,182		20,866		1,232		1,363
Total real estate		33,081		35,954		2,399		35,995		2,534		2,676
Non-Real Estate:
Agricultural		-		-		-		-		-		-
Commercial and industrial		496		496		20		743		19		-
Consumer and other		-		-		-		-		-		-
Total Non-Real Estate		496		496		20		743		19		-
Total Impaired Loans with an allowance recorded	$	33,577	$	36,450	$	2,419	$	36,738	$	2,553	$	2,676
Total Impaired Loans	$	46,714	$	50,494	$	2,419	$	49,374	$	4,153	$	4,108

16

The following is a summary of impaired loans by class at December 31, 2011:

	At December 31, 2011
(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Cash Basis
Impaired Loans with no related allowance:
Real estate:
Construction & land development	$	937	$	960	$	-	$	634	$	91	$	64
Farmland		-		-		-		-		-		-
1 - 4 family		858		1,192		-		2,388		218		32
Multifamily		-		-		-		-		-		-
Non-farm non-residential		8,710		10,708		-		11,549		824		409
Total Real Estate		10,505		12,860		-		14,571		1,133		505
Non-Real Estate:
Agricultural		-		-		-		-		-		-
Commercial and industrial		738		1,737		-		2,986		238		102
Consumer and other		-		-		-		-		-		-
Total Non-Real Estate		738		1,737		-		2,986		238		102
Total Impaired Loans with no related allowance	$	11,243	$	14,597	$	-	$	17,557	$	1,371	$	607
Impaired Loans with an allowance recorded:
Real estate:
Construction & land development	$	7,061	$	7,061	$	139	$	7,243	$	477	$	376
Farmland		-		-		-		-		-		-
1 - 4 family		2,733		2,870		392		1,127		57		56
Multifamily		7,369		7,369		701		6,347		288		333
Non-farm non-residential		22,687		23,637		1,224		21,180		1,261		815
Total real estate		39,850		40,937		2,456		35,897		2,083		1,580
Non-Real Estate:
Agricultural		-		-		-		-		-		-
Commercial and industrial		-		-		-		-		-		-
Consumer and other		-		-		-		-		-		-
Total Non-Real Estate		-		-		-		-		-		-
Total Impaired Loans with an allowance recorded	$	39,850	$	40,937	$	2,456	$	35,897	$	2,083	$	1,580
Total Impaired Loans	$	51,093	$	55,534	$	2,456	$	53,454	$	3,454	$	2,187

17

Troubled Debt Restructurings

A Troubled Debt Restructuring ("TDR") is considered such if the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider. The modifications to the Company's TDRs were concessions on the interest rate charged. The effect of the modifications to the Company was a reduction in interest income. These loans have an allocated reserve in the Company's reserve for loan losses. For the first nine months of 2012, there were no loans restructured in a troubled debt restructuring.

The following table identifies the Troubled Debt Restructurings as of September 30, 2012 and September 30, 2011:

Troubled Debt Restructurings	September 30, 2012								September 30, 2011
	Accruing Loans								Accruing Loans
(in thousands)	Current		30-89 Days Past Due		Nonaccrual		Total TDRs		Current		30-89 Days Past Due		Nonaccrual		Total TDRs
Real Estate:
Construction & land development	$	2,601	$	-	$	-	$	2,601	$	2,602	$	235	$	-	$	2,837
Farmland		-		-		-		-		-		-		-		-
1-4 Family		-		-		1,323		1,323		1,693		-		-		1,693
Multifamily		5,965		-		-		5,965		6,018		-		-		6,018
Non-farm non residential		6,106		679		-		6,785		6,939		-		-		6,939
Total Real Estate		14,672		679		1,323		16,674		17,252		235		-		17,487
Non-Real Estate:
Agricultural		-		-		-		-		-		-		-		-
Commercial and industrial		-		-		-		-		-		-		-		-
Consumer and other		-		-		-		-		-		-		-		-
Total Non-Real Estate		-		-		-		-		-		-		-		-
Total	$	14,672	$	679	$	1,323	$	16,674	$	17,252	$	235	$	-	$	17,487

18

The Company did not restructure any loans considered to be a troubled debt restructuring in the first nine months of 2012. Information about the Company's TDRs occurring in the nine month period ended September 30, 2011 is presented in the following table.

Troubled Debt Restructurings	September 30, 2012					September 30, 2011
(in thousands)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real Estate:
Construction & land development	-	$	-	$	-	5	$	2,837	$	2,837
Farmland	-		-		-	-		-		-
1-4 Family	-		-		-	1		1,693		1,693
Multifamily	-		-		-	1		6,018		6,018
Non-farm non residential	-		-		-	4		6,939		6,939
Total real estate	-		-		-	11		17,487		17,487
Non-Real Estate:
Agricultural	-		-		-	-		-		-
Commercial and industrial	-		-		-	-		-		-
Consumer and other	-		-		-	-		-		-
Total Non-Real Estate	-		-		-	-		-		-
Total	-	$	-	$	-	11	$	17,487	$	17,487

The following is a summary of the TDRs that subsequently defaulted after restructuring during the previous twelve months.

Troubled Debt Restructurings that subsequently defaulted
(in thousands)	Number of Contracts	Recorded Investment
Real Estate:
Construction & land development	-	$	-
Farmland	-		-
1-4 Family	3		1,322
Multifamily	-		-
Non-farm non residential	-		-
Total real estate	3		1,322
Non-Real Estate:
Agricultural	-		-
Commercial and industrial	-		-
Consumer and other	-		-
Total Non-Real Estate	-		-
Total	3	$	1,322

The following table discloses TDR activity for the nine months ended September 30, 2012.

	Real Estate Loans:														Non-Real Estate Loans:
(in thousands)	Construction and Land Development			Farmland		1-4 family			Multi-family			Non-farm non-residential			Agricultural		Commercial and Industrial		Consumer and other		Total
Beginning balance of TDRs (12/31/2011)	$	2,840		$	-	$	1,694		$	6,015		$	6,998		$	-	$	-	$	-	$	17,547
New TDRs		-			-		-			-			-			-		-		-		-
Charge-offs post-modification		-			-		(619	)		-			-			-		-		-		(619	)
Paydowns		-			-		-			(50	)		(380	)		-		-		-		(430	)
Construction to permanent financing		(239	)		-		239			-			-			-		-		-		-
Other[1]		-			-		9			-			167			-		-		-		176
Ending balance of TDRs (9/30/2012)	$	2,601		$	-	$	1,323		$	5,965		$	6,785		$	-	$	-	$	-	$	16,674
(1)Other includes additions to the balances of TDRs to account for the expenses incurred by the Company for items such as insurance and taxes in protecting the Company's interest.

19

Note 6. Goodwill and Other Intangible Assets

Goodwill and intangible assets deemed to have indefinite lives are no longer amortized, but are subject to annual impairment tests. Other intangible assets continue to be amortized over their useful lives. Goodwill at September 30, 2012 was $2.0 million and resulted from the Homestead Bancorp acquisition in 2007.  No impairment charges have been recognized since the acquisition.Mortgage servicing rights were relatively unchanged since December 31, 2011, totaling $0.2 million at September 30, 2012. Other intangible assets recorded include core deposit intangibles, which are subject to amortization. The core deposits reflect the value of deposit relationships, including the beneficial rates, which arose from the purchase of other financial institutions and the purchase of various banking center locations from other financial institutions. At September 30, 2012 and December 31, 2011, core deposit intangibles totaled $2.3 million and $2.6 million, respectively. 

Note 7. Borrowings

The Company's senior long-term debt totaled $1.3 million at September 30, 2012. Long-term debt at December 31, 2011 totaled $3.2 million. The Company pays $50,000 principal plus interest on a monthly basis. In addition to its monthly principal payments, the Company has made additional principal payments totaling $1.5 million. At September 30, 2012 the Company's long-term debt was priced at Wall Street Journal Prime plus 75 basis points (4.00%) and has a contractual maturity of April 2017. It is secured by a pledge of 13.2% (735,745 shares) of First Guaranty Bank, a wholly owned subsidiary of the Company, under a Commercial Pledge Agreement dated June 22, 2011. 

Note 8. Commitments and Contingencies

Off-balance sheet commitments

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit and standby and commercial letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Balance Sheets. The contract or notional amounts of those instruments reflect the extent of the involvement in particular classes of financial instruments.

The exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby and commercial letters of credit is represented by the contractual notional amount of those instruments. The same credit policies are used in making commitments and conditional obligations as it does for on-balance sheet instruments. Unless otherwise noted, collateral or other security is not required to support financial instruments with credit risk.

Set forth below is a summary of the notional amounts of the financial instruments with off-balance sheet risk at September 30, 2012 and December 31, 2011:

Contract Amount
(in thousands)	September 30, 2012		December 31, 2011
Commitments to Extend Credit	$	22,634	$	13,264
Unfunded Commitments under lines of credit	$	76,554	$	69,522
Commercial and Standby letters of credit	$	6,462	$	6,745

Litigation

The nature of the Company’s business ordinarily results in a certain amount of claims, litigation and legal and administrative cases, all of which are considered incidental to the normal conduct of business. When the Company’s management and counsel determine it has defenses to the claims asserted, it defends itself. The Company will consider settlement of cases when, in Management’s and counsel’s judgment, it is in the best interests of both the Company and its shareholders.

While the final outcome of legal proceedings is inherently uncertain, based on information currently available, advice of counsel, and available insurance coverage, Management believes that any incremental liability arising from the Company’s legal proceedings will not have a material adverse effect on the Company’s financial position.

20

Note 9. Fair Value

The fair value of a financial instrument is the current amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. Valuation techniques use certain inputs to arrive at fair value. Inputs to valuation techniques are the assumptions that market participants would use in pricing the asset or liability. They may be observable or unobservable. The Company uses a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1 Inputs – Unadjusted quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds or credit risks) or inputs that are derived principally from or corroborated by market data by correlation or other means.

Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

A description of the valuation methodologies used for instruments measured at fair value follows, as well as the classification of such instruments within the valuation hierarchy.

Securities available for sale. Securities are classified within Level 1 where quoted market prices are available in an active market. Inputs include securities that have quoted prices in active markets for identical assets.  If quoted market prices are unavailable, fair value is estimated using quoted prices of securities with similar characteristics, at which point the securities would be classified within Level 2 of the hierarchy. Securities classified Level 3 in the Company's portfolio as of September 30, 2012 includes municipal bonds and one preferred equity security.

Impaired loans. Loans are measured for impairment using the methods permitted by ASC Topic 310. Fair value of impaired loans is measured by either the loans obtainable market price, if available (Level 1), the fair value of the collateral if the loan is collateral dependent (Level 2), or the present value of expected future cash flows, discounted at the loan's effective interest rate (Level 3). Fair value of the collateral is determined by appraisals or by independent valuation.

Other real estate owned. Properties are recorded at the balance of the loan or at estimated fair value less estimated selling costs, whichever is less, at the date acquired. Fair values of other real estate owned ("OREO") at September 30, 2012 are determined by sales agreement or appraisal, and costs to sell are based on estimation per the terms and conditions of the sales agreement or amounts commonly used in real estate transactions. Inputs include appraisal values on the properties or recent sales activity for similar assets in the property’s market, and thus OREO measured at fair value would be classified within Level 2 of the hierarchy.

Certain non-financial assets and non-financial liabilities are measured at fair value on a non-recurring basis including assets and liabilities related to reporting units measured at fair value in the testing of goodwill impairment, as well as intangible assets and other non-financial long-lived assets measured at fair value for impairment assessment.

The following table summarizes financial assets measured at fair value on a recurring basis as of September 30, 2012 and December 31, 2011, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

(in thousands)	September 30, 2012		December 31, 2011
Securities available for sale measured at fair value	$	619,762	$	520,497
Fair Value Measurements Using:
Quoted Prices in Active Markets For Identical Assets (Level 1)	$	12,000	$	3,203
Significant Other Observable Inputs (Level 2)	$	599,119	$	509,778
Significant Unobservable Inputs (Level 3)	$	8,643	$	7,516

The Company's valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.  While management believes the methodologies used are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value.  The change in level 3 securities available for sale from December 31, 2011 was the addition of a $2.0 million preferred security that was transferred from level 2 to level 3. This addition was partially offset by $0.9 million in municipal bond principal repayments.

21

Gains and losses on securities (realized and unrealized) included in earnings (or changes in net assets) for the first nine months of 2012 measured at fair value on a recurring basis are reported in noninterest income or other comprehensive income as follows:

(in thousands)	Noninterest Income		Other Comprehensive Income
Total gains included in earnings (or changes in net assets)	$	3,230	$	-
Impairment loss	$	-	$	-
Changes in unrealized gains (losses) relating to assets still held at September 30, 2012	$	-	$	3,367

The following table measures financial assets and financial liabilities measured at fair value on a non-recurring basis as of September 30, 2012 and December 31, 2011, segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value:

(in thousands)	At September 30, 2012		At December 31, 2011
Impaired loans measured at fair value	$	33,577	$	39,850
Fair Value Measurements Using:
Quoted Prices in Active Markets For Identical Assets (Level 1)	$	-	$	-
Significant Other Observable Inputs (Level 2)	$	6,795	$	8,113
Significant Unoberservable Inputs (Level 3)	$	26,782	$	31,737
Other real estate owned measured at fair value	$	4,435	$	5,709
Fair Value Measurements Using:
Quoted Prices in Active Markets For Identical Assets (Level 1)	$	-	$	-
Significant Other Observable Inputs (Level 2)	$	4,435	$	5,709
Significant Unoberservable Inputs (Level 3)	$	-	$	-

ASC 825-10 provides the Company with an option to report selected financial assets and liabilities at fair value. The fair value option established by this statement permits the Company to choose to measure eligible items at fair value at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in earnings at each reporting date subsequent to implementation.

The Company has chosen not to elect the fair value option for any items that are not already required to be measured at fair value in accordance with accounting principles generally accepted in the United States, and as such has not included any gains or losses in earnings for the nine months ended September 30, 2012 or 2011.

22

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following management discussion and analysis is intended to highlight the significant factors affecting the Company's financial condition and results of operations presented in the consolidated financial statements included in this Form 10-Q. This discussion is designed to provide readers with a more comprehensive view of the operating results and financial position than would be obtained from reading the consolidated financial statements alone. Reference should be made to those statements for an understanding of the following review and analysis. The financial data at September 30, 2012 and for the three and nine months that ended September 30, 2012 and 2011 have been derived from unaudited consolidated financial statements and include, in the opinion of management, all adjustments (consisting of normal recurring accruals and provisions) necessary to present fairly the Company's financial position and results of operations for such periods.

First Guaranty Bancshares, Inc. is a bank holding company headquartered in Hammond, LA with one wholly owned subsidiary, First Guaranty Bank.  First Guaranty Bank is a Louisiana state chartered commercial bank with 21 banking facilities including one drive-up only facility, located throughout southeast, southwest and north Louisiana.  The Company emphasizes personal relationships and localized decision making to ensure that products and services are matched to customer needs.  The Company competes for business principally on the basis of personal service to customers, customer access to officers and directors and competitive interest rates and fees. 

Special Note Regarding Forward-Looking Statements

Congress passed the Private Securities Litigation Act of 1995 in an effort to encourage corporations to provide information about a Company's anticipated future financial performance. This act provides a safe harbor for such disclosure, which protects us from unwarranted litigation, if actual results are different from Management expectations. This discussion and analysis contains forward-looking statements and reflects Management’s current views and estimates of future economic circumstances, industry conditions, company performance and financial results. The words “may,” “should,” “expect,” “anticipate,” “intend,” “plan,” “continue,” “believe,” “seek,” “estimate” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to a number of factors and uncertainties, including, changes in general economic conditions, either nationally or in our market areas, that are worse than expected; competition among depository and other financial institutions; inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments; adverse changes in the securities markets; changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements; our ability to enter new markets successfully and capitalize on growth opportunities; our ability to successfully integrate acquired entities, if any; changes in consumer spending, borrowing and savings habits; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission and the Public Company Accounting Oversight Board; changes in our organization, compensation and benefit plans; changes in our financial condition or results of operations that reduce capital available to pay dividends; and changes in the financial condition or future prospects of issuers of securities that we own, which could cause our actual results and experience to differ from the anticipated results and expectations, expressed in such forward-looking statements. 

23

Three and Nine months Financial Overview 2012

Financial highlights for the three and nine months of 2012 and 2011 are as follows:

●	First Guaranty Bancshares issued a ten percent stock dividend on February 24, 2012 to stockholders of record as of February 17, 2012.
●	Net income for the third quarter of 2012 and 2011 was $3.0 million and $2.2 million, respectively. Net income for the nine months ending September 30, 2012 was $9.0 million compared to $7.0 million for the nine months ended September 30, 2011.
●	Net income to common shareholders after preferred stock dividends was $2.5 million and $1.4 million for the third quarter of 2012 and 2011. Net income to common shareholders after preferred stock dividends was $7.6 million and $5.5 million for the nine months ending 2012 and 2011. The increase in net income for 2012 was the result of several factors including a higher volume of investments, decreases in incremental and absolute interest expense, and a decrease in provisions for loan losses.
●	The Company's cost of time deposits for the first nine months of 2012 decreased 0.3% to 1.8% from 2.1% for the same period in 2011.
●	Earnings per common share for the three months ended September 30, 2012 and 2011 were $0.40 and $0.22, respectively. For the nine months ended September 30, 2012 and 2011 earnings per common share were $1.20 and $0.89, respectively.
●	The net loan portfolio at September 30, 2012 totaled $596.7 million, a net increase of $32.4 million from the December 31, 2011 net loan portfolio of $564.2 million. Net loans are reduced by the allowance for loan losses which totaled $9.5 million for September 30, 2012 and $8.9 million for December 31, 2011. Total loans net of unearned income were $606.2 million for September 30, 2012 compared to $573.1 million for December 31, 2011.
●	During the first nine months of 2012 the Company's management shortened the contractual maturity of the Company's securities portfolio to reduce interest rate risk.
●	Return on average assets for the three months ending September 30, 2012 and September 30, 2011 was 0.89% and 0.67%, respectively. Return on average assets for the nine months ended September 30, 2012 and September 30, 2011 was 0.89% and 0.77%, respectively. Return on average assets is calculated by dividing annualized net income before preferred dividends by average assets.
●	Return on average common equity for the three months ending September 30, 2012 and September 30, 2011 was 10.72% and 6.40%, respectively. Return on average common shareholders’ equity for the nine months ended September 30, 2012 and September 30, 2011 was 11.07% and 9.16% respectively. Return on common shareholders’ equity is calculated by dividing net earnings applicable to common shareholders by average common shareholders’ equity.
●	Book value per common share was $15.10 as of September 30, 2012 compared to $13.81 as of September 30, 2011. Book value per share was $13.85 as of December 31, 2011. [2]
●	The Company's Board of Directors declared cash dividends of $0.16 per common share in the third quarter of 2012 and $0.15 per common share for the third quarter of 2011. Declared cash dividends for the nine months ended September 30, 2012 and 2011 were $0.48 and $0.44 per common share, respectively. [2]
●	On September 22, 2011, the Company received $39.4 million in funds under the U.S. Treasury's Small Business Lending Fund ("SBLF") program. A portion of the funds from the SBLF were used to redeem the Company's Series A Preferred Stock issued to the Treasury under the CPP. The dividend rate on the shares of the preferred stock issued in connection with the SBLF will be dependent on the Company's volume of qualified small business loans.
	[2]2011 common share amounts have been retroactively adjusted to reflect the ten percent stock dividend paid February 24, 2012 to stockholders of record as of February 17, 2012

24

Financial Condition

Changes in Financial Condition from December 31, 2011 to September 30, 2012

The Company completed the acquisition of Greensburg Bancshares and its wholly owned subsidiary Bank of Greensburg on July 1, 2011. This acquisition added 4 branches, $78.0 million in deposits, and $63.0 million in loans. The results of operations since the date of acquisition reflect the impact of the transaction.

General.

Total assets increased $7.4 million to $1.4 billion at September 30, 2012 and was relatively unchanged from December 31, 2011.

Investment Securities.  

Investment securities at September 30, 2012 totaled $644.7 million, an increase of $11.6 million compared to $633.2 million at December 31, 2011.  The investment portfolio consisted of available for sale securities at their fair market value total of $619.8 million and held to maturity securities at an amortized cost total of $25.0 million.  At December 31, 2011 held to maturity securities, at their amortized cost, total $112.7 million. The decrease from December 31, 2011 to September 30, 2012 in the Company’s held to maturity portfolio was mainly attributable to decreases in market interest rates that prompted bond issuers to redeem the bonds prior to maturity. The Company also had bonds that were classified as held to maturity that matured in the first nine months of 2012.

The securities portfolio consisted principally of U.S. Government agency securities, corporate debt securities and municipal bonds. The securities portfolio provides the Company with a relatively stable source of income and provides a balance to credit risk when compared to other categories of assets. Management monitors the securities portfolio for both credit and interest rate risk.  The Company generally limits the purchase of corporate securities to individual issuers to manage concentration and credit risk. Corporate securities generally have a maturity of 10 years or less.  Government agency securities generally have maturities of 15 years or less. Corporate securities held at fair value totaled $181.9 million at September 30, 2012.  U.S. Government Agency securities that were held at fair value totaled $403.6 million at September 30, 2012. Agency securities that were held for maturity and carried at amortized cost totaled $25.0 million at September 30, 2012. The fair value of held to maturity agency securities was $25.2 million at September 30, 2012.

At September 30, 2012, $30.5 million or 4.7% of the securities portfolio was scheduled to mature in less than one year. Securities with contractual maturity dates over 10 years totaled $111.5 million or 17.3% of the total portfolio. The weighted average contractual maturity of the securities portfolio was 7.7 years.  The average maturity of the securities portfolio is affected by issuer call options which are influenced by market interest rates.

During 2012 the Company has substantially shortened the contractual maturity of its securities portfolio mainly through redeployment of funds from securities called during the course of 2012 into shorter term securities. This is an effort by management to reduce the inherent interest rate risk in the portfolio. The Company's securities contractually maturing in greater than ten years at December 31, 2011 totaled $279.5 million. At September 30, 2012, securities maturing in greater than ten years totaled $113.3 million, a decrease of $162.2 million from December 31, 2011. In this same time period the Company's securities contractually maturing in five through ten years increased $92.0 million, maturing in one through five years increased $68.4 million, and securities contractually maturing in less than one year increased $17.4 million while the total securities portfolio increased $11.6 million.

As of September 30, 2012, certain investment securities totaling $2.5 million, all of which were corporate debt securities, had continuous unrealized loss positions for more than 12 months with unrealized losses totaling $0.2 million. At September 30, 2012, 20 securities from 13 issuers were graded below investment grade with a total book value of $4.8 million.  Non-investment grade securities represent approximately 0.7% of the Company's total investment portfolio.  All of the Company’s non-investment grade securities referenced above were initially investment grade and have been downgraded since purchase. The non-investment grade securities are monitored by management.

Year to date 2012 and 2011 average securities as a percentage of average interest-earning assets were 50.7% and 46.2%, respectively. At September 30, 2012, the U.S. Government agency securities and municipal bonds qualified as securities pledge-able to collateralize repurchase agreements and public funds. Securities pledged totaled $440.8 million at September 30, 2012 and $428.6 million at December 31, 2011.  See Note 3 of the Notes to Consolidated Financial Statements for more information on investment securities.

25

Loans.

Net loans accounted for 43.8% of total assets at September 30, 2012, compared to 41.7% at December 31, 2011. As of September 30, 2012, 77.2% of our loan portfolio was secured primarily or secondarily by real estate. The largest portion of our loan portfolio, at 49.1%, is non-farm, non-residential loans secured by real estate.

The net loan portfolio at September 30, 2012 totaled $596.7 million, a net increase of $32.4 million from the December 31, 2011 net loan portfolio of $564.2 million.  Net loans are reduced by the allowance for loan losses which totaled $9.5 million for September 30, 2012 and $8.9 million for December 31, 2011. Total loans include $39.5 million in syndicated loans. Purchased syndicated loans must meet the same underwriting criteria used when originating loans. 

Loan charge-offs totaled $3.0 million during the first nine months of 2012, compared to $8.1 million during the same period of 2011.  Recoveries totaled $0.6 million during the first nine months of 2012 and $0.6 million for the same period in 2011.  See Note 4 of the Notes to Consolidated Financial Statements for more information on loans and Note 5 for information on the allowance for loan losses.

The high level of charge-offs in 2011 is attributable in part to Management's decision to aggressively address non-performing assets by partial charge-offs to conservative estimates of realizable amounts. The lower level of 2012 charge-offs is indicative of the lack of further deterioration in anticipated realizable values.

The Company revised and enhanced its credit risk rating system during 2012.  The changes included increased weighting to cash flow analysis and less weighting to collateral valuation.  The methodology changes along with the identification of potential weaknesses in several credits resulted in an overall increase in special mention credits from December 31, 2011 to September 30, 2012.  The Company believes this enhanced methodology will contribute to earlier detection of problem credits and better monitoring of the loan portfolio.

Nonperforming Assets.

Nonperforming assets consist of loans on which interest is no longer accrued, certain restructured loans where the interest rate or other terms have been renegotiated and real estate acquired through foreclosure (other real estate). The accrual of interest is discontinued on loans when management believes there is reasonable uncertainty about the full collection of principal and interest or when the loan is contractually past due 90 days or more and not fully secured. If the principal amount of the loan is adequately secured, then interest income on such loans is recognized only in periods in which actual payments are received.

26

The table below sets forth the amounts and categories of our nonperforming assets at the dates indicated.

(in thousands)	September 30, 2012		December 31, 2011
Non-accrual loans:
Real Estate:
Construction and land development	$	1,735	$	1,520
Farmland		781		562
1 - 4 family residential		5,063		5,647
Multifamily		-		-
Non-farm non-residential		11,963		12,400
Total Real Estate	$	19,542	$	20,129
Non-Real Estate:
Agricultural	$	785	$	315
Commercial and industrial		3,239		1,986
Consumer and other		22		20
Total Non-Real Estate	$	4,046	$	2,321
Total non-accrual loans	$	23,588	$	22,450
Loans 90 days and greater delinquent & accruing:
Real Estate:
Construction and land development	$	-	$	-
Farmland		-		-
1 - 4 family residential		376		309
Multifamily		-		-
Non-farm non-residential		678		419
Total Real Estate	$	1,054	$	728
Non-Real Estate:
Agricultural	$	-	$	-
Commercial and industrial		-		-
Consumer and other		-		8
Total Non-Real Estate	$	-	$	8
Total loans 90 days and greater delinquent & accruing	$	1,054	$	736
Total non-performing loans	$	24,642	$	23,186
Real Estate Owned:
Real Estate Loans:
Construction and land development	$	800	$	1,161
Farmland		-		-
1 - 4 family residential		1,414		1,342
Multifamily		-		-
Non-farm non-residential		2,221		3,206
Total Real Estate	$	4,435	$	5,709
Non-Real Estate Loans:
Agricultural	$	-	$	-
Commercial and industrial		-		-
Consumer and other		-		-
Total Non-Real Estate	$	-	$	-
Total Real Estate Owned	$	4,435	$	5,709
Total non-performing assets	$	29,077	$	28,895
				-
Restructured Loans:
In compliance with modified terms	$	14,672	$	17,547
Past due 30 through 89 days and still accruing		679		-
Subsequently defaulted		1,323		-
Total restructured loans	$	16,674	$	17,547

27

Nonperforming assets totaled $29.1 million or 2.1% of total assets at September 30, 2012, an increase of $0.2 million from December 31, 2011. Management has not identified additional information on any loans not already included in impaired loans or the nonperforming asset total that indicates possible credit problems that could cause doubt as to the ability of borrowers to comply with the loan repayment terms in the future.

Nonaccrual loans totaled $23.6 million as of September 30, 2012. The nonaccrual loans are concentrated in six credit relationships that total approximately $13.8 million or 58.4% of the nonaccrual balance. The nonaccrual loan total includes approximately $3.7 million in a participation loan secured by a hotel, $3.8 million secured by two motels, $1.1 million secured by a personal residence, $1.9 million secured by equipment, $2.5 million secured by real estate, equipment, and accounts receivable, and $0.9 million secured by real estate.

Nonaccrual loans increased in aggregate $1.1 million from December 31, 2011 to September 30, 2012. The increase represents $10.2 million in loans placed on nonaccrual status during the first nine months of 2012. This was partially offset by nonaccrual loans that were charged-off, foreclosed upon and the collateral was transferred to other real estate, was returned to performing status, or principal repayed totaling $9.0 million.

Other Real Estate Owned (OREO) totaled $4.4 million as of September 30, 2012 compared to $5.7 million at December 31, 2011. OREO is composed of several 1-4 family residential properties totaling $1.4 million, construction and land development lots of approximately $0.8 million, and commercial properties totaling $2.2 million. The decrease in OREO from December 31, 2011 was due to the sale of $4.2 million of other real estate in the first nine months of 2012. In addition the Company had write-downs of $1.3 million. The decreases in other real estate were partially offset by additions of $4.2 million during 2012.

Impaired loans totaled $46.7 million as of September 30, 2012.  Impaired loans with a valuation allowance totaled $33.6 million and impaired loans without a valuation allowance totaled $13.1 million.  Included in the impaired loan total were $14.7 million in restructured loans that are performing under their new terms.  For more information, see Note 5 to Consolidated Financial Statements.

Allowance for Loan Losses. 

The allowance for loan losses is maintained at a level considered sufficient to absorb potential losses embedded in the loan portfolio. The allowance is increased by the provision for anticipated loan losses as well as recoveries of previously charged off loans and is decreased by loan charge-offs. The provision is the necessary charge to current expense to provide for current loan losses and to maintain the allowance at a level commensurate with Management’s evaluation of the risks inherent in the loan portfolio. Various factors are taken into consideration when determining the amount of the provision and the adequacy of the allowance. These factors include but are not limited to:

●   past due and nonperforming assets;

●   specific internal analysis of loans requiring special attention;

●   the current level of regulatory classified and criticized assets and the associated risk factors with each;

●   changes in underwriting standards or lending procedures and policies;

●   charge-off and recovery practices;

●   national and local economic and business conditions;

●   nature and volume of loans;

●   overall portfolio quality;

●   adequacy of loan collateral;

●   quality of loan review system and degree of oversight by its Board of Directors;

●   competition and legal and regulatory requirements on borrowers;

●   examinations of the loan portfolio by federal and state regulatory agencies and examinations; and

●  review by our internal loan review department and independent accountants.

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The data collected from all sources in determining the allowance for loan losses is evaluated on a regular basis by Management with regard to current national and local economic trends, prior loss history, underlying collateral values, credit concentrations and industry risks. An estimate of potential loss on specific loans is developed in conjunction with an overall risk evaluation of the total loan portfolio. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as new information becomes available.

The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as doubtful, substandard or special mention. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors.  An unallocated component is maintained to cover uncertainties that could affect Management's estimate of probable losses.

Provisions made pursuant to these processes totaled $3.0 million in the first nine months of 2012 compared to $6.9 million for the same period in 2011. Total charge-offs were $3.0 million for first nine months of 2012 as compared to $8.1 million for the same period in 2011.  Recoveries totaled $0.6 million during the first nine months of 2012 and $0.6 million during the first nine months of 2011.

All accrued but uncollected interest related to a loan is deducted from income in the period the loan is assigned a nonaccrual status. During the period a loan is in nonaccrual status, any cash receipts are first applied to the principal balance. Once the principal balance has been fully recovered, any residual amounts are applied to expenses resulting from the collection of the payment and to the recovery of any reversed interest income and interest income that would have been due had the loan not been placed on nonaccrual status. As of September 30, 2012 and December 31, 2011 the Company had loans totaling $23.6 million and $22.5 million, respectively, on which the accrual of interest had been discontinued. The allowance for loan losses at September 30, 2012 was $9.5 million or 40.3% of nonperforming loans.  At September 30, 2012 loans classified as TDRs totaled $16.7 million. The portion of the allowance for loan losses associated with TDRs was $0.7 million or 7.7% of total reserve. See Note 4 and 5 of the Notes to Consolidated Financial Statements for more information on loans and the allowance for loan losses.

Other information relating to loans, the allowance for loan losses and other pertinent statistics follows.

(in thousands)	September 30, 2012			September 30, 2011
Loans:
Average outstanding balance	$	583,046		$	580,478
Balance at end of period	$	606,162		$	606,501
Allowance for Loan Losses:
Balance at beginning of year	$	8,879		$	8,317
Provision charged to expense		3,014			6,855
Loans charged-off		(2,951	)		(8,060	)
Recoveries		565			592
Balance at end of period	$	9,507		$	7,704

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Deposits.

Managing the mix and pricing the maturities of deposit liabilities is an important factor affecting our ability to maximize our net interest margin. The strategies used to manage interest-bearing deposit liabilities are designed to adjust as the interest rate environment changes. In this regard, management regularly assesses our funding needs, deposit pricing and interest rate outlooks. From December 31, 2011 to September 30, 2012, total deposits decreased by $1.1 million to $1.2 billion at September 30, 2012.  Noninterest-bearing demand deposits increased $24.4 million from December 31, 2011 to September 30, 2012. Interest-bearing demand deposits increased by $8.2 million when comparing September 30, 2012 to December 31, 2011. Time deposits decreased $36.3 million, or 5.2% to $656.2 million at September 30, 2012, compared to $692.5 million at December 31, 2011.

At September 30, 2012, public fund deposits totaled $433.2 million.  The Company has developed a program for the development and management of public fund deposits.  Since 2007, the Company has maintained public fund deposits in excess of $175.0 million.  These deposits are with local government entities such as school districts, hospital districts, sheriff departments and other municipalities.  Several of these accounts are under contracts with terms up to three years.  Public funds deposit accounts are collateralized by FHLB letters of credit, U.S. Government securities, and by eligible U.S. Government agency securities such as those issued by the FHLB, FFCB, FNMA, and FHLMC.  Management believes that public funds provide a low cost and stable source of funding for the Company.

As of September 30, 2012, the aggregate amount of outstanding time deposits in amounts greater than or equal to $100,000 was approximately $429.8 million.  At September 30, 2012, $280.0 million or 42.7% of the Company's time deposits had a remaining term greater than one year.

As we seek to maintain a strong net interest margin and improve our earnings, attracting core noninterest-bearing deposits will remain a key element of the Company’s strategy. Management will continue to evaluate and update our product mix in its efforts to attract additional core customers. We currently offer a number of noninterest-bearing deposit products that are competitively priced and designed to attract and retain customers with emphasis on core deposits.

The following table sets forth the distribution of our total deposit accounts, by account type, for the periods indicated.

					Increase/(Decrease)
(in thousands except for %)	September 30, 2012		December 31, 2011		Amount			Percent
Noninterest-bearing demand	$	192,282	$	167,925	$	24,357		14.5	%
Interest-bearing demand		297,579		289,408		8,171		2.8	%
Savings		60,135		57,452		2,683		4.7	%
Time		656,174		692,517		(36,343	)	-5.2	%
Total deposits	$	1,206,170	$	1,207,302	$	(1,132	)	-0.1	%

The following table sets forth the distribution of our time deposit accounts.

(in thousands)	September 30, 2012
Time deposits of less than $100,000	$	226,348
Time deposits of $100,000 through $250,000		158,445
Time deposits of more than $250,000		271,381
Total Time Deposits	$	656,174

The following table sets forth public funds as a percent of total deposits.

(in thousands except for %)	September 30, 2012			December 31, 2011			December 31, 2010			December 31, 2009			December 31, 2008
Total Public Funds	$	433,167		$	431,905		$	356,153		$	268,474		$	225,766
Total Deposits	$	1,206,170		$	1,207,302		$	1,007,383		$	799,746		$	780,382
Total Public Funds as a percent of Total Deposits		35.9	%		35.8	%		35.4	%		33.6	%		28.9	%

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Borrowings.

The Company maintains borrowing relationships with other financial institutions as well as the Federal Home Loan Bank on a short and long-term basis to meet liquidity needs. At September 30, 2012, short-term borrowings totaled $11.8 million compared to $12.2 million at December 31, 2011, and consisted of repurchase agreements and federal funds purchased. Overnight repurchase agreement balances are monitored daily for sufficient collateralization. The Company had long-term borrowings totaling $1.3 million as of September 30, 2012 and $3.2 million at December 31, 2011. The Company pays $50,000 principal per month on its long-term debt that is priced at WSJ prime plus 75 basis points (4.0%). In addition to the $0.5 million in monthly principal payments for the first nine months of 2012, the Company also made principal reductions totaling $1.5 million. The accelerated repayment of the Company’s long-term debt is a strategy by Management to reduce interest costs while yields on securities remain low.  

The average amount of total short-term borrowings for the first nine months of 2012 and 2011 totaled $15.1 million. At September 30, 2012, the Company had $50.0 million in Federal Home Loan Bank letters of credit outstanding obtained solely for collateralizing public deposits.

The Company also maintains a $2.5 million revolving line of credit.  There was no balance on this credit facility at September 30, 2012 or December 31, 2011.  This credit facility and the $1.3 million in long-term debt are secured by a portion of the Company's ownership in its subsidiary First Guaranty Bank.

Equity.  

Stockholders’ equity provides a source of permanent funding, allows for future growth and the ability to absorb unforeseen adverse developments. Of total stockholders' equity, $39.4 million is in the form of preferred stock Series C. The Company is a participant in the United States Treasury's Small Business Lending Fund and the preferred stock series C was issued pursuant to participation. Total equity increased to $134.5 million as of September 30, 2012 from $126.6 million at December 31, 2011. The increase in stockholders' equity was the result of the increase in retained earnings totaling $4.5 million and an increase in accumulated other comprehensive income totaling $3.4 million. The increase in retained earnings was attributable to year to date earnings of $9.0 million which was partially offset by dividends paid to common shareholders totaling $3.0 million and dividends paid on preferred stock totaling $1.5 million. The increase in accumulated other comprehensive income was solely from increases in unrealized gains on available for sale securities. Stockholders’ equity was slightly decreased by the purchase of 2,895 shares of the Company’s common stock totaling $54,000.

Results of Operations for the Three Months and Nine Months Ended September 30, 2012 and 2011

Net Income.

Net income for the quarter ended September 30, 2012 was $3.0 million, an increase of $0.9 million from $2.2 million for the quarter ended September 30, 2011. Net income for the nine months ended September 30, 2012 was $9.0 million, an increase of $2.1 million or 30.1% from $7.0 million for the nine months ended September 30, 2011. For the quarter ended September 30, 2012, the Company had net income available to common shareholders of $2.5 million, an increase of $1.1 million from $1.4 million for the same quarter in 2011. Net income available to common shareholders for the nine months ended September 30, 2012 was $7.6 million, an increase of $2.0 million from $5.5 million for the same period in 2011. The increase in income can be attributed to decreased provisions to the allowance for loan losses when compared year over year as well as decreased interest expense. Net gains on securities for the third quarter of 2012 and 2011 were $1.7 million and $0.9 million, respectively. Net gains on securities for the first nine months of 2012 and 2011 were $3.2 million and $3.1 million. Earnings per common share for the third quarter ended September 30, 2012 was $0.40 per common share, an increase of 81.8% or $0.18 per common share from $0.22 per common share for the third quarter ended September 30, 2011. Earnings per common share for the nine months ended September 30, 2012 was $1.20 per common share, an increase of 34.8% or $0.31 per common share from $0.89 per common share for the nine months ended September 30, 2011.

Net Interest Income.

Net interest income is the largest component of our earnings, and is calculated by subtracting the cost of interest-bearing liabilities from the income earned on interest-earning assets. This represents the earnings from our primary business of gathering deposits, and making loans and investments. Our long-term objective is to manage net interest income to provide the largest possible amount of income, while balancing interest rate risk, credit risk, and liquidity risk.

A financial institution’s asset and liability structure is substantially different from that of a non-financial company, in that virtually all assets and liabilities are monetary in nature. Accordingly, changes in interest rates, which are generally impacted by inflation rates, may have a significant impact on a financial institutions performance. The impact of interest rate changes depends on the sensitivity to the change of our interest-earning assets and interest-bearing liabilities. The effects of the varying interest rate environment in recent years and our interest sensitivity position will be discussed below.

Net interest income in the third quarter of 2012 was $9.9 million, when compared to the same period in 2011 of $10.1 million. Net interest income for the first nine months of 2012 and 2011 was $31.6 million and $29.1 million, respectively. Loans represent the largest portion of the Company's interest-earning assets, and at September 30, 2012, 52.1% of our total loans were floating rate loans which are primarily tied to the prime lending rate. After the prime rate dropped 400 basis points in 2008, management began adding interest rate floors to floating rate loans. The interest rate floors helped stabilize the Company's net interest income. The Company has also improved it net interest income in 2012 by increasing its investment portfolio. The cost of our interest-bearing liabilities reflects a lower cost of funds paid on interest-bearing liabilities. As of September 30, 2012, time deposits represented 54.4% of total deposits, which is a decrease from 57.4% of total deposits at December 31, 2011.

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The average yield on interest-earning assets decreased from 4.64% for the nine months ended September 30, 2011 to 4.26%  for the nine months ended September 30, 2012. The interest-bearing liabilities average yield decreased to 1.28% for the nine months ended September 30, 2012, compared to 1.60% for the same period in 2011. The net yield on interest-earning assets was 2.98% for the nine months ended September 30, 2012, compared to 3.04% for the same period in 2011.

The net interest income yield shown below in the average balance sheet is calculated by dividing net interest income by average interest-earning assets outstanding for 2012 and is a measure of the efficiency of the earnings from balance sheet activities. It is affected by changes in the difference between interest on interest-earning assets and interest-bearing liabilities and the percentage of interest-earning assets funded by interest-bearing liabilities.

The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments were made, as the effect thereof was not material. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense.

	September 30, 2012						September 30, 2011
(in thousands)	Average Balance		Interest		Yield/Rate		Average Balance		Interest		Yield/Rate
Assets
Interest-earning assets:
Interest-earning deposits with banks [3]	$	29,887	$	56	0.25	%	$	28,563	$	35	0.16	%
Securities (including FHLB stock)		666,707		15,110	3.02	%		539,272		14,504	3.60	%
Federal funds sold		25,263		10	0.05	%		18,235		14	0.10	%
Loans, net of unearned income		583,046		26,538	6.06	%		580,478		25,938	5.97	%
Total interest-earning assets		1,304,903		41,714	4.26	%		1,166,548		40,491	4.64	%
Noninterest-earning assets:
Cash and due from banks		10,442						9,602
Premises and equipment, net		19,827						17,229
Other assets		22,342						10,695
Total Assets		1,357,514						1,204,074
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Demand deposits		305,547		1,050	0.46	%		209,279		644	0.41	%
Savings deposits		58,806		40	0.09	%		51,535		37	0.10	%
Time deposits		667,103		8,905	1.78	%		675,915		10,637	2.10	%
Borrowings		17,406		98	0.74	%		13,304		50	0.50	%
Total interest-bearing liabilities		1,048,862		10,093	1.28	%		950,033		11,368	1.60	%
Noninterest-bearing liabilities:
Demand deposits		171,854						145,548
Other		6,027						6,234
Total Liabilities		1,226,743						1,101,815
Stockholders' equity		130,771						102,259
Total Liabilities and Stockholders'		1,357,514						1,204,074
Net interest income			$	31,621					$	29,123
Net interest rate spread [4]					2.98	%					3.04	%
Net interest-earning assets [5]	$	256,041					$	216,515
Net interest margin [6]					3.23	%					3.34	%
Average interest-earning assets to interest-bearing liabilities					124.41	%					122.79	%

[3]	Interest-earning deposits with banks include interest earning portion of reserves kept with the Federal Reserve Bank that are classified on the balance sheet as "cash and due from banks". The reserves are not classified as interest-earning demand deposits on the balance sheet because interest is only paid on amounts in excess of minimum reserve requirements.
[4]	Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
[5]	Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
[6]	Net interest margin represents net interest income divided by average total interest-earning assets.

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Provision for Loan Losses.

The provision for loan losses was $0.9 million and $3.5 million for the third quarter of 2012 and 2011, respectively. For the nine months ending September 30, 2012, the provision for loan loss was $3.0 million, a decrease from $6.9 million for the first nine months of 2011. The lower provision in 2012 was based on the current condition of the loan portfolio as well as other quantitative and qualitative factors considered by the Company's management team. Of the loan charge-offs for the year to date 2012, approximately $2.1 million were loans secured by real estate and $0.8 million were loans secured by non-real estate. The allowance for loan losses at September 30, 2012 was $9.5 million, compared to $8.9 million at December 31, 2011, and was 1.57% and 1.55% of total loans, at the respective dates. Management believes that the current allowance will cover losses that may currently exist in the loan portfolio given certain qualitative information (i.e. economic conditions, expected charge-offs, and nonperforming assets).

Noninterest Income.

For the quarter ending September 30, 2012 and 2011, noninterest income totaled $3.3 million and $4.0 million, respectively. Noninterest income totaled $8.0 million for the nine months ended September 30, 2012, a decrease of $0.9 million when compared to $8.9 million for the nine months ended September 30, 2011. The noninterest income for the quarter and nine months ended September 30, 2011 included a gain on acquisition of $1.4 million. Service charges, commissions and fees totaled $1.2 million for the third quarter ended September 30, 2012 and 2011. Service charges, commissions and fees totaled $3.6 million for the nine months ended September 30, 2012 and $3.4 million for the same period of 2011. Net securities gains were $1.7 million for the third quarter of 2012 compared to $0.9 million in 2011. Net securities gains were $3.2 million for the first nine months of 2012 compared to $3.1 million in 2011. Net losses on the sale of loans were $47,000 for the nine months ended September 30, 2012 and net gains on the sale of loans were $0.1 million for the same period in 2011. Other noninterest income remained relatively unchanged at $0.4 million for the third quarter ending September 30, 2012 and 2011. The Company’s other noninterest income increased by $0.2 million to $1.2 million in the first nine months of 2012 from $1.1 million for the same period in 2011.

Noninterest Expense.

Noninterest expense includes salaries and employee benefits, occupancy and equipment expense, net cost from other real estate and repossessions, regulatory assessments and other types of expenses. Noninterest expense totaled $7.8 million in the third quarter of 2012 and $7.9 million in 2011. Noninterest expense increased to $22.9 million for the first nine months of 2012 from $21.2 million for the first nine months of 2011. Salaries and benefits totaled $3.4 million for the third quarter of 2012 and 2011. Salaries and benefits totaled $10.1 million for the first nine months of 2012 compared to $9.4 million for the same period in 2011. Occupancy and equipment expense totaled $1.0 million for the third quarter of 2012 and $0.9 million for the same period in 2011. Occupancy and equipment expense totaled $2.8 million for the first nine months of 2012 and $2.6 million for the same period in 2011. Net costs from other real estate and repossession includes expenses to maintain properties (taxes, legal fees, and insurance) as well as write-downs of the carrying value of the Company's other real estate owned. The increase in net costs from other real estate and repossession is largely attributable to write-downs of $1.3 million for the first nine months of 2012 compared to $0.3 million for the same period in 2011. Other noninterest expense totaled $3.5 million in the third quarter of 2012 and 2011. Other noninterest expense increased by $0.7 million to $10.0 million for the nine months ended September 30, 2012 from $9.3 million for the nine months ended September 30, 2011.

The following is a summary of the significant components of other noninterest expense:
	Nine Months Ended September 30,				Three Months Ended September 30,
(in thousands)	2012		2011		2012		2011
Other noninterest expense:
Legal and professional fees	$	1,527	$	1,691	$	438	$	730
Data processing		2,086		1,803		721		684
Marketing and public relations		657		746		237		217
Taxes - sales, capital, and franchise		541		403		182		17
Operating supplies		425		735		150		170
Travel and lodging		409		345		118		151
Net costs from other real estate and repossessions		1,838		520		739		324
Regulatory assessment		792		1,361		295		413
Other		1,720		1,659		574		827
Total other expense	$	9,995	$	9,263	$	3,454	$	3,533

Income Taxes.

The provision for income taxes was $1.5 million and $0.5 million for the quarters ending September 30, 2012 and 2011. The provision for the nine months ended September 30, 2012 and 2011 was $4.6 million and $3.1 million, respectively. The higher provision for income taxes for 2012 was a result of higher income for 2012 when compared to 2011 as well as the non-taxable nature of the Gain on Acquisition in 2011.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Asset/Liability Management and Market Risk

Asset/Liability Management.

Our asset/liability management (ALM) process consists of quantifying, analyzing and controlling interest rate risk (IRR) to maintain reasonably stable net interest income levels under various interest rate environments. The principal objective of ALM is to maximize net interest income while operating within acceptable limits established for interest rate risk and maintain adequate levels of liquidity.

The majority of our assets and liabilities are monetary in nature. Consequently, one of our most significant forms of market risk is interest rate risk. Our assets, consisting primarily of loans secured by real estate, have longer maturities than our liabilities, consisting primarily of deposits. As a result, a principal part of our business strategy is to manage interest rate risk and reduce the exposure of our net interest income to changes in market interest rates. Accordingly, our Board of Directors has established an Asset/Liability Committee which is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the Board of Directors. Senior Management monitors the level of interest rate risk on a regular basis and the Asset/Liability Committee, which consists of executive Management and other bank personnel operating under a policy adopted by the Board of Directors, meets as needed to review our asset/liability policies and interest rate risk position.

The interest spread and liability funding discussed below are directly related to changes in asset and liability mixes, volumes, maturities and repricing opportunities for interest-earning assets and interest-bearing liabilities. Interest-sensitive assets and liabilities are those which are subject to being repriced in the near term, including both floating or adjustable rate instruments and instruments approaching maturity. The interest sensitivity gap is the difference between total interest-sensitive assets and total interest-sensitive liabilities. Interest rates on our various asset and liability categories do not respond uniformly to changing market conditions. Interest rate risk is the degree to which interest rate fluctuations in the marketplace can affect net interest income.

To maximize our margin, we attempt to be somewhat more asset sensitive during periods of rising rates and more liability sensitive during periods of falling rates. The need for interest sensitivity gap management is most critical in times of rapid changes in overall interest rates. We generally seek to limit our exposure to interest rate fluctuations by maintaining a relatively balanced mix of rate sensitive assets and liabilities on a one-year time horizon. The mix is relatively difficult to manage. Because of the significant impact on net interest margin from mismatches in repricing opportunities, the asset-liability mix is monitored periodically depending upon management’s assessment of current business conditions and the interest rate outlook. Exposure to interest rate fluctuations is maintained within prudent levels by the use of varying investment strategies.

We monitor interest rate risk using an interest sensitivity analysis set forth on the following table. This analysis, which we prepare monthly, reflects the maturity and repricing characteristics of assets and liabilities over various time periods. The gap indicates whether more assets or liabilities are subject to repricing over a given time period. The interest sensitivity analysis at September 30, 2012 shown below reflects a liability-sensitive position with a negative cumulative gap on a one-year basis.

	September 30, 2012
	Interest Sensitivity Within
(in thousands)	3 Months Or Less			Over 3 Months thru 12 Months			Total One Year			Over One Year		Total
Earning Assets:
Loans (including loans held for sale)	$	72,378		$	117,461		$	189,839		$	416,403	$	606,242
Securities (including FHLB stock)		30,483			72,772			103,255			542,626		645,881
Federal Funds Sold		4,931			-			4,931			-		4,931
Other earning assets		20			-			20			747		767
Total earning assets	$	107,812		$	190,233		$	298,045		$	959,776	$	1,257,821
Source of Funds:
Interest-bearing accounts:
Demand deposits	$	148,790		$	-		$	148,790		$	148,789	$	297,579
Savings deposits		15,034			-			15,034			45,101		60,135
Time deposits		154,390			221,770			376,160			280,014		656,174
Short-term borrowings		11,774			-			11,774			-		11,774
Long-term borrowings		-			-			-			1,250		1,250
Noninterest-bearing, net		-			-			-			230,909		230,909
Total source of funds	$	329,988		$	221,770		$	551,758		$	706,063	$	1,257,821
Period gap	$	(222,176	)	$	(31,537	)	$	(253,713	)	$	253,713
Cumulative gap	$	(222,176	)	$	(253,713	)	$	(253,713	)	$	-
Cumulative gap as a percent of earning assets		-17.66	%		-20.17	%		-20.17	%

34

Liquidity and Capital Resources

On September 22, 2011, the Company received $39.4 million in funds from the U.S. Treasury's Small Business Lending Fund ("SBLF") program. $21.1 million of the funds from the SBLF program were used to refinance the Company's Series A and B Preferred Stock issued to the Treasury under the Capital Purchase Program. The dividend rate on the shares of the preferred stock issued in connection with the SBLF is dependent on the Company's volume of qualified small business loans. In the third quarter of 2012 the Company’s estimated growth in its qualified loans exceeded ten percent of its base line qualified loan portfolio. This increase should reduce the Company’s rate on its preferred equity from 5.00% on the total $39.4 million to 1.00% on the amount equal to the growth in qualified loans and 5.00% on the residual. Pursuant to the agreement with the Treasury, this rate reduction is anticipated to be recognized in the first quarter of 2013.

Liquidity.

Liquidity refers to the ability or flexibility to manage future cash flows to meet the needs of depositors and borrowers and fund operations. Maintaining appropriate levels of liquidity allows the Company to have sufficient funds available to meet customer demand for loans, withdrawal of deposit balances and maturities of deposits and other liabilities. Liquid assets include cash and due from banks, interest-earning demand deposits with banks, interest-earning time deposits, federal funds sold and unpledged available-for-sale investment securities. These assets represent 60.5% and 63.5% of the unpledged liquidity base at September 30, 2012 and December 31, 2011, respectively. The residual liquidity base is comprised of available lines of credit that are discussed in further detail below.

Loans maturing within one year or less at September 30, 2012 totaled $173.3 million.  At September 30, 2012, time deposits maturing within one year or less totaled $376.1 million.

The Company maintained a net borrowing capacity at the Federal Home Loan Bank totaling $125.8 million and $125.5 million at September 30, 2012 and December 31, 2011, respectively. The Company also maintain federal funds lines of credit at three correspondent banks with borrowing capacity of $55.5 million and a revolving line of credit for $2.5 million as of September 30, 2012. The Company did not have an outstanding balance on these lines of credit as of September 30, 2012. Management believes there is sufficient liquidity to satisfy current operating needs.

Capital Resources.

The Company's capital position is reflected in stockholders’ equity, subject to certain adjustments for regulatory purposes. Further, our capital base allows us to take advantage of business opportunities while maintaining the level of resources we deem appropriate to address business risks inherent in daily operations.

Total equity increased to $134.5 million as of September 30, 2012 from $126.6 million at December 31, 2011. The increase in stockholders' equity was the result of the increase in retained earnings totaling $4.5 million and an increase in accumulated other comprehensive income totaling $3.4 million. The increase in retained earnings was attributable to year to date earnings of $9.0 million which was partially offset by dividends paid to common shareholders totaling $3.0 million and dividends paid on preferred stock totaling $1.5 million. The increase in accumulated other comprehensive income was solely from increases in unrealized gains on available for sale securities. Stockholders’ equity was slightly decreased by the purchase of 2,895 shares of the Company’s common stock totaling $54,000.

Regulatory Capital.

Risk-based capital regulations adopted by the FDIC require banks to achieve and maintain specified ratios of capital to risk-weighted assets. Similar capital regulations apply to bank holding companies. The risk-based capital rules are designed to measure “Tier 1” capital (consisting of common equity, retained earnings and a limited amount of qualifying perpetual preferred stock and trust preferred securities, net of goodwill and other intangible assets and accumulated other comprehensive income) and total capital in relation to the credit risk of both on- and off- balance sheet items. Under the guidelines, one of its risk weights is applied to the different on balance sheet items. Off-balance sheet items, such as loan commitments, are also subject to risk weighting. All bank holding companies and banks must maintain a minimum total capital to total risk weighted assets ratio of 8.00%, at least half of which must be in the form of core or Tier 1 capital. These guidelines also specify that bank holding companies that are experiencing internal growth or making acquisitions will be expected to maintain capital positions substantially above the minimum supervisory levels.

	As of September 30, 2012
	"Well Capitalized Minimums"		Actual
Tier 1 Leverage Ratio
Consolidated	5.00	%	9.15	%
Bank	5.00	%	9.14	%
Tier 1 Risk-based Capital Ratio
Consolidated	6.00	%	14.16	%
Bank	6.00	%	14.14	%
Total Risk-based Capital Ratio
Consolidated	10.00	%	15.26	%
Bank	10.00	%	15.24	%

At September 30, 2012, the Company and its subsidiary satisfied the minimum regulatory capital requirements and were well capitalized within the meaning of federal regulatory requirements.

35

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As defined by the Securities and Exchange Commission in Exchange Act Rules 13a-15(e) and 15d-15(e), a Company's “disclosure controls and procedures” means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within time periods specified in the Commission’s rules and forms. The Company maintains such controls designed to ensure this material information is communicated to Management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decision regarding required disclosure.

Management, with the participation of the CEO and CFO, have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on that evaluation, the CEO and CFO have concluded that the disclosure controls and procedures as of the end of the period covered by this quarterly report are effective. There were no changes in the Company's internal control over financial reporting during the last fiscal quarter in the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

The Company is subject to various other legal proceedings in the normal course of business and otherwise. It is management's belief that the ultimate resolution of such other claims will not have a material adverse effect on the Company's financial position or results of operations.

PART II.  OTHER INFORMATION

Item 1.      Legal Proceedings

The Company is subject to various other legal proceedings in the normal course of business and otherwise. It is management's belief that the ultimate resolution of such other claims will not have a material adverse effect on the Company's financial position or results of operations.

Item 1A.  Risk Factors

There have been no material changes in the risk factors disclosed by the Company in its Annual Report on Form 10-K with the Securities and Exchange Commission.

Exhibit
Number	Exhibit
14.3	Code of Ethics for Senior Financial Officers
14.4	Code of conduct and Ethics for Employees, Officers, and Directors
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

36

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FIRST GUARANTY BANCSHARES, INC.
Date:  November 13, 2012	By: /s/ Alton B. Lewis
	Alton B. Lewis
	Principal Executive Officer
Date:  November 13, 2012	By: /s/ Eric J. Dosch
	Eric J. Dosch
	Principal Financial Officer
	Secretary and Treasurer

37

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Alton B. Lewis, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of First Guaranty Bancshares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves Management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 13, 2012	/s/ Alton B. Lewis
Date	Alton B. Lewis
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Eric J. Dosch, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of First Guaranty Bancshares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves Management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 13, 2012	/s/ Eric J. Dosch
Date	Eric J. Dosch
	Chief Financial Officer
	Secretary and Treasurer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of First Guaranty Bancshares, Inc. (the “Company”) on Form 10-Q as of and for the quarter ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alton B. Lewis, Chief Executive Officer of the Company, certify that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to First Guaranty Bancshares, Inc. and will be retained by First Guaranty Bancshares, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Alton B. Lewis

Alton B. Lewis

Chief Executive Officer

November 13, 2012

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of First Guaranty Bancshares, Inc. (the “Company”) on Form 10-Q as of and for the quarter ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Eric J. Dosch, Chief Financial Officer of the Company, certify that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to First Guaranty Bancshares, Inc. and will be retained by First Guaranty Bancshares, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Eric J. Dosch

Eric J. Dosch

Chief Financial Officer

Secretary and Treasurer

November 13, 2012

EX-14.3

FIRST GUARANTY BANCSHARES, INC. AND SUBSIDIARY CODE OF CONDUCT AND ETHICS FOR EMPLOYEES, OFFICERS AND DIRECTORS

ADHERENCE TO THE HIGHEST ETHICAL STANDARDS

First Guaranty Bancshares, Inc. and its consolidated subsidiary (the “Company”) are committed to the highest ethical standards in the conduct of our business. Honesty, integrity, and trust are essential to our reputation with our customers, employees, and the communities we serve. They are also essential to our ability to attract and retain customers and grow our business. Users of our services must be able to do so with complete confidence in the integrity of those with whom they deal.

Although this Code of Conduct and Ethics (the “Code”) does not cover every ethical issue that may arise, it sets out basic principles to guide our employees, officers and directors.

Each of our employees, officers, and directors must read, understand and adhere to this Code, and conduct themselves accordingly, avoiding even the appearance of any impropriety.

In the event an applicable law, regulation, or regulatory rule conflicts with this Code, such law, regulation, or regulatory rule shall take precedence. However, if a local custom or policy conflicts with this Code, this Code takes precedence. We will have more detailed policies covering certain topics in this Code, as deemed necessary. You are expected to comply both with this Code and any other policies, operating rules and procedures set forth in the applicable policies or department or branch manuals. If you have any questions about compliance with policy, or possible conflicts between policies, you should seek guidance from your manager or Human Resources. Violations of the standards set forth in this Code will be subject to disciplinary action.

IF YOU ARE IN A SITUATION WHICH YOU BELIEVE MAY LEAD TO A VIOLATION OF THIS CODE, PLEASE FOLLOW THE GUIDELINES DESCRIBED IN THE SECTION ENTITLED “PROMPT CONFIDENTIAL REPORTING OF CODE VIOLATIONS.”

OUR BASIC ETHICAL PRINCIPLES

Honesty. Our business is based on mutual trust and absolute honesty in all our dealings whether internally or externally. We must adhere to and demonstrate this principle at all times in both our personal and corporate behavior.

Integrity. Our business creates opportunities that can be realized only if we demonstrate the integrity of the Company, as well as the integrity of our personnel. We therefore use corporate assets, including our name, with the care befitting a valuable resource.

Respect. We treat one another with respect and dignity, and we respect the diversity of our workforce, our customers, and our communities.

Responsibility. We are accountable for our actions and we ask for clarification when necessary, and are responsible for reporting concerns or observed violations of the Code.

Good Citizenship. We comply with both the intent and spirit of laws that govern our business and the community, thereby contributing to the strength and well being of our constituent customers and communities we serve.

COMPLIANCE WITH LAWS, RULES, AND REGULATIONS

Employees should become familiar with all laws and regulations applicable to the Company, as such laws and regulations relate to daily work requirements and professional responsibilities. Each of these and other laws and regulations are addressed in our various policies and procedures which are available to employees. Therefore, all of our employees, officers, and directors are required to carry out their responsibilities in accordance with applicable laws, regulations, and policy, including all applicable federal and state criminal laws governing fraud, bribery, embezzlement, conversion, and conflicts of interest. They also must conduct their business affairs consistent with applicable safety and soundness standards and Code requirements. Everyone is expected to have sufficient knowledge of applicable laws and regulations that relate to their duties, and should know when to seek guidance from higher authority. It is imperative to follow operating rules and procedures covered in applicable department or branch manuals, and to use the proper Company or First Guaranty Bank forms, which have been prepared with legal requirements in mind.

Accurate Record Keeping and Accounting. We require honest and accurate recording and reporting of financial and other information both to make responsible business decisions, and to provide accurate reporting of our performance to regulators, depositors, and employees. We require full, fair, accurate, timely, and understandable disclosure in all reports and documents we file with, or submit to the regulators, and in other material public communications. It is a violation of law and our policy for any employee to attempt to improperly influence or mislead the financial reporting process or our accountants who audit our financial statements. Our financial and other reporting must fairly present the financial condition, results of operations and cash flow of the Company, and it must comply in all material respects with applicable law, governmental rules and regulations, including generally accepted accounting principles and applicable rules of banking regulators.

We have implemented disclosure controls and procedures to ensure that our public disclosures are timely, comply with laws and regulations, and are otherwise fair, accurate, and understandable. Employees responsible for the preparation of our public disclosures, or who provide information as part of that process, have a responsibility to ensure that such disclosures and information are complete, accurate and comply with our Company’s disclosure controls and procedures.

Document Retention and Destruction. Employees and directors must fully comply with our document retention and destruction policy. In addition, once a legal proceeding has begun (or when one is threatened or reasonably likely), federal and state obstruction-of-justice statutes require us to preserve documents relevant to the issues in that proceeding even before specific documents are requested. Any employee, officer, or director, who fails to comply with this policy, as well as industry regulations and state and federal laws, is subject to termination or removal and may also face criminal or civil prosecution, with possible fines and prison terms.

Confidentiality of Information. Employees, officers and directors who have access to confidential information are not permitted to use or share that information for any purpose except the conduct of our business. Non-public information regarding the Company, or our customers, is confidential and should be safeguarded appropriately. Any use of non-public information for personal financial benefit or to “tip” others who might make an investment choice based on this information is both unethical and illegal. Please consult the Company’s Compliance Department for further details on this topic.

REGULATORY AGENCIES, AUDITORS, AND COUNSEL

Honesty, candor, and cooperation are required in dealing with our independent and internal auditors, and attorneys. Any request by regulatory or governmental agencies for information, which is not incidental to periodic bank and holding company examinations and required reports, should be referred to the Compliance Department.

COMPETITION AND FAIR DEALING

Competition requires fair dealing with customers, competitors, suppliers, and fellow employees. We compete based on achieving advantage in the marketplace through superior service, competitive interest rates, and ethical business practices. Accordingly, it is against our policy to attempt to win or keep business relationships based on unethical or illegal activities.

Employees must not attempt to obtain unfair advantage over competitors, customers, suppliers, or fellow employees through manipulation, abuse of privileged information, misrepresentation of material facts, or any other unfair-dealing practice.

Anti-Competitive Activities. Federal and state law prohibits any combination, conspiracy, or agreement among competitors to restrict or prevent competition. Violations can occur through both formal and informal agreements between the Company and a competitor to fix prices, allocate markets or customers, or refuse to deal with particular suppliers or customers.

All employees should be especially careful at social or professional meetings to avoid discussions or exchanges of information relating to competitive matters (i.e., cost, pricing, or strategy). Employees with questions concerning any such antitrust issues should be directed to the Compliance Officer.

Vendors. Employees who select or work with vendors for the Company are required to be objective and fair and employ professional business practices when selecting sources, in negotiations, in awarding business, and in the administration of purchasing activities. Although we expect employees to strive for good relationships with suppliers, it is wrong to create even the impression that a supplier has a “friend” at the Company and can therefore exert special influence.

SAFEGUARDING AND PROPER USE OF OUR ASSETS

Our employees, officers and directors are bound by this Code to protect our assets, ensuring they are used only for legitimate business purposes. Such assets include, but are not limited to, capital, facilities, equipment, proprietary information, technology, business plans, ideas for new products and services, trade secrets, inventions, copyrightable materials and customer lists.

Corporate Funds. Employees entrusted with the Company’s funds are personally responsible for the handling of those funds.

Physical Assets. Employees entrusted with use of our physical assets (such as computer equipment, corporate charge cards, telephones and office supplies) must protect them from loss, damage, misuse or theft. These assets should be used only to conduct our business and for purposes authorized by management.

Information Technology. Our information systems, such as Internet access, e-mail and software programs are vital to conducting our business and, accordingly, are to be used only for business purposes. Using the Internet for non-business purposes is inappropriate. Visiting sites with sexual or hate content as well as gambling-related sites is strictly prohibited.

All data stored in the computer system, such as data files or word processing documents, must be treated as proprietary information. Our technology policy sets the standards relating to the use and protection of computer and information assets, and employees must adhere to this policy.

CONFLICTS OF INTEREST

Employees, officers and directors are expected to make business decisions on behalf of the Company free from conflicting outside interests. It is a violation of this Code and of our policies to foster personal or business interests (or those of others with whom such persons have a personal or business relationship) at the expense of the Company.

Although it is impossible to cover every potential conflict of interest situation, a potential conflict exists whenever an employee, officer, or director of the Company has an outside interest, direct or indirect, which conflicts with their duty to the Company or adversely affects their judgment in the discharge of their responsibilities to the Company.

Examples of conflicts of interest include receiving money or other benefits from a third party in return for the Company granting a loan to or purchasing property or services from such third party, and advocating a transaction between the Company and another entity in which such person owns stock or otherwise stands to benefit from the transaction at the expense of the Company.

The appearance of a conflict of interest may be just as damaging to our reputation as a real conflict of interest and may be difficult to discern. Our employees, officers and directors are expected to objectively assess their actions periodically to determine whether a reasonable, disinterested observer, a customer, a supplier, a shareholder, an acquaintance, or a government official would have grounds to believe a conflict of interest exists.

Giving and Receiving Gifts. Employees, officers and directors or their close family members should not accept any gift, regardless of its value, that might appear to compromise independent business judgment. Neither should employees, officers or directors give a gift to a customer, vendor, or prospect that might appear to be an attempt to influence them. Gifts include cash, material goods, services, promotional premiums, knowingly accepting a discount, and receipt of a loan.

When the value of the gift is appropriate to an occasion (e.g., holidays), and permitted by law, non-cash gifts may be accepted from, or provided to, customers or suppliers, provided they are valued at $100 or less. Any gift received over such amount should be politely returned or approval from the Chief Executive Officer obtained prior to acceptance. Gifts are permitted under this policy in the following circumstances:

GIFTS OR GRATUITIES TO GOVERNMENT OFFICIALS ARE INAPPROPRIATE, POSSIBLY ILLEGAL AND ARE STRICTLY PROHIBITED.

Business Functions and Entertaining. Meals, refreshments, entertainment, accommodation, or travel arrangements of a reasonable value may be accepted if they are provided in the course of a meeting or occasion, the purpose of which is to hold bona fide business discussions or to foster better relations, and provided that the expense would be paid for by the Company if not paid for by another party.

Customary and reasonable business and related development practices, consisting of appropriate entertainment events, including meals, are not prohibited by this Code. Such activities are prohibited if they are or may appear to be lavish. Frequent entertaining could appear to influence the judgment of the person being entertained. The purchase of tickets to fundraising events sponsored by non-profit organizations is considered a “normal business practice.”

Invitations received by employees and officers that may seem inappropriate should be discussed with the Executive Vice President responsible for your functional area prior to acceptance. In matters involving Executive Vice Presidents or above, such invitations should be discussed with the Chief Executive Officer prior to acceptance. Invitations involving the Chief Executive Officer or a director should be discussed with the Chair of the Nominating and Corporate Governance Committee.

Relationships with Outside Interests. Employees, officers and directors must avoid conflicts and the appearance of conflicts between personal interests and the interests of the Company. Employees, officers, and directors may own securities (e.g., debt or stock) in entities who are competitors or customers, without providing immediate notification to the Company. Employees, officers and directors must not act on behalf of the Company in any transaction involving persons or organizations with which you, or a family member, have any personal, financial, or residual interest without first providing written disclosure of such interest to the CEO, or the Board, as applicable. A family member includes a person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, and brothers and sisters-in-law. The CEO or Board, as applicable, will review any personal disclosures and make a recusal determination promptly and will advise you if additional actions must be taken.Additionally, you must recuse yourself from any decision making process when you believe you or your family’s personal, financial, or residual interest presents a conflict or is sufficient that a conflict could be perceived. Such recusal shall be clearly documented in the minutes of any meeting at which the conflict or appearance of conflict is discussed.

Relationships, other than normal and customary relationships at prevailing terms that an employee, officer or director may have with Company suppliers (for example, home improvement services, security firms, attorneys, lawn services, or automobile repair shops) should always be disclosed in writing to Human Resources prior to its commencement, and must be approved in writing in advance.

Employees and officers who serve in a “financial oversight role” are not permitted to receive any tax services from the Company’s independent auditors. The prohibition extends to the employee or officer’s Immediate Family Members. Immediate Family Member is defined as “spouse, spousal equivalent, or dependents.” The characteristic that identifies a “financial reporting role” is the ability to exercise influence over the contents of the financial statements of the Company or anyone who prepares them. The following roles are among those that meet the criterion: chief executive officer; president; chief financial officer; chief operating officer; general counsel, chief accounting officer; controller; director of internal audit; director of financial reporting, treasurer, and director of internal controls compliance.

Tax services to a board member are permitted provided the Board member does not also function in any of the other financial reporting oversight roles noted immediately above.

Secondary Employment. We do not prohibit other employment; however, full time employees are expected to devote their complete attention and energy to their duties. Employees must notify their immediate supervisor and the Human Resource Officer prior to accepting any outside employment. Officers holding the title of Senior Vice President or higher (“Executive Officer”) must notify the Chief Executive Officer. Outside employment will not be approved which might subject the Company to criticism or which would encroach on working time, interfere with regular

§ Gifts of reasonable value based on a family or personal relationship where that relationship is the obvious motivating factor for the gift;

§ Discounts or rebates on merchandise or services that do not exceed those available to other customers of the merchant;

§ Awards for recognition of service or accomplishments from civic, charitable, educational, or religious organizations. duties, or otherwise affect an individual's effectiveness.

§ Employees are prohibited from outside employment that may appear to create a conflict of interest. This section should not be construed as prohibiting or discouraging an employee from serving as a volunteer at a non-profit organization.

Examples include:

CONFIDENTIALITY AND PRIVACY

Nonpublic Information. Employees are required to maintain the confidentiality of information entrusted to them by the Company and provided by our customers and vendors. Confidential information includes all non-public information that might be of use to competitors, or harmful to us or to our customers, if disclosed. It also includes non-public information about our financial condition, results of operations, business operations, and future prospects. All employees must exercise care not to misuse nonpublic information obtained during their employment, including customer lists, information about our personnel and customers, and business plans and ideas.THE OBLIGATION TO PRESERVE CONFIDENTIAL INFORMATION

CONTINUES EVEN AFTER EMPLOYMENT ENDS.

The obligation to maintain the confidentiality of information may be subject to legal or regulatory requirements to disclose that information. Discuss your concerns with your manager or Human Resource Officer if you have any questions regarding what constitutes confidential information or when such information must be disclosed.

Customer Information Privacy. We protect the confidentiality and security of customer information. The Company has a policy governing Customer Information Privacy and such policy should be referenced for more detailed information. Our Privacy Policy for customer information provides, among other things, that:

OUR PEOPLE

We are committed to treating everyone with respect and dignity. Hostility, harassment, or unwelcome sexual advances are offensive and are not tolerated. We will strive to provide a safe and secure work environment, and to respect and protect the personal information of our employees, officers and directors.

Equal Opportunity. We are an equal opportunity employer, committed to ensuring that our workplace is free from discrimination. As such, we will recruit, hire, train, and promote individuals in accordance with all applicable laws and regulations, without regard to a person’s race, color, creed, religion, age, gender, national origin, citizenship status, marital status, sexual orientation, disability, veteran status, or other category protected by federal, state, or local law.

Harassment-Free Work Environment. One objective of this Code is to discourage unprofessional behavior that compromises trust, the quality of the work environment, or the integrity of decision-making. We prohibit behavior that harasses an employee, officer or director, or customer on the basis of race, color, creed, religion, age, gender, national origin, citizenship status, marital status, sexual orientation, disability, veteran status, or other category protected by federal, state, or local law. Forms of such harassment can include physical, verbal, and nonverbal behavior that harasses, disrupts, or interferes with work performance or in any way creates or contributes to an intimidating, hostile, or offensive work environment. This behavior includes, by way of example only, off-color jokes, threats, and derogatory e-mails or drawings.

· Engaging in any activity that competes with the Company.

· Employment which involves the use of our equipment, supplies, or facilities.

· Employment which involves the preparation, audit or certification of financial statements, tax returns, or other documents upon which we may rely for lending or other decisions. Senior Managers and employees who prepare income tax returns for individuals or entities other than themselves must obtain confirmation that the customer does not intend to use the officer's or employee's work product as part of any transaction with the Company.

· Employment which involves giving investment, legal or other advice, or exercising judgment which is based upon information, reports, or analyses that are accessible from the Company.

· Employment which may reflect adversely on the officer, employee, or the Company.

· Employment under circumstances which may suggest the sponsorship or support of the Company on behalf of the outside employer or an outside organization.

· Employment as an insurance or securities broker, agent or representative.

· Employment as a real estate salesman, broker, agent, or contractor, (except with the prior written approval of Chief Executive Officer).

· We do not sell or rent customers’ personal information.

· We do not release customer information to third parties, except upon a customer’s authorization or when required by law. Employees may not discuss the business affairs of any customer with any other person, except on a strict need-to-know basis

· Third-Party service providers and vendors with access to customer information are required to keep customer information confidential and use it only to provide services to or for the Company.

Similarly, favoritism, belittling others, and verbal outrages undermine the dignity and respect due to all employees, officers and directors. Sexual harassment is one form of conduct that undermines the integrity of the employment relationship. For purposes of this policy, sexual harassment is defined as sexual behavior that is unwelcome, is personally offensive, or creates a hostile, intimidating, or offensive work environment. We will not tolerate sexual harassment of applicants for employment, employees, officers or directors by anyone- employees, officers, directors, vendors, or customers. For additional information, contact your Human Resource Officer.

Health and Safety. Providing a safe and secure work environment is fundamental. Employees, officers and directors are responsible for complying with applicable health and safety rules. Accordingly, each person should take appropriate measures to protect his or her physical security and observe safe and responsible work practices, such as adhering to local building access security procedures, promptly reporting to management any job-related injury or illness, and following security guidelines. Moreover, violence or threats of violence by any employee against any other employee will not be tolerated. Likewise, weapons of any kind must never be brought to our offices or customer locations.

Substance Abuse. Being under the influence of alcohol or illegal drugs or improperly using medicines can diminish one’s ability to do his or her job, and can compromise the safety of others. You should not work in an impaired state or allow substances to interfere with the safety or productivity of those around you. This policy also prohibits the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance on the Company’s premises, in our vehicles, or while conducting Company business.

CODE OF CONDUCT AND ETHICS ADMINISTRATION

(Procedures for receipt, retention, and treatment of complaints received.)

Administration Responsibility. The Human Resource Director is responsible for administering this Code and enforcing the Code for employees and officers. The Audit Committee is responsible for enforcing the Code for senior officers and directors. The Human Resource Director is responsible for conducting Code-related training, maintaining all Code-related records and investigating and resolving all Code-related matters.

Responsibility to Report Code-Related Matters. All persons subject to the Code must report Code-related matters in accordance with the following procedures: Officers and employees must promptly make reports of any Code-related matters to their immediate supervisor and simultaneously to the Human Resource Officer. Supervisors receiving such reports must promptly advise the Human Resource Officer, even when the Human Resource Officer has already been advised. Directors shall promptly make reports of any Code-related matters to the Chief Executive Officer, the Corporate Secretary, or the Chair of the Audit Committee.

Permissible Transactions with the Company and Other Matters Not Involving a Code Violation. The Human Resource Officer shall promptly review all reports of Code-related matters. The Human Resource Officer shall confer with the appropriate officers to determine if the requested transaction or other matter complies with all applicable laws, regulations, and policies. If deemed necessary by the Human Resource Officer, the Human Resource Officer shall seek the advice of our legal counsel. The Human Resource Officer or his or her designee shall promptly advise the filer of the request as to our determination.

Investigation and Resolution of All Code Violations. The Human Resource Officer (or designee approved by the Board of Directors) shall promptly investigate all violations or alleged violations of any provision of the Code. Concerns regarding internal accounting controls, questionable accounting or auditing matters that have been reported to the Human Resource Officer should be forwarded by the Human Resource Officer to the Chair of the Auditing Committee. Any violation or alleged violation of the Code is referred to as a “Code Violation.”

When appropriate, the Human Resource Officer shall promptly report any Code Violation to the Chief Executive Officer with recommendations for resolution, in accordance with the investigation and referral procedures described herein. The Chair of the Audit Committee should be informed of the violation and the response planned or executed.

We will take appropriate action to resolve Code violations. Such resolutions may involve disciplinary actions or other sanctions including termination of employment or dismissal. We will take all reasonable steps to respond to any offense and prevent its recurrence. The procedure for making such a report is as follows:

Prompt Confidential Reporting of Code Violations. Any employee, officer or director who becomes aware of a violation or alleged violation of any provision of this Code, including concerns regarding internal accounting controls, questionable accounting or auditing matters (any such violation or alleged violation of the Code is referred to as “Code Violation”), shall promptly report such violation. To encourage employees to fulfill their obligations under this Code, established procedures under which any employee, officer, or director suspecting that a Code Violation has been or is being committed, may report the facts in a manner that will safeguard the person’s identity to the fullest extent practicable and protect the reporting person against retribution. The procedure for making such a report is as follows:

1. Any employee or officer who becomes aware of a past or present Code Violation is required to promptly report the facts and circumstances to his or her immediate supervisor, and simultaneously to the Human Resource Officer. Once the supervisor has been advised of a Code Violation, the supervisor is required to promptly confirm the matter with the Human Resource Officer. Directors should contact the Chief Executive Officer, the Corporate Secretary, or the Chair of the Audit Committee. The

Audit Committee of the Board of Directors in particular will be notified promptly about any Code Violation regarding accounting or auditing matters as well as the full board at its next regular meeting unless, in the judgment of the CEO, the matter needs to be addressed sooner.

2. An investigation into the reported Code Violation will be conducted promptly by the Human Resource Officer in consultation with the Chief Executive Officer or Audit Committee, as appropriate. Facts and circumstances in the report will be reported so as Employees, officers and directors may also make reference to the Company’s Policy for Whistleblowing Procedures for further guidance regarding confidential reporting procedures.

Employees, officers or directors who willfully fail to report a Code Violation or who fail to cooperate in an investigation of a Code Violation will be subject to disciplinary action, possibly including termination of employment, or in the case of a director, dismissal from the Board.

Request for Waivers. A waiver of a provision of the Code shall be requested whenever there is a question whether any contemplated action will violate the Code. It is anticipated that waivers will be granted only under exceptional or limited circumstances.

The procedure for requesting a waiver is to seek approval from:

Sanctions for Code Violations. Failure to comply with the policies in this Code will result in disciplinary action, ranging from a reprimand to dismissal or removal and possible civil and criminal prosecution. Disciplinary actions will be pursued against all of the following: (a) any director, officer or employee violating this Code; (b) any director, officer or employee deliberately withholding information regarding a Code Violation; (c) the manager or supervisor of a person who has committed an act under (a) or (b), in circumstances where such violation reflected poor supervision or lack of diligence; and (d) any director, officer or employee who retaliates, directly or indirectly, against any employee who reports a suspected Code Violation. In addition, Code Violations may expose the offending employee, officer, or director and the Company to monetary damages, regulatory penalties, and criminal sanctions. We will ensure that all disciplinary actions taken to enforce this Code are applied consistently and in accordance with all applicable laws and regulations.

Retention. Reports documenting completed investigations will be confidentially maintained for no less than one year.

Revisions

The Code of Ethics shall be revised periodically to ensure that it addresses new statutes and contemporary legal issues, as appropriate. The Code of Conduct and Ethics for Employees, Officers, and Directors was approved by the Nominating and Corporate Governance Committee and adopted by the Board of Directors on January 25, 2008, to protect, to the greatest extent possible, the anonymity of the reporting person.

3. If the Human Resource Officer and the Chief Executive Officer are not able to promptly resolve the Code Violation to their mutual satisfaction, the Human Resource Officer and the Chief Executive Officer shall promptly confer with the Audit Committee of the Board of Directors to resolve the Code Violation consistent with this Code and applicable laws and regulations.

4. Illegal or criminal conduct will also be reported to our primary regulators and any law enforcement agencies with jurisdiction consistent with confidentiality and the protection of applicable privacy privileges. We will cooperate fully with such authorities in their prosecution of parties responsible for impermissible, illegal, or criminal conduct.

5. In the event of legal proceedings, the reporting person(s) may be deposed, interviewed, and asked to testify, just as any other person having knowledge of the relevant facts and circumstances would be. We will seek to protect the identity of the reporting person to the greatest extent practicable.

1. The Audit Committee of the Board - if the waiver sought relates to any executive officer (title of Senior Vice President or higher), and any Senior Financial Officer (CEO, CFO and all Accounting, Audit and/or Compliance officers, with the title of Vice President or higher).

2. The Human Resource Officer - if the waiver sought relates to any other employee. The determination shall be made by the employee’s immediate supervisor, in consultation with the Human Resource Officer unless such request is quantitatively or qualitatively material or outside the ordinary course of business, in which case such determination shall be made by the Audit Committee.

3. The decision with respect to the waiver request shall be documented and forwarded to the Human Resource Officer for filing and retention, with a copy to the Audit Committee of the Board of Directors.

4. All waivers of the Code shall be reported promptly by the Audit Committee or Human Resource Officer, as applicable, to the Board of Directors.

5. Waivers shall be publicly disclosed on a timely basis as determined by the Board of Directors in consultation with the Compliance Officer and/or legal counsel.

Approved: March 15, 2012

Your Personal Commitment to Our Code of Conduct and Ethics

All employees, officers and directors of the Company or First Guaranty Bank, are responsible for reading, understanding, and complying with the standards outlined in this Code.

Employees, officer, and directors are required to affirmatively acknowledge receipt, understanding, and compliance with this Code. I acknowledge that I have received and will comply with the Code of Conduct and Ethics for Employees, Officer, and Directors. I understand and agree that the Code of Conduct and Ethics is not an employment contract between the Company or First Guaranty Bank and me. I understand that if I have questions related to the standards of the Code of Conduct and Ethics, I am to discuss them promptly with my Manager.

(Branch or Department), Senior Management, Human Resource Officer, or the Compliance Officer.

Sign here:

Print: ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

Name Title Date

Approved: March 15, 2012

EX-14.4

FIRST GUARANTY BANCSHARES, INC. CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERS

A. INTRODUCTION

This “Code of Ethics for Senior Financial Officers” (“Code”) was approved and adopted by the Board of Directors of First Guaranty Bancshares, Inc. (the “Company”). Its purpose is to ensure that the Company’s Senior Financial Officers are committed to the highest standards of integrity and professionalism when conducting and reporting the financial affairs of the Company. This Code, the text of which is posted on the Company’s Internet Web site at www.fgb.net, supplements the Company’s corporate-wide Code of Ethics that applies to all directors, officers

and employees of the Company.

For the purposes of this Code, the term “Senior Financial Officer” includes each of the following officers of the Company:

• Chief Executive Officer

• Chief Financial Officer

• All Executive Officers

B. STANDARDS OF CONDUCT

Each Senior Financial Officer of the Company shall be bound by the following standards of integrity and professionalism when conducting and reporting the Company’s financial affairs:

• Honest and Ethical Conduct

Each Senior Financial Officer shall engage in honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between his or her personal and professional

relationships.

• Full Disclosure

Each Senior Financial Officer shall, to the best of their knowledge and ability, promote full, fair, accurate, timely and understandable disclosures in reports and documents that the Company files with or submits to the Securities and Exchange Commission (“SEC”), to other regulatory agencies, and in other public communications made by the Company.

• Compliance with Laws, Rules and Regulations

Each Senior Financial Officer shall, to the best of their knowledge and ability, promote full compliance with applicable governmental laws, rules and regulations.

• Reporting of Code Violations

Each Senior Financial Officer shall promptly report any known or suspected violation of this Code to the Company’s Audit Committee of the Board using the confidential “whistleblower” procedures established by the Bank for reporting questionable accounting or auditing practices or other significant business concerns. Where possible and appropriate, the identity of any person who reports a known or suspected violation of this Code as provided herein will be kept anonymous. The Company prohibits retaliation of any kind against individuals who make goodfaith reports of ethical violations or other known or suspected illegal conduct.

• Accountability

Each Senior Financial Officer shall be held accountable for adherence to this Code.

C. AMENDMENTS TO OR WAIVERS OF THIS CODE

Any amendment to or waiver of this Code must be approved by the Company’s Board of Directors. A “waiver of this Code” is defined as a material departure from a provision of this Code. As a general rule, a waiver of this Code will not be approved unless necessary and warranted. The Company will disclose any amendment to or waiver of this Code in the manner required by then-applicable law, rule or listing standard.

XML

Loans, Receivables Past Due (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	$ 6,259,000	$ 5,218,000
90 Days or Greater	24,642,000	23,186,000
Total Past Due	30,901,000	28,404,000
Current	576,341,000	545,339,000
Total Loans	607,242,000	573,743,000
Recorded Investment, 90 Days Accruing	1,054,000	736,000
Unearned income	(1,080,000)	(643,000)
Total loans net of unearned income	606,162,000	573,100,000
Financing Receivable, Recorded Investment, Nonaccrual Status, Floor Rate	225,500,000
Real Estate [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	5,863,000	4,592,000
90 Days or Greater	20,596,000	20,857,000
Total Past Due	26,459,000	25,449,000
Current	442,299,000	439,476,000
Total Loans	468,758,000	464,925,000
Recorded Investment, 90 Days Accruing	1,054,000	728,000
Real Estate [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	141,000	240,000
90 Days or Greater	1,735,000	1,520,000
Total Past Due	1,876,000	1,760,000
Current	53,504,000	76,854,000
Total Loans	55,380,000	78,614,000
Recorded Investment, 90 Days Accruing	0	0
Real Estate [Member] | Farmland [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	120,000	45,000
90 Days or Greater	781,000	562,000
Total Past Due	901,000	607,000
Current	9,742,000	10,970,000
Total Loans	10,643,000	11,577,000
Recorded Investment, 90 Days Accruing	0	0
Real Estate [Member] | One to Four Family [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	2,837,000	2,812,000
90 Days or Greater	5,439,000	5,957,000
Total Past Due	8,276,000	8,769,000
Current	80,495,000	80,433,000
Total Loans	88,771,000	89,202,000
Recorded Investment, 90 Days Accruing	376,000	309,000
Real Estate [Member] | MultiFamily [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	742,000	617,000
90 Days or Greater	0	0
Total Past Due	742,000	617,000
Current	14,753,000	16,297,000
Total Loans	15,495,000	16,914,000
Recorded Investment, 90 Days Accruing	0	0
Real Estate [Member] | Non Farm Non Residential [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	2,023,000	878,000
90 Days or Greater	12,641,000	12,818,000
Total Past Due	14,664,000	13,696,000
Current	283,805,000	254,922,000
Total Loans	298,469,000	268,618,000
Recorded Investment, 90 Days Accruing	678,000	419,000
Non Real Estate [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	396,000	626,000
90 Days or Greater	4,046,000	2,329,000
Total Past Due	4,442,000	2,955,000
Current	134,042,000	105,863,000
Total Loans	138,484,000	108,818,000
Recorded Investment, 90 Days Accruing	0	8,000
Non Real Estate [Member] | Agricultural [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	0	90,000
90 Days or Greater	785,000	315,000
Total Past Due	785,000	405,000
Current	25,496,000	16,933,000
Total Loans	26,281,000	17,338,000
Recorded Investment, 90 Days Accruing	0	0
Non Real Estate [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	279,000	147,000
90 Days or Greater	3,239,000	1,986,000
Total Past Due	3,518,000	2,133,000
Current	84,240,000	65,892,000
Total Loans	87,758,000	68,025,000
Recorded Investment, 90 Days Accruing	0	0
Non Real Estate [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
30 to 89 Days Past Due	117,000	389,000
90 Days or Greater	22,000	28,000
Total Past Due	139,000	417,000
Current	24,306,000	23,038,000
Total Loans	24,445,000	23,455,000
Recorded Investment, 90 Days Accruing	$ 0	$ 8,000

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2012

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

Note 2.  Recent Accounting Pronouncements

In July 2012, the Financial Accounting Standards Board ("FASB") issued ASU No 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, which permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with the FASB Accounting Standards Codification ("ASC") Subtopic 350-30. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. The Company adopted this standard in the fourth quarter of 2011. Adoption of this guidance did not have a material impact on the Company's statements of income and financial condition.

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Borrowings (Details) (USD $)	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Borrowings [Abstract]
Long-term borrowing	$ 1,250,000	$ 3,200,000
Periodic principal payment	50,000
Principal payment frequency	monthly
Additional principal payments	$ 1,500,000
Description of variable rate basis	Wall Street Journal Prime plus 75 basis points
Basis spread on variable rate (in hundredths)	4.00%
Debt maturity date	Apr. 30, 2017
Percentage of interest used secured pledge borrowings (in hundredths)	13.20%
Number of shares used secured pledge borrowings (in shares)	735,745

XML

Goodwill and Other Intangible Assets (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Goodwill and Other Intangible Assets [Abstract]
Goodwill	$ 1,999,000	$ 1,999,000
Mortgage service rights	200,000
Core deposits intangibles	$ 2,300,000	$ 2,600,000

XML

Commitments and Contingencies (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Commitments to extend credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Notional value	$ 22,634	$ 13,264
Unfunded commitment under lines of credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Notional value	76,554	69,522
Commercial and Standby letters of credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Notional value	$ 6,462	$ 6,745

XML

Fair Value (Details) (USD $)	12 Months Ended		9 Months Ended			9 Months Ended
	Dec. 31, 2011	Sep. 30, 2012	Sep. 30, 2012 Significant Unobservable Inputs, Level 3 [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Noninterest Income [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Other Comprehensive Income [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Quoted Prices in Active Markets For Identical Assets, Level 1 [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Quoted Prices in Active Markets For Identical Assets, Level 1 [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Significant Other Observable Inputs, Level 2 [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Significant Other Observable Inputs, Level 2 [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Significant Unobservable Inputs, Level 3 [Member]	Dec. 31, 2011 Fair Value, Measurements, Recurring [Member] Significant Unobservable Inputs, Level 3 [Member]	Sep. 30, 2012 Fair Value, Measurements, Nonrecurring [Member]	Dec. 31, 2011 Fair Value, Measurements, Nonrecurring [Member]	Sep. 30, 2012 Fair Value, Measurements, Nonrecurring [Member] Quoted Prices in Active Markets For Identical Assets, Level 1 [Member]	Dec. 31, 2011 Fair Value, Measurements, Nonrecurring [Member] Quoted Prices in Active Markets For Identical Assets, Level 1 [Member]	Sep. 30, 2012 Fair Value, Measurements, Nonrecurring [Member] Significant Other Observable Inputs, Level 2 [Member]	Dec. 31, 2011 Fair Value, Measurements, Nonrecurring [Member] Significant Other Observable Inputs, Level 2 [Member]	Sep. 30, 2012 Fair Value, Measurements, Nonrecurring [Member] Significant Unobservable Inputs, Level 3 [Member]	Dec. 31, 2011 Fair Value, Measurements, Nonrecurring [Member] Significant Unobservable Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, fair value Disclosure	$ 520,497,000	$ 619,762,000		$ 619,762,000	$ 520,497,000			$ 12,000,000	$ 3,203,000	$ 599,119,000	$ 509,778,000	$ 8,643,000	$ 7,516,000
Equity transfer Level 2 to Level 3, amount	2,000,000
Change in level 3 securities available for sale, municipal bond principle payment			900,000
Total gains included in earnings (or changes in net assets)						3,230,000	0
Impairment loss						0	0
Changes in unrealized gains (losses) relating to assets still held at end of period						0	3,367,000
Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis [Abstract]
Impaired loans measured at fair value	55,534,000	50,494,000												33,577,000	39,850,000	0	0	6,795,000	8,113,000	26,782,000	31,737,000
Other real estate owned measured at fair value														$ 4,435,000	$ 5,709,000	$ 0	$ 0	$ 4,435,000	$ 5,709,000	$ 0	$ 0

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Basis of Presentation

9 Months Ended

Sep. 30, 2012

Basis of Presentation [Abstract]

Basis of Presentation

Note 1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles. The consolidated financial statements and the footnotes of First Guaranty Bancshares, Inc. (the "Company") thereto should be read in conjunction with the audited financial statements and note disclosures for the Company previously filed with the Securities and Exchange Commission in the Company's Annual Report filed on Form 10-K for the year ended December 31, 2011.

The consolidated financial statements include the accounts of First Guaranty Bancshares, Inc. and its wholly owned subsidiary First Guaranty Bank. All significant intercompany balances and transactions have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary for a fair presentation of the consolidated financial statements. Those adjustments are of a normal recurring nature. The results of operations for the three and nine month periods ended September 30, 2012 and 2011 are not necessarily indicative of the results expected for the full year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Material estimates that are susceptible to significant change in the near term are the allowance for loan losses, valuation of goodwill, intangible assets and other purchase accounting adjustments.

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CONSOLIDATED BALANCE SHEETS (unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Cash and cash equivalents:
Cash and due from banks	$ 71,942	$ 43,810
Interest-earning demand deposits with banks	20	2
Federal funds sold	4,931	68,630
Cash and cash equivalents	76,893	112,442
Interest-earning time deposits with banks	754	0
Investment securities:
Available for sale, at fair value	619,762	520,497
Held to maturity, at cost (estimated fair value of $25,222 and $113,197, respectively)	24,976	112,666
Investment securities	644,738	633,163
Federal Home Loan Bank stock, at cost	1,143	643
Loans held for sale	80	0
Loans, net of unearned income	606,162	573,100
Less: allowance for loan losses	9,507	8,879
Net loans	596,655	564,221
Premises and equipment, net	19,664	19,921
Goodwill	1,999	1,999
Intangible assets, net	2,511	2,811
Other real estate, net	4,435	5,709
Accrued interest receivable	6,895	8,128
Other assets	5,467	4,829
Total Assets	1,361,234	1,353,866
Deposits:
Noninterest-bearing demand	192,282	167,925
Interest-bearing demand	297,579	289,408
Savings	60,135	57,452
Time	656,174	692,517
Total deposits	1,206,170	1,207,302
Short-term borrowings	11,774	12,223
Accrued interest payable	3,135	3,509
Long-term borrowing	1,250	3,200
Other liabilities	4,449	1,030
Total Liabilities	1,226,778	1,227,264
Stockholders' Equity
Common stock: $1 par value - authorized 100,600,000 shares; issued 6,294,227	6,294	6,294	[1]
Surplus	39,387	39,387
Treasury stock, at cost, 2,895 and 0 shares, respectively	(54)	0
Retained earnings	41,560	37,019
Accumulated other comprehensive income (loss)	7,834	4,467
Total Stockholders' Equity	134,456	126,602
Total Liabilities and Stockholders' Equity	1,361,234	1,353,866
Series C - Preferred Stock $1,000 par value [Member]
Stockholders' Equity
Series C - $1,000 par value - authorized 39,435 shares; issued and outstanding 39,435 shares	39,435	39,435
Total Stockholders' Equity	$ 39,435	$ 39,435

[1] 2011 common share amounts have been retroactively adjusted to reflect the ten percent stock dividend paid February 24, 2012 to stockholders of record as of February 17, 2012

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited) (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited) [Abstract]
Cash dividends per share (in dollars per share)	$ 0.48	$ 0.44	[1]
Treasury shares purchased, at cost (in shares)	2,895
Common stock issued in acquisition (in shares)		178,619

[1] 2011 common share amounts have been retroactively adjusted to reflect the ten percent stock dividend paid February 24, 2012 to stockholders of record as of February 17, 2012

XML

Recent Accounting Pronouncements (Details)	9 Months Ended
	Sep. 30, 2012
Recent Accounting Pronouncements [Abstract]
Probability in percentage determining threshold for performing test (in hundredths)	5000.00%

XML

Loans (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 607,242	$ 573,743
Percent of category	100.00%	100.00%
Unearned income	(1,080)	(643)
Total loans net of unearned income	606,162	573,100
Fixed and Floating Rate Loans by Maturity and Repricing Frequencies [Abstract]
One year or less	173,273	232,328
One to five years	330,200	259,163
Five to 15 years	66,831	45,284
Over 15 years	13,350	14,518
Subtotal	583,654	551,293
Loans And Leases Receivable Carrying Amount Net Nonaccrual Before Unearned Income	607,242	573,743
Nonaccrual loans	23,588	22,450
Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	468,758	464,925
Percent of category	77.20%	81.00%
Fixed and Floating Rate Loans by Maturity and Repricing Frequencies [Abstract]
Nonaccrual loans	19,542	20,129
Real Estate [Member] | Construction and Land Development [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	55,380	78,614
Percent of category	9.10%	13.70%
Fixed and Floating Rate Loans by Maturity and Repricing Frequencies [Abstract]
Nonaccrual loans	1,735	1,520
Real Estate [Member] | Farmland [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	10,643	11,577
Percent of category	1.80%	2.00%
Fixed and Floating Rate Loans by Maturity and Repricing Frequencies [Abstract]
Nonaccrual loans	781	562
Real Estate [Member] | One to Four Family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	88,771	89,202
Percent of category	14.60%	15.60%
Fixed and Floating Rate Loans by Maturity and Repricing Frequencies [Abstract]
Nonaccrual loans	5,063	5,647
Real Estate [Member] | MultiFamily [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	15,495	16,914
Percent of category	2.60%	2.90%
Fixed and Floating Rate Loans by Maturity and Repricing Frequencies [Abstract]
Nonaccrual loans	0	0
Real Estate [Member] | Non Farm Non Residential [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	298,469	268,618
Percent of category	49.10%	46.80%
Fixed and Floating Rate Loans by Maturity and Repricing Frequencies [Abstract]
Nonaccrual loans	11,963	12,400
Non Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	138,484	108,818
Percent of category	22.80%	19.00%
Fixed and Floating Rate Loans by Maturity and Repricing Frequencies [Abstract]
Nonaccrual loans	4,046	2,321
Non Real Estate [Member] | Agricultural [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	26,281	17,338
Percent of category	4.30%	3.00%
Fixed and Floating Rate Loans by Maturity and Repricing Frequencies [Abstract]
Nonaccrual loans	785	315
Non Real Estate [Member] | Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	87,758	68,025
Percent of category	14.50%	11.90%
Fixed and Floating Rate Loans by Maturity and Repricing Frequencies [Abstract]
Nonaccrual loans	3,239	1,986
Non Real Estate [Member] | Consumer and Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	24,445	23,455
Percent of category	4.00%	4.10%
Fixed and Floating Rate Loans by Maturity and Repricing Frequencies [Abstract]
Nonaccrual loans	22	20
Fixed Rate Loans [Member]
Fixed and Floating Rate Loans by Maturity and Repricing Frequencies [Abstract]
One year or less	29,544	108,276
One to five years	208,689	160,191
Five to 15 years	22,422	8,393
Over 15 years	7,273	8,464
Subtotal	267,928	285,324
Floating Rate Loans [Member]
Fixed and Floating Rate Loans by Maturity and Repricing Frequencies [Abstract]
One year or less	143,729	124,052
One to five years	121,511	98,972
Five to 15 years	44,409	36,891
Over 15 years	6,077	6,054
Subtotal	$ 315,726	$ 265,969

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash Flows From Operating Activities
Net income	$ 9,048	$ 6,954
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	3,014	6,855
Depreciation and amortization	1,561	1,240
Amortization/(accretion) of investments	1,419	703
Gain on acquisition	0	(1,391)
Net gains on securities	(3,230)	(3,102)
Net losses (gains) on sale of assets	138	(112)
Other than temporary impairment charge on securities	0	97
ORE writedowns and losses on disposition	937	287
FHLB stock dividends	(1)	(3)
Net increase in loans held for sale	(80)	(156)
Change in other assets and liabilities, net	1,809	3,518
Net Cash Provided By Operating Activities	14,615	14,890
Cash Flows From Investing Activities
Funds invested in certificates of deposit	(747)	0
Proceeds from maturities and calls of HTM securities	128,640	151,474
Proceeds from maturities, calls and sales of AFS securities	621,340	369,196
Funds invested in HTM securities	(40,901)	(165,268)
Funds invested in AFS securities	(713,748)	(442,166)
Proceeds from sale/redemption of Federal Home Loan Bank stock	3,441	1,796
Funds invested in Federal Home Loan Bank stock	(3,940)	(1,440)
Net (increase) decrease in loans	(39,666)	19,875
Purchase of premises and equipment	(1,214)	(1,812)
Proceeds from sales of premises and equipment	168	0
Proceeds from sales of other real estate owned	4,555	445
Cash received in excess of cash paid in acquisition	0	4,992
Net Cash Used In Investing Activities	(42,072)	(62,908)
Cash Flows From Financing Activities
Net (decrease) increase in deposits	(1,132)	86,682
Net decrease in federal funds purchased and short-term borrowings	(449)	(8,387)
Proceeds from long-term borrowings	0	3,500
Repayment of long-term borrowings	(1,950)	(3,650)
Repurchase of preferred stock	0	(21,128)
Proceeds from issuance of preferred stock	0	39,435
Purchase of treasury stock	(54)	0
Dividends paid	(4,507)	(4,257)
Net Cash (Used In) Provided By Financing Activities	(8,092)	92,195
Net (Decrease) Increase In Cash and Cash Equivalents	(35,549)	44,177
Cash and Cash Equivalents at the Beginning of the Period	112,442	44,837
Cash and Cash Equivalents at the End of the Period	76,893	89,014
Noncash Activities:
Loans transferred to foreclosed assets	4,218	4,797
Common stock issued in acquisition	0	3,030
Cash Paid During The Period:
Interest on deposits and borrowed funds	10,467	11,235
Income taxes	$ 4,900	$ 2,850

XML

CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Investment securities:
Held to maturity investments, fair value	$ 25,222	$ 113,197
Preferred stock:
Preferred stock, par value (in dollars per share)	$ 1,000	$ 1,000
Preferred stock, shares authorized (in shares)	39,435	39,435
Preferred stock, shares issued (in shares)	39,435	39,435
Preferred stock, shares outstanding (in shares)	39,435	39,435
Common stock:
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized (in shares)	100,600,000	100,600,000
Common stock, shares issued (in shares)	6,294,227	6,294,227
Treasury Stock (in shares)	2,895	0

XML

Securities (Tables)

9 Months Ended

Sep. 30, 2012

Securities [Abstract]

Schedule of available-for-sale securities reconciliation

A summary comparison of securities by type at September 30, 2012 and December 31, 2011 is shown below.

	September 30, 2012									December 31, 2011
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale:
U.S. Treasury Bills	$	12,000	$	-	$	-		$	12,000	$	-	$	-	$	-		$	-
U.S. Government Agencies		402,125		1,571		(57	)		403,639		319,113		1,422		(328	)		320,207
Corporate debt securities		172,661		9,485		(285	)		181,861		171,927		6,250		(1,222	)		176,955
Mutual funds or other equity securities		2,564		47		-			2,611		2,773		38		-			2,811
Municipal bonds		18,548		1,103		-			19,651		19,916		609		(1	)		20,524
Total available for sale securities	$	607,898	$	12,206	$	(342	)	$	619,762	$	513,729	$	8,319	$	(1,551	)	$	520,497
Held to maturity:
U.S. Government Agencies	$	24,976	$	246	$	-		$	25,222	$	112,666	$	535	$	(4	)	$	113,197
Total held to maturity securities	$	24,976	$	246	$	-		$	25,222	$	112,666	$	535	$	(4	)	$	113,197

Investments Classified by Contractual Maturity Date

The scheduled maturities of securities at September 30, 2012 and December 31, 2011, by contractual maturity, are shown below. As evidenced by the following table, the Company has substantially decreased the contractual maturity of its securities investment portfolio in 2012. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2012				December 31, 2011
(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available For Sale:
Due in one year or less	$	30,543	$	30,863	$	13,267	$	13,505
Due after one year through five years		132,852		135,765		59,897		61,320
Due after five years through 10 years		332,965		339,828		214,467		218,280
Over 10 years		111,538		113,306		226,098		227,392
Total available for sale securities	$	607,898	$	619,762	$	513,729	$	520,497
Held to Maturity:
Due in one year or less	$	-	$	-	$	-	$	-
Due after one year through five years		4,004		4,010		10,015		10,157
Due after five years through 10 years		20,972		21,212		50,535		50,828
Over 10 years		-		-		52,116		52,212
Total held to maturity securities	$	24,976	$	25,222	$	112,666	$	113,197

Schedule of Unrealized Loss on Investments

The following is a summary of the fair value of securities with gross unrealized losses and an aging of those gross unrealized losses at September 30, 2012.

	Less Than 12 Months					12 Months or More					Total
(in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Available for sale:
U.S. Government Agencies	$	38,083	$	(57	)	$	-	$	-		$	38,083	$	(57	)
Corporate debt securities		6,201		(78	)		2,487		(207	)		8,688		(285	)
Mutual funds or other equity securities		-		-			-		-			-		-
Municipals		-		-			-		-			-		-
Total available for sale securities	$	44,284	$	(135	)	$	2,487	$	(207	)	$	46,771	$	(342	)
Held to maturity:
U.S. Government Agencies	$	-	$	-		$	-	$	-		$	-	$	-
Total held to maturity securities	$	-	$	-		$	-	$	-		$	-	$	-

Schedule of exposure to investment securities issuers that exceeded 10 percent of stockholder's equity

At September 30, 2012, the Company's exposure to investment securities issuers that exceeded 10% of stockholders' equity as follows:

	At September 30, 2012
(in thousands)	Amortized Cost		Fair Value
Federal Home Loan Bank (FHLB)	$	108,002	$	108,247
Federal Home Loan Mortgage Corporation (Freddie Mac-FHLMC)		86,849		87,488
Federal National Mortgage Association (Fannie Mae-FNMA)		118,323		118,600
Federal Farm Credit Bank (FFCB)		113,926		114,525
Total	$	427,100	$	428,860

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 09, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	First Guaranty Bancshares, Inc.
Entity Central Index Key	0001408534
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		6,291,332
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012

XML

Loans (Tables)

9 Months Ended

Sep. 30, 2012

Loans [Abstract]

Financing Receivables

The following table summarizes the components of the Company's loan portfolio as of September 30, 2012 and December 31, 2011:

	September 30, 2012					December 31, 2011
(in thousands)	Balance			As % of Category		Balance			As % of Category
Real Estate:
Construction & land development	$	55,380		9.1	%	$	78,614		13.7	%
Farmland		10,643		1.8	%		11,577		2.0	%
1- 4 Family		88,771		14.6	%		89,202		15.6	%
Multifamily		15,495		2.6	%		16,914		2.9	%
Non-farm non-residential		298,469		49.1	%		268,618		46.8	%
Total Real Estate		468,758		77.2	%		464,925		81.0	%
Non-real Estate:
Agricultural		26,281		4.3	%		17,338		3.0	%
Commercial and industrial		87,758		14.5	%		68,025		11.9	%
Consumer and other		24,445		4.0	%		23,455		4.1	%
Total Non-real Estate		138,484		22.8	%		108,818		19.0	%
Total loans before unearned income		607,242		100.0	%		573,743		100.0	%
Less: Unearned income		(1,080	)				(643	)
Total loans net of unearned income	$	606,162				$	573,100

Schedule of Financing Receivables, Minimum Payments

The following table summarizes fixed and floating rate loans by contractual maturity as of September 30, 2012 and December 31, 2011 unadjusted for scheduled principal payments, prepayments, or repricing opportunities. The average life of the loan portfolio may be substantially less than the contractual terms when these adjustments are considered.

	September 30, 2012							December 31, 2011
(in thousands)	Fixed		Floating		Total			Fixed		Floating		Total
One year or less	$	29,544	$	143,729	$	173,273		$	108,276	$	124,052	$	232,328
One to five years		208,689		121,511		330,200			160,191		98,972		259,163
Five to 15 years		22,422		44,409		66,831			8,393		36,891		45,284
Over 15 years		7,273		6,077		13,350			8,464		6,054		14,518
Total (excluding nonaccrual loans)	$	267,928	$	315,726		583,654		$	285,324	$	265,969		551,293
Nonaccrual loans						23,588							22,450
Total loans before unearned income						607,242							573,743
Less: Unearned income						(1,080	)						(643	)
Total loans net of unearned income					$	606,162						$	573,100

Past Due Financing Receivables

The following tables present the age analysis of past due loans at September 30, 2012 and December 31, 2011:

	September 30, 2012
(in thousands)	30-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Loans			Recorded Investment 90 Days Accruing
Real Estate:
Construction & land development	$	141	$	1,735	$	1,876	$	53,504	$	55,380		$	-
Farmland		120		781		901		9,742		10,643			-
1 - 4 family		2,837		5,439		8,276		80,495		88,771			376
Multifamily		742		-		742		14,753		15,495			-
Non-farm non-residential		2,023		12,641		14,664		283,805		298,469			678
Total Real Estate		5,863		20,596		26,459		442,299		468,758			1,054
Non-Real Estate:
Agricultural		-		785		785		25,496		26,281			-
Commercial and industrial		279		3,239		3,518		84,240		87,758			-
Consumer and other		117		22		139		24,306		24,445			-
Total Non-Real Estate		396		4,046		4,442		134,042		138,484			-
Total loans before unearned income	$	6,259	$	24,642	$	30,901	$	576,341		607,242		$	1,054
Less: unearned income										(1,080	)
Total loans net of unearned income									$	606,162

	December 31, 2011
(in thousands)	30-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Loans			Recorded Investment 90 Days Accruing
Real estate:
Construction & land development	$	240	$	1,520	$	1,760	$	76,854	$	78,614		$	-
Farmland		45		562		607		10,970		11,577			-
1 - 4 family		2,812		5,957		8,769		80,433		89,202			309
Multifamily		617		-		617		16,297		16,914			-
Non-farm non-residential		878		12,818		13,696		254,922		268,618			419
Total Real Estate		4,592		20,857		25,449		439,476		464,925			728
Non-Real Estate:
Agricultural		90		315		405		16,933		17,338			-
Commercial and industrial		147		1,986		2,133		65,892		68,025			-
Consumer and other		389		28		417		23,038		23,455			8
Total Non-Real Estate		626		2,329		2,955		105,863		108,818			8
Total loans before unearned income	$	5,218	$	23,186	$	28,404	$	545,339		573,743		$	736
Less: unearned income										(643	)
Total loans net of unearned income									$	573,100

Schedule of Financing Receivables, Non Accrual Status

The following is a summary of nonaccrual loans by class at September 30, 2012 and December 31, 2011:

(in thousands)	September 30, 2012		December 31, 2011
Real Estate:
Construction & land development	$	1,735	$	1,520
Farmland		781		562
1 - 4 family		5,063		5,647
Multifamily		-		-
Non-farm non-residential		11,963		12,400
Total Real Estate		19,542		20,129
Non-real Estate:
Agricultural		785		315
Commercial and industrial		3,239		1,986
Consumer and other		22		20
Total Non-Real Estate		4,046		2,321
Total Nonaccrual Loans	$	23,588	$	22,450

Financing Receivable Credit Quality Indicators

The following table identifies the commercial and consumer credit exposure of the loan portfolio by specific credit ratings at September 30, 2012 and December 31, 2011:

	September 30, 2012											December 31, 2011
(in thousands)	Pass		Special Mention		Substandard		Doubtful		Total			Pass		Special Mention		Substandard		Doubtful		Total
Real Estate:
Construction & land development	$	40,169	$	4,757	$	10,454	$	-	$	55,380		$	67,602	$	82	$	10,930	$	-	$	78,614
Farmland		10,099		75		469		-		10,643			11,485		-		92		-		11,577
1 - 4 family		72,510		8,425		7,836		-		88,771			80,053		1,770		7,379		-		89,202
Multifamily		8,173		-		7,322		-		15,495			9,545		-		7,369		-		16,914
Non-farm non-residential		253,285		16,712		28,472		-		298,469			235,448		372		32,798		-		268,618
Total real estate		384,236		29,969		54,553		-		468,758			404,133		2,224		58,568		-		464,925
Non-Real Estate:
Agricultural		25,800		56		425		-		26,281			17,304		-		34		-		17,338
Commercial and industrial		79,238		3,273		5,247		-		87,758			65,553		93		2,379		-		68,025
Consumer and other		24,275		104		66		-		24,445			23,345		43		67		-		23,455
Total Non-Real Estate		129,313		3,433		5,738		-		138,484			106,202		136		2,480		-		108,818
Total loans before unearned income	$	513,549	$	33,402	$	60,291	$	-		607,242		$	510,335	$	2,360	$	61,048	$	-		573,743
Less: unearned income										(1,080	)										(643	)
Total loans net of unearned income									$	606,162										$	573,100

Impaired Financing Receivables

The Company has loans that were acquired in the acquisition of Greensburg Bancshares, for which there was, at acquisition, evidence of deterioration of credit quality since origination and for which it is probable, at acquisition, that all contractually required payments would not be collected. These loans are subject to ASC Topic 310-30. The carrying amount of those loans is included in the balance sheet amounts of loans receivable at September 30, 2012. The amounts of loans subject to ASC Topic 310-30 at September 30, 2012 and December 31, 2011 are as follows:

	September 30, 2012				December 31, 2011
(in thousands)	Contractual Amount		Carrying Value		Contractual Amount		Carrying Value
Real Estate:
Construction & land development	$	-	$	-	$	536	$	301
Farmland		-		-		-		-
1 - 4 family		190		190		704		573
Multifamily		-		-		-		-
Non-farm non-residential		130		130		352		352
Total real estate		320	$	320		1,592		1,226
Non-real Estate:
Agricultural		-		-		-		-
Commercial and industrial		-		-		-		-
Consumer and other		-		-		-		-
Total Non-Real Estate		-		-		-		-
Total	$	320	$	320	$	1,592	$	1,226

XML

CONSOLIDATED STATEMENTS OF INCOME (unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended			9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011		Sep. 30, 2012	Sep. 30, 2011
Interest Income:
Loans (including fees)	$ 8,903	$ 9,230		$ 26,537	$ 25,930
Loans held for sale	0	2		1	8
Deposits with other banks	20	13		56	35
Securities (including FHLB stock)	4,172	4,707		15,110	14,504
Federal funds sold	2	5		10	14
Total Interest Income	13,097	13,957		41,714	40,491
Interest Expense:
Demand deposits	349	239		1,050	644
Savings deposits	14	15		40	37
Time deposits	2,782	3,607		8,905	10,637
Borrowings	25	36		98	50
Total Interest Expense	3,170	3,897		10,093	11,368
Net Interest Income	9,927	10,060		31,621	29,123
Less: Provision for loan losses	909	3,504		3,014	6,855
Net Interest Income after Provision for Loan Losses	9,018	6,556		28,607	22,268
Noninterest Income:
Service charges, commissions and fees	1,180	1,235		3,565	3,352
Net gains on securities	1,747	885		3,230	3,102
Loss on securities impairment	0	0		0	(97)
Net gains (losses) on sale of loans	(20)	10		(47)	106
Gain on acquisition	0	1,391		0	1,391
Other	424	443		1,234	1,081
Total Noninterest Income	3,331	3,964		7,982	8,935
Noninterest Expense:
Salaries and employee benefits	3,394	3,380		10,125	9,363
Occupancy and equipment expense	963	942		2,818	2,552
Other	3,454	3,533		9,995	9,263
Total Noninterest Expense	7,811	7,855		22,938	21,178
Income Before Income Taxes	4,538	2,665		13,651	10,025
Less: Provision for income taxes	1,505	500		4,603	3,071
Net Income	3,033	2,165		9,048	6,954
Preferred Stock Dividends	(493)	(768)		(1,479)	(1,433)
Income Available to Common Shareholders	$ 2,540	$ 1,397		$ 7,569	$ 5,521
Per Common Share:
Earnings (in dollars per share)	$ 0.40	$ 0.22	[1]	$ 1.20	$ 0.89	[1]
Cash dividends paid (in dollars per share)	$ 0.16	$ 0.15	[1]	$ 0.48	$ 0.44	[1]
Weighted Average Common Shares Outstanding (in shares)	6,292,479	6,294,227	[1]	6,293,367	6,175,802	[1]

[1] 2011 common share amounts have been retroactively adjusted to reflect the ten percent stock dividend paid February 24, 2012 to stockholders of record as of February 17, 2012

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Allowance for Loan Losses

9 Months Ended

Sep. 30, 2012

Allowance for Loan Losses [Abstract]

Allowance for Loan Losses

Note 5. Allowance for Loan Losses

The allowance for loan losses is reviewed by the Company's management on a monthly basis and additions thereto are recorded pursuant to the results of such reviews. In assessing the allowance, several internal and external factors that might impact the performance of individual loans are considered. These factors include, but are not limited to, economic conditions and their impact upon borrowers' ability to repay loans, respective industry trends, borrower estimates and independent appraisals. Periodic changes in these factors impact the assessment of each loan and its overall impact on the allowance for loan losses.

The monitoring of credit risk also extends to unfunded credit commitments, such as unused commercial credit lines and letters of credit. A reserve is established as needed for estimates of probable losses on such commitments.

A summary of changes in the allowance for loan losses, by portfolio type, for the nine months ended September 30, 2012 and 2011 is as follows:

	As of September 30, 2012
	Real Estate Loans:														Non-Real Estate Loans:
(in thousands)	Construction and Land Development			Farmland		1-4 Family			Multi-family			Non-farm non-residential			Agricultural			Commercial and Industrial			Consumer and other			Unallocated			Total
Allowance for Credit Losses:
Beginning balance (12/31/11)	$	1,002		$	65	$	1,917		$	780		$	2,980		$	125		$	1,407		$	314		$	289		$	8,879
Charge-offs		(58	)		-		(1,409	)		(187	)		(459	)		(27	)		(455	)		(356	)		-			(2,951	)
Recoveries		13			1		27			-			106			1			212			205			-			565
Provision		228			15		1,547			(162	)		818			(40	)		508			137			(37	)		3,014
Ending Balance	$	1,185		$	81	$	2,082		$	431		$	3,445		$	59		$	1,672		$	300		$	252		$	9,507

	As of September 30, 2011
	Real Estate Loans:													Non-Real Estate Loans:
(in thousands)	Construction and Land Development			Farmland		1-4 Family			Multi-family		Non-farm non-residential			Agricultural			Commercial and Industrial			Consumer and other			Unallocated			Total
Allowance for Credit Losses:
Beginning balance (12/31/10)	$	977		$	46	$	1,891		$	487	$	3,423		$	80		$	510		$	390		$	513		$	8,317
Charge-offs		(935	)		-		(1,233	)		-		(3,790	)		(20	)		(1,596	)		(486	)		-			(8,060	)
Recoveries		1			-		95			-		12			3			319			145			17			592
Provision		410			15		815			47		2,833			126			2,790			220			(401	)		6,855
Ending Balance	$	453		$	61	$	1,568		$	534	$	2,478		$	189		$	2,023		$	269		$	129		$	7,704

The following is a breakdown of loans individually and collectively evaluated for impairment and the corresponding allowance by loan category at September 30, 2012 and December 31, 2011.

	September 30, 2012
	Real Estate Loans:										Non-Real Estate Loans:
(in thousands)	Construction and Land Development		Farmland		1-4 Family		Multi-family		Non-farm non-residential		Agricultural		Commercial and Industrial		Consumer and other		Unallocated		Total
Allowance individually evaluated for impairment	$	512	$	-	$	279	$	426	$	1,182	$	-	$	20	$	-	$	-	$	2,419
Allowance collectively evaluated for impairment		673		81		1,803		5		2,263		59		1,652		300		252		7,088
Allowance at September 30, 2012	$	1,185	$	81	$	2,082	$	431	$	3,445	$	59	$	1,672	$	300	$	252	$	9,507
Loans individually evaluated for impairment	$	7,396	$	-	$	2,149	$	7,322	$	25,416	$	-	$	4,431	$	-	$	-	$	46,714
Loans collectively evaluated for impairment		47,984		10,643		86,622		8,173		273,053		26,281		83,327		24,445		-		560,528
Loans at September 30, 2012 (before unearned income)	$	55,380	$	10,643	$	88,771	$	15,495	$	298,469	$	26,281	$	87,758	$	24,445	$	-	$	607,242
Unearned income																				(1,080	)
Total loans net of unearned income																			$	606,162

	December 31, 2011
	Real Estate Loans:										Non-Real Estate Loans:
(in thousands)	Construction and Land Development		Farmland		1-4 Family		Multi-family		Non-farm non-residential		Agricultural		Commercial and Industrial		Consumer and other		Unallocated		Total
Allowance individually evaluated for impairment	$	139	$	-	$	392	$	701	$	1,224	$	-	$	-	$	-	$	-	$	2,456
Allowance collectively evaluated for impairment		863		65		1,525		79		1,756		125		1,407		314		289		6,423
Allowance at December 31, 2011	$	1,002	$	65	$	1,917	$	780	$	2,980	$	125	$	1,407	$	314	$	289	$	8,879
Loans individually evaluated for impairment	$	7,998	$	-	$	3,591	$	7,369	$	31,397	$	-	$	738	$	-	$	-	$	51,093
Loans collectively evaluated for impairment		70,616		11,577		85,611		9,545		237,221		17,338		67,287		23,455		-		522,650
Loans at December 31, 2011 (before unearned income)	$	78,614	$	11,577	$	89,202	$	16,914	$	268,618	$	17,338	$	68,025	$	23,455	$	-	$	573,743
Unearned income																				(643	)
Total loans net of unearned income																			$	573,100

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by Management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price or the fair value of the collateral if the loan is collateral dependent. As an administrative matter, this process is only applied to impaired loans or relationships in excess of $250,000.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, individual consumer and residential loans are not separately identified for impairment disclosures, unless such loans are the subject of a restructuring agreement.

The following is a summary of impaired loans by class at September 30, 2012:

	At September 30, 2012
(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Cash Basis
Impaired Loans with no related allowance:
Real estate:
Construction & land development	$	900	$	949	$	-	$	923	$	50	$	26
Farmland		-		-		-		-		-		-
1 - 4 family		1,074		1,734		-		1,905		124		48
Multifamily		-		-		-		-		-		-
Non-farm non-residential		7,228		7,426		-		9,643		1,395		1,335
Total Real Estate		9,202		10,109		-		12,471		1,569		1,409
Non-Real Estate:
Agricultural		-		-		-		-		-		-
Commercial and industrial		3,935		3,935		-		165		31		23
Consumer and other		-		-		-		-		-		-
Total Non-Real Estate		3,935		3,935		-		165		31		23
Total Impaired Loans with no related allowance	$	13,137	$	14,044	$	-	$	12,636	$	1,600	$	1,432
Impaired Loans with an allowance recorded:
Real estate:
Construction & land development	$	6,496	$	6,496	$	512	$	6,601	$	604	$	609
Farmland		-		-		-		-		-		-
1 - 4 family		1,075		1,234		279		1,161		80		77
Multifamily		7,322		7,322		426		7,367		618		627
Non-farm non-residential		18,188		20,902		1,182		20,866		1,232		1,363
Total real estate		33,081		35,954		2,399		35,995		2,534		2,676
Non-Real Estate:
Agricultural		-		-		-		-		-		-
Commercial and industrial		496		496		20		743		19		-
Consumer and other		-		-		-		-		-		-
Total Non-Real Estate		496		496		20		743		19		-
Total Impaired Loans with an allowance recorded	$	33,577	$	36,450	$	2,419	$	36,738	$	2,553	$	2,676
Total Impaired Loans	$	46,714	$	50,494	$	2,419	$	49,374	$	4,153	$	4,108

The following is a summary of impaired loans by class at December 31, 2011:

	At December 31, 2011
(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Cash Basis
Impaired Loans with no related allowance:
Real estate:
Construction & land development	$	937	$	960	$	-	$	634	$	91	$	64
Farmland		-		-		-		-		-		-
1 - 4 family		858		1,192		-		2,388		218		32
Multifamily		-		-		-		-		-		-
Non-farm non-residential		8,710		10,708		-		11,549		824		409
Total Real Estate		10,505		12,860		-		14,571		1,133		505
Non-Real Estate:
Agricultural		-		-		-		-		-		-
Commercial and industrial		738		1,737		-		2,986		238		102
Consumer and other		-		-		-		-		-		-
Total Non-Real Estate		738		1,737		-		2,986		238		102
Total Impaired Loans with no related allowance	$	11,243	$	14,597	$	-	$	17,557	$	1,371	$	607
Impaired Loans with an allowance recorded:
Real estate:
Construction & land development	$	7,061	$	7,061	$	139	$	7,243	$	477	$	376
Farmland		-		-		-		-		-		-
1 - 4 family		2,733		2,870		392		1,127		57		56
Multifamily		7,369		7,369		701		6,347		288		333
Non-farm non-residential		22,687		23,637		1,224		21,180		1,261		815
Total real estate		39,850		40,937		2,456		35,897		2,083		1,580
Non-Real Estate:
Agricultural		-		-		-		-		-		-
Commercial and industrial		-		-		-		-		-		-
Consumer and other		-		-		-		-		-		-
Total Non-Real Estate		-		-		-		-		-		-
Total Impaired Loans with an allowance recorded	$	39,850	$	40,937	$	2,456	$	35,897	$	2,083	$	1,580
Total Impaired Loans	$	51,093	$	55,534	$	2,456	$	53,454	$	3,454	$	2,187

Troubled Debt Restructurings

A Troubled Debt Restructuring ("TDR") is considered such if the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider. The modifications to the Company's TDRs were concessions on the interest rate charged. The effect of the modifications to the Company was a reduction in interest income. These loans have an allocated reserve in the Company's reserve for loan losses. For the first nine months of 2012, there were no loans restructured in a troubled debt restructuring.

The following table identifies the Troubled Debt Restructurings as of September 30, 2012 and September 30, 2011:

Troubled Debt Restructurings	September 30, 2012								September 30, 2011
	Accruing Loans								Accruing Loans
(in thousands)	Current		30-89 Days Past Due		Nonaccrual		Total TDRs		Current		30-89 Days Past Due		Nonaccrual		Total TDRs
Real Estate:
Construction & land development	$	2,601	$	-	$	-	$	2,601	$	2,602	$	235	$	-	$	2,837
Farmland		-		-		-		-		-		-		-		-
1-4 Family		-		-		1,323		1,323		1,693		-		-		1,693
Multifamily		5,965		-		-		5,965		6,018		-		-		6,018
Non-farm non residential		6,106		679		-		6,785		6,939		-		-		6,939
Total Real Estate		14,672		679		1,323		16,674		17,252		235		-		17,487
Non-Real Estate:
Agricultural		-		-		-		-		-		-		-		-
Commercial and industrial		-		-		-		-		-		-		-		-
Consumer and other		-		-		-		-		-		-		-		-
Total Non-Real Estate		-		-		-		-		-		-		-		-
Total	$	14,672	$	679	$	1,323	$	16,674	$	17,252	$	235	$	-	$	17,487

The Company did not restructure any loans considered to be a troubled debt restructuring in the first nine months of 2012. Information about the Company's TDRs occurring in the nine month period ended September 30, 2011 is presented in the following table.

Troubled Debt Restructurings	September 30, 2012					September 30, 2011
(in thousands)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real Estate:
Construction & land development	-	$	-	$	-	5	$	2,837	$	2,837
Farmland	-		-		-	-		-		-
1-4 Family	-		-		-	1		1,693		1,693
Multifamily	-		-		-	1		6,018		6,018
Non-farm non residential	-		-		-	4		6,939		6,939
Total real estate	-		-		-	11		17,487		17,487
Non-Real Estate:
Agricultural	-		-		-	-		-		-
Commercial and industrial	-		-		-	-		-		-
Consumer and other	-		-		-	-		-		-
Total Non-Real Estate	-		-		-	-		-		-
Total	-	$	-	$	-	11	$	17,487	$	17,487

The following is a summary of the TDRs that subsequently defaulted after restructuring during the previous twelve months.

Troubled Debt Restructurings that subsequently defaulted
(in thousands)	Number of Contracts	Recorded Investment
Real Estate:
Construction & land development	-	$	-
Farmland	-		-
1-4 Family	3		1,322
Multifamily	-		-
Non-farm non residential	-		-
Total real estate	3		1,322
Non-Real Estate:
Agricultural	-		-
Commercial and industrial	-		-
Consumer and other	-		-
Total Non-Real Estate	-		-
Total	3	$	1,322

The following table discloses TDR activity for the nine months ended September 30, 2012.

	Real Estate Loans:														Non-Real Estate Loans:
(in thousands)	Construction and Land Development			Farmland		1-4 family			Multi-family			Non-farm non-residential			Agricultural		Commercial and Industrial		Consumer and other		Total
Beginning balance of TDRs (12/31/2011)	$	2,840		$	-	$	1,694		$	6,015		$	6,998		$	-	$	-	$	-	$	17,547
New TDRs		-			-		-			-			-			-		-		-		-
Charge-offs post-modification		-			-		(619	)		-			-			-		-		-		(619
Paydowns		-			-		-			(50	)		(380	)		-		-		-		(430
Construction to permanent financing		(239	)		-		239			-			-			-		-		-		-
Other[1]		-			-		9			-			167			-		-		-		176
Ending balance of TDRs (9/30/2012)	$	2,601		$	-	$	1,323		$	5,965		$	6,785		$	-	$	-	$	-	$	16,674
(1)Other includes additions to the balances of TDRs to account for the expenses incurred by the Company for items such as insurance and taxes in protecting the Company's interest.

XML

Loans

9 Months Ended

Sep. 30, 2012

Loans [Abstract]

Loans

Note 4. Loans

The following table summarizes the components of the Company's loan portfolio as of September 30, 2012 and December 31, 2011:

	September 30, 2012					December 31, 2011
(in thousands)	Balance			As % of Category		Balance			As % of Category
Real Estate:
Construction & land development	$	55,380		9.1	%	$	78,614		13.7	%
Farmland		10,643		1.8	%		11,577		2.0	%
1- 4 Family		88,771		14.6	%		89,202		15.6	%
Multifamily		15,495		2.6	%		16,914		2.9	%
Non-farm non-residential		298,469		49.1	%		268,618		46.8	%
Total Real Estate		468,758		77.2	%		464,925		81.0	%
Non-real Estate:
Agricultural		26,281		4.3	%		17,338		3.0	%
Commercial and industrial		87,758		14.5	%		68,025		11.9	%
Consumer and other		24,445		4.0	%		23,455		4.1	%
Total Non-real Estate		138,484		22.8	%		108,818		19.0	%
Total loans before unearned income		607,242		100.0	%		573,743		100.0	%
Less: Unearned income		(1,080	)				(643	)
Total loans net of unearned income	$	606,162				$	573,100

The following table summarizes fixed and floating rate loans by contractual maturity as of September 30, 2012 and December 31, 2011 unadjusted for scheduled principal payments, prepayments, or repricing opportunities. The average life of the loan portfolio may be substantially less than the contractual terms when these adjustments are considered.

	September 30, 2012							December 31, 2011
(in thousands)	Fixed		Floating		Total			Fixed		Floating		Total
One year or less	$	29,544	$	143,729	$	173,273		$	108,276	$	124,052	$	232,328
One to five years		208,689		121,511		330,200			160,191		98,972		259,163
Five to 15 years		22,422		44,409		66,831			8,393		36,891		45,284
Over 15 years		7,273		6,077		13,350			8,464		6,054		14,518
Total (excluding nonaccrual loans)	$	267,928	$	315,726		583,654		$	285,324	$	265,969		551,293
Nonaccrual loans						23,588							22,450
Total loans before unearned income						607,242							573,743
Less: Unearned income						(1,080	)						(643	)
Total loans net of unearned income					$	606,162						$	573,100

The majority of floating rate loans have interest rate floors. Of the floating rate loans, $225.5 million were at the floor rate as of September 30, 2012. Nonaccrual loans have been excluded.

The following tables present the age analysis of past due loans at September 30, 2012 and December 31, 2011:

	September 30, 2012
(in thousands)	30-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Loans			Recorded Investment 90 Days Accruing
Real Estate:
Construction & land development	$	141	$	1,735	$	1,876	$	53,504	$	55,380		$	-
Farmland		120		781		901		9,742		10,643			-
1 - 4 family		2,837		5,439		8,276		80,495		88,771			376
Multifamily		742		-		742		14,753		15,495			-
Non-farm non-residential		2,023		12,641		14,664		283,805		298,469			678
Total Real Estate		5,863		20,596		26,459		442,299		468,758			1,054
Non-Real Estate:
Agricultural		-		785		785		25,496		26,281			-
Commercial and industrial		279		3,239		3,518		84,240		87,758			-
Consumer and other		117		22		139		24,306		24,445			-
Total Non-Real Estate		396		4,046		4,442		134,042		138,484			-
Total loans before unearned income	$	6,259	$	24,642	$	30,901	$	576,341		607,242		$	1,054
Less: unearned income										(1,080	)
Total loans net of unearned income									$	606,162

	December 31, 2011
(in thousands)	30-89 Days Past Due		90 Days or Greater		Total Past Due		Current		Total Loans			Recorded Investment 90 Days Accruing
Real estate:
Construction & land development	$	240	$	1,520	$	1,760	$	76,854	$	78,614		$	-
Farmland		45		562		607		10,970		11,577			-
1 - 4 family		2,812		5,957		8,769		80,433		89,202			309
Multifamily		617		-		617		16,297		16,914			-
Non-farm non-residential		878		12,818		13,696		254,922		268,618			419
Total Real Estate		4,592		20,857		25,449		439,476		464,925			728
Non-Real Estate:
Agricultural		90		315		405		16,933		17,338			-
Commercial and industrial		147		1,986		2,133		65,892		68,025			-
Consumer and other		389		28		417		23,038		23,455			8
Total Non-Real Estate		626		2,329		2,955		105,863		108,818			8
Total loans before unearned income	$	5,218	$	23,186	$	28,404	$	545,339		573,743		$	736
Less: unearned income										(643	)
Total loans net of unearned income									$	573,100

The Company's management monitors the credit quality of its loans on an ongoing basis. Measurement of delinquency and past due status are based on the contractual terms of each loan.

For all loan classes, past due loans are reviewed on a monthly basis to identify loans for nonaccrual status. Generally, when collection in full of the principal and interest is jeopardized, the loan is placed on nonaccrual. The accrual of interest income on commercial and most consumer loans generally is discontinued when a loan becomes 90 to 120 days past due as to principal or interest. When interest accruals are discontinued, unpaid interest recognized in income is reversed. The Company's method of income recognition for loans that are classified as nonaccrual is to recognize interest income on a cash basis or apply the cash receipt to principal when the ultimate collectability of principal is in doubt. Nonaccrual loans will not normally be returned to accrual status unless all past due principal and interest has been paid.

The following is a summary of nonaccrual loans by class at September 30, 2012 and December 31, 2011:

(in thousands)	September 30, 2012		December 31, 2011
Real Estate:
Construction & land development	$	1,735	$	1,520
Farmland		781		562
1 - 4 family		5,063		5,647
Multifamily		-		-
Non-farm non-residential		11,963		12,400
Total Real Estate		19,542		20,129
Non-real Estate:
Agricultural		785		315
Commercial and industrial		3,239		1,986
Consumer and other		22		20
Total Non-Real Estate		4,046		2,321
Total Nonaccrual Loans	$	23,588	$	22,450

The Company assigns credit quality indicators of pass, special mention, substandard, and doubtful to its loans. For the Company's loans with a commercial and consumer credit exposure, the Company internally assigns a grade based on the creditworthiness of the borrower. For loans with a consumer credit exposure, the Bank internally assigns a grade based upon an individual loan's delinquency status. Loans included in the Pass category are performing loans with satisfactory debt coverage ratios, collateral, payment history, and documentation.

Special mention loans have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loans or in the Company's credit position at some future date. Borrowers may be experiencing adverse operating trends (declining revenues or margins) or an ill proportioned balance sheet (e.g., increasing inventory without an increase in sales, high leverage, tight liquidity). Adverse economic or market conditions, such as interest rate increases or the entry of a new competitor, may also support a special mention rating. Nonfinancial reasons for rating a credit exposure special mention include management problems, pending litigation, an ineffective loan agreement or other material structural weakness, and any other significant deviation from prudent lending practices.

A substandard loan with a commercial and consumer credit exposure is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt by the borrower. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. These loans require more intensive supervision by management. Substandard loans are generally characterized by current or expected unprofitable operations, inadequate debt service coverage, inadequate liquidity, or marginal capitalization. Repayment may depend on collateral or other credit risk mitigates. For some substandard loans, the likelihood of full collection of interest and principal may be in doubt and thus, placed on nonaccrual. For loans with a consumer credit exposure, loans that are 90 days or more past due or that have been placed on nonaccrual are considered substandard.

Doubtful loans have the weaknesses of substandard loans with the additional characteristic that the weaknesses make collection or liquidation in full questionable and there is a high probability of loss based on currently existing facts, conditions and values.

The Company periodically reassesses its credit quality indicators and has revised its methodology in 2012 contributing to the increase in special mention credits over the previous periods. As of September 30, 2012, $29.4 million of the loans in the special mention category had a payment status of current, $3.9 million were between 30 and 89 days past due, and $0.1 million were 90 days or greater past due.

The following table identifies the commercial and consumer credit exposure of the loan portfolio by specific credit ratings at September 30, 2012 and December 31, 2011:

	September 30, 2012											December 31, 2011
(in thousands)	Pass		Special Mention		Substandard		Doubtful		Total			Pass		Special Mention		Substandard		Doubtful		Total
Real Estate:
Construction & land development	$	40,169	$	4,757	$	10,454	$	-	$	55,380		$	67,602	$	82	$	10,930	$	-	$	78,614
Farmland		10,099		75		469		-		10,643			11,485		-		92		-		11,577
1 - 4 family		72,510		8,425		7,836		-		88,771			80,053		1,770		7,379		-		89,202
Multifamily		8,173		-		7,322		-		15,495			9,545		-		7,369		-		16,914
Non-farm non-residential		253,285		16,712		28,472		-		298,469			235,448		372		32,798		-		268,618
Total real estate		384,236		29,969		54,553		-		468,758			404,133		2,224		58,568		-		464,925
Non-Real Estate:
Agricultural		25,800		56		425		-		26,281			17,304		-		34		-		17,338
Commercial and industrial		79,238		3,273		5,247		-		87,758			65,553		93		2,379		-		68,025
Consumer and other		24,275		104		66		-		24,445			23,345		43		67		-		23,455
Total Non-Real Estate		129,313		3,433		5,738		-		138,484			106,202		136		2,480		-		108,818
Total loans before unearned income	$	513,549	$	33,402	$	60,291	$	-		607,242		$	510,335	$	2,360	$	61,048	$	-		573,743
Less: unearned income										(1,080	)										(643	)
Total loans net of unearned income									$	606,162										$	573,100

ASC 310-30 Loans

The Company has loans that were acquired in the acquisition of Greensburg Bancshares, for which there was, at acquisition, evidence of deterioration of credit quality since origination and for which it is probable, at acquisition, that all contractually required payments would not be collected. These loans are subject to ASC Topic 310-30. The carrying amount of those loans is included in the balance sheet amounts of loans receivable at September 30, 2012. The amounts of loans subject to ASC Topic 310-30 at September 30, 2012 and December 31, 2011 are as follows:

	September 30, 2012				December 31, 2011
(in thousands)	Contractual Amount		Carrying Value		Contractual Amount		Carrying Value
Real Estate:
Construction & land development	$	-	$	-	$	536	$	301
Farmland		-		-		-		-
1 - 4 family		190		190		704		573
Multifamily		-		-		-		-
Non-farm non-residential		130		130		352		352
Total real estate		320	$	320		1,592		1,226
Non-real Estate:
Agricultural		-		-		-		-
Commercial and industrial		-		-		-		-
Consumer and other		-		-		-		-
Total Non-Real Estate		-		-		-		-
Total	$	320	$	320	$	1,592	$	1,226

There have been no additional provisions made to the allowance for loan losses subsequent to acquisition of these loans. The loans acquired in the acquisition of Greensburg Bancshares, that are within the scope of Topic ASC 310-30, are not accounted for using the income recognition model of the Topic because the Company cannot reasonably estimate cash flows expected to be collected.

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Securities (Details) (USD $)	3 Months Ended	9 Months Ended
	Mar. 31, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Available-for-sale Securities, Balance Sheet, Reported Amounts [Abstract]
Available-for-sale Securities, Amortized Cost Basis, Total		$ 607,898,000		$ 513,729,000
Unrealized gains on securities available for sale		12,206,000		8,319,000
Unrealized loss on securities available for sale		(342,000)		(1,551,000)
Available-for-sale securities, fair value Disclosure		619,762,000		520,497,000
Available-for-sale Securities, Debt Maturities, Cost [Abstract]
Due in one year or less		30,543,000		13,267,000
Due after one year through five years		132,852,000		59,897,000
Due after five years through ten years		332,965,000		214,467,000
Due after ten years		111,538,000		226,098,000
Available-for-sale Securities, Amortized Cost Basis, Total		607,898,000		513,729,000
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Due in one year or less, fair value		30,863,000		13,505,000
Due after one year through five years, fair value		135,765,000		61,320,000
Due after five years through ten years, fair value		339,828,000		218,280,000
Due after ten years, fair value		113,306,000		227,392,000
Available-for-sale securities, fair value Disclosure		619,762,000		520,497,000
Available-for-sale Securities, Temporarily Impaired Securities
Less than 12 months, fair value		44,284,000
12 Months or more, fair value		2,487,000
Less than 12 months, gross unrealized loss		(135,000)
12 months or more, gross unrealized loss		(207,000)
Available-for-sale Securities, Fair Value, Total		46,771,000
Gross unrealized loss		(342,000)
Exposure to Investment Securities [Abstract]
Amortized cost		644,738,000		633,163,000
Number of securities with gross unrealized losses for less than 12 months		52
Held-to-maturity Securities, Balance Sheet, Reported Amounts [Abstract]
Held-to-maturity securities, amortized cost total		24,976,000		112,666,000
Held-to-maturity Securities, gross unrealized gains		246,000		535,000
Held-to-maturity Securities, gross unrealized losses		0		(4,000)
Held to maturity investments, fair value		25,222,000		113,197,000
Held-to-maturity Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Due in one year - fair value		0		0
Due after on year through five years - fair value		4,010,000		10,157,000
Due after five years through 10 years - fair value		21,212,000		50,828,000
Over 10 years - fair value		0		52,212,000
Total held to maturity securities - fair value		25,222,000		113,197,000
Marketable Securities, Restricted, Total		440,800,000
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract]
Due in one year or less - amortized cost		0		0
Due after one year through five years - amortized cost		4,004,000		10,015,000
Due after five years through 10 years - amortized cost		20,972,000		50,535,000
Over 10 years - amortized cost		0		52,116,000
Total held to maturity - amortized cost		24,976,000		112,666,000
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]
Less than twelve months, fair value		0
Less than 12 months, gross unrealized losses		0
Twelve months or longer, fair value		0
12 months or longer, gross unrealized losses		0
Total held to maturity securities , fair value		0
Total held-to-maturity securities, gross unrealized losses		0
Securities Disclosures [Abstract]
Unrealized Gain (Loss) on Securities		300,000
Unrealized Gain (Loss) on Securities Percentage of Amortized Cost		0.70%
Number of securities with gross unrealized losses for greater than 12 months		9
Aggregate debt securities with unrealized losses greater than 12 months amortized cost		2,700,000
Maturity threshold for public funds, maximum		15 years
Public funds deposits		433,200,000
Public funds deposits since December 2007, minimum		175,000,000
Loss on securities impairment	100,000
Gain on sale of securities			45,000
US Government Agencies [Member]
Held-to-maturity Securities, Balance Sheet, Reported Amounts [Abstract]
Held-to-maturity securities, amortized cost total		24,976,000		112,666,000
Held-to-maturity Securities, gross unrealized gains		246,000		535,000
Held-to-maturity Securities, gross unrealized losses		0		(4,000)
Held to maturity investments, fair value		25,222,000		113,197,000
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract]
Total held to maturity - amortized cost		24,976,000		112,666,000
U.S. Treasury Bills [Member]
Available-for-sale Securities, Balance Sheet, Reported Amounts [Abstract]
Available-for-sale Securities, Amortized Cost Basis, Total		12,000,000		0
Unrealized gains on securities available for sale		0		0
Unrealized loss on securities available for sale		0		0
Available-for-sale securities, fair value Disclosure		12,000,000		0
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Available-for-sale securities, fair value Disclosure		12,000,000		0
US Government Agencies [Member]
Available-for-sale Securities, Balance Sheet, Reported Amounts [Abstract]
Available-for-sale Securities, Amortized Cost Basis, Total		402,125,000		319,113,000
Unrealized gains on securities available for sale		1,571,000		1,422,000
Unrealized loss on securities available for sale		(57,000)		(328,000)
Available-for-sale securities, fair value Disclosure		403,639,000		320,207,000
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Available-for-sale securities, fair value Disclosure		403,639,000		320,207,000
Available-for-sale Securities, Temporarily Impaired Securities
Less than 12 months, fair value		38,083,000
12 Months or more, fair value		0
Less than 12 months, gross unrealized loss		(57,000)
12 months or more, gross unrealized loss		0
Available-for-sale Securities, Fair Value, Total		38,083,000
Gross unrealized loss		(57,000)
Corporate Debt Securities [Member]
Available-for-sale Securities, Balance Sheet, Reported Amounts [Abstract]
Available-for-sale Securities, Amortized Cost Basis, Total		172,661,000		171,927,000
Unrealized gains on securities available for sale		9,485,000		6,250,000
Unrealized loss on securities available for sale		(285,000)		(1,222,000)
Available-for-sale securities, fair value Disclosure		181,861,000		176,955,000
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Available-for-sale securities, fair value Disclosure		181,861,000		176,955,000
Available-for-sale Securities, Temporarily Impaired Securities
Less than 12 months, fair value		6,201,000
12 Months or more, fair value		2,487,000
Less than 12 months, gross unrealized loss		(78,000)
12 months or more, gross unrealized loss		(207,000)
Available-for-sale Securities, Fair Value, Total		8,688,000
Gross unrealized loss		(285,000)
Mutual funds or other equity securities [Member]
Available-for-sale Securities, Balance Sheet, Reported Amounts [Abstract]
Available-for-sale Securities, Amortized Cost Basis, Total		2,564,000		2,773,000
Unrealized gains on securities available for sale		47,000		38,000
Unrealized loss on securities available for sale		0		0
Available-for-sale securities, fair value Disclosure		2,611,000		2,811,000
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Available-for-sale securities, fair value Disclosure		2,611,000		2,811,000
Available-for-sale Securities, Temporarily Impaired Securities
Less than 12 months, fair value		0
12 Months or more, fair value		0
Less than 12 months, gross unrealized loss		0
12 months or more, gross unrealized loss		0
Available-for-sale Securities, Fair Value, Total		0
Gross unrealized loss		0
Municipal Bonds [Member]
Available-for-sale Securities, Balance Sheet, Reported Amounts [Abstract]
Available-for-sale Securities, Amortized Cost Basis, Total		18,548,000		19,916,000
Unrealized gains on securities available for sale		1,103,000		609,000
Unrealized loss on securities available for sale		0		(1,000)
Available-for-sale securities, fair value Disclosure		19,651,000		20,524,000
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Available-for-sale securities, fair value Disclosure		19,651,000		20,524,000
Available-for-sale Securities, Temporarily Impaired Securities
Less than 12 months, fair value		0
12 Months or more, fair value		0
Less than 12 months, gross unrealized loss		0
12 months or more, gross unrealized loss		0
Available-for-sale Securities, Fair Value, Total		0
Gross unrealized loss		0
Exceeds 10 percent of stockholders' equity [Member]
Exposure to Investment Securities [Abstract]
Amortized cost		427,100,000
Fair value disclosure		428,860,000
Exceeds 10 percent of stockholders' equity [Member] | Federal Home Loan Bank (FHLB) [Member]
Exposure to Investment Securities [Abstract]
Amortized cost		108,002,000
Fair value disclosure		108,247,000
Exceeds 10 percent of stockholders' equity [Member] | Federal Home Loan Mortgage Corporation (Freddie Mac-FHLMC) [Member]
Exposure to Investment Securities [Abstract]
Amortized cost		86,849,000
Fair value disclosure		87,488,000
Exceeds 10 percent of stockholders' equity [Member] | Federal National Mortgage Association (Fannie Mae-FNMA) [Member]
Exposure to Investment Securities [Abstract]
Amortized cost		118,323,000
Fair value disclosure		118,600,000
Exceeds 10 percent of stockholders' equity [Member] | Federal Farm Credit Bank (FFCB) [Member]
Exposure to Investment Securities [Abstract]
Amortized cost		113,926,000
Fair value disclosure		$ 114,525,000

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Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2012

Allowance for Loan Losses [Abstract]

Allowance for Credit Losses on Financing Receivables

A summary of changes in the allowance for loan losses, by portfolio type, for the nine months ended September 30, 2012 and 2011 is as follows:

	As of September 30, 2012
	Real Estate Loans:														Non-Real Estate Loans:
(in thousands)	Construction and Land Development			Farmland		1-4 Family			Multi-family			Non-farm non-residential			Agricultural			Commercial and Industrial			Consumer and other			Unallocated			Total
Allowance for Credit Losses:
Beginning balance (12/31/11)	$	1,002		$	65	$	1,917		$	780		$	2,980		$	125		$	1,407		$	314		$	289		$	8,879
Charge-offs		(58	)		-		(1,409	)		(187	)		(459	)		(27	)		(455	)		(356	)		-			(2,951	)
Recoveries		13			1		27			-			106			1			212			205			-			565
Provision		228			15		1,547			(162	)		818			(40	)		508			137			(37	)		3,014
Ending Balance	$	1,185		$	81	$	2,082		$	431		$	3,445		$	59		$	1,672		$	300		$	252		$	9,507

	As of September 30, 2011
	Real Estate Loans:													Non-Real Estate Loans:
(in thousands)	Construction and Land Development			Farmland		1-4 Family			Multi-family		Non-farm non-residential			Agricultural			Commercial and Industrial			Consumer and other			Unallocated			Total
Allowance for Credit Losses:
Beginning balance (12/31/10)	$	977		$	46	$	1,891		$	487	$	3,423		$	80		$	510		$	390		$	513		$	8,317
Charge-offs		(935	)		-		(1,233	)		-		(3,790	)		(20	)		(1,596	)		(486	)		-			(8,060	)
Recoveries		1			-		95			-		12			3			319			145			17			592
Provision		410			15		815			47		2,833			126			2,790			220			(401	)		6,855
Ending Balance	$	453		$	61	$	1,568		$	534	$	2,478		$	189		$	2,023		$	269		$	129		$	7,704

The following is a breakdown of loans individually and collectively evaluated for impairment and the corresponding allowance by loan category at September 30, 2012 and December 31, 2011.

	September 30, 2012
	Real Estate Loans:										Non-Real Estate Loans:
(in thousands)	Construction and Land Development		Farmland		1-4 Family		Multi-family		Non-farm non-residential		Agricultural		Commercial and Industrial		Consumer and other		Unallocated		Total
Allowance individually evaluated for impairment	$	512	$	-	$	279	$	426	$	1,182	$	-	$	20	$	-	$	-	$	2,419
Allowance collectively evaluated for impairment		673		81		1,803		5		2,263		59		1,652		300		252		7,088
Allowance at September 30, 2012	$	1,185	$	81	$	2,082	$	431	$	3,445	$	59	$	1,672	$	300	$	252	$	9,507
Loans individually evaluated for impairment	$	7,396	$	-	$	2,149	$	7,322	$	25,416	$	-	$	4,431	$	-	$	-	$	46,714
Loans collectively evaluated for impairment		47,984		10,643		86,622		8,173		273,053		26,281		83,327		24,445		-		560,528
Loans at September 30, 2012 (before unearned income)	$	55,380	$	10,643	$	88,771	$	15,495	$	298,469	$	26,281	$	87,758	$	24,445	$	-	$	607,242
Unearned income																				(1,080	)
Total loans net of unearned income																			$	606,162

	December 31, 2011
	Real Estate Loans:										Non-Real Estate Loans:
(in thousands)	Construction and Land Development		Farmland		1-4 Family		Multi-family		Non-farm non-residential		Agricultural		Commercial and Industrial		Consumer and other		Unallocated		Total
Allowance individually evaluated for impairment	$	139	$	-	$	392	$	701	$	1,224	$	-	$	-	$	-	$	-	$	2,456
Allowance collectively evaluated for impairment		863		65		1,525		79		1,756		125		1,407		314		289		6,423
Allowance at December 31, 2011	$	1,002	$	65	$	1,917	$	780	$	2,980	$	125	$	1,407	$	314	$	289	$	8,879
Loans individually evaluated for impairment	$	7,998	$	-	$	3,591	$	7,369	$	31,397	$	-	$	738	$	-	$	-	$	51,093
Loans collectively evaluated for impairment		70,616		11,577		85,611		9,545		237,221		17,338		67,287		23,455		-		522,650
Loans at December 31, 2011 (before unearned income)	$	78,614	$	11,577	$	89,202	$	16,914	$	268,618	$	17,338	$	68,025	$	23,455	$	-	$	573,743
Unearned income																				(643	)
Total loans net of unearned income																			$	573,100

Impaired Financing Receivables

The Company has loans that were acquired in the acquisition of Greensburg Bancshares, for which there was, at acquisition, evidence of deterioration of credit quality since origination and for which it is probable, at acquisition, that all contractually required payments would not be collected. These loans are subject to ASC Topic 310-30. The carrying amount of those loans is included in the balance sheet amounts of loans receivable at September 30, 2012. The amounts of loans subject to ASC Topic 310-30 at September 30, 2012 and December 31, 2011 are as follows:

	September 30, 2012				December 31, 2011
(in thousands)	Contractual Amount		Carrying Value		Contractual Amount		Carrying Value
Real Estate:
Construction & land development	$	-	$	-	$	536	$	301
Farmland		-		-		-		-
1 - 4 family		190		190		704		573
Multifamily		-		-		-		-
Non-farm non-residential		130		130		352		352
Total real estate		320	$	320		1,592		1,226
Non-real Estate:
Agricultural		-		-		-		-
Commercial and industrial		-		-		-		-
Consumer and other		-		-		-		-
Total Non-Real Estate		-		-		-		-
Total	$	320	$	320	$	1,592	$	1,226

Troubled Debt Restructurings on Financing Receivables

A Troubled Debt Restructuring ("TDR") is considered such if the creditor for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider. The modifications to the Company's TDRs were concessions on the interest rate charged. The effect of the modifications to the Company was a reduction in interest income. These loans have an allocated reserve in the Company's reserve for loan losses. For the first nine months of 2012, there were no loans restructured in a troubled debt restructuring.

The following table identifies the Troubled Debt Restructurings as of September 30, 2012 and September 30, 2011:

Troubled Debt Restructurings	September 30, 2012								September 30, 2011
	Accruing Loans								Accruing Loans
(in thousands)	Current		30-89 Days Past Due		Nonaccrual		Total TDRs		Current		30-89 Days Past Due		Nonaccrual		Total TDRs
Real Estate:
Construction & land development	$	2,601	$	-	$	-	$	2,601	$	2,602	$	235	$	-	$	2,837
Farmland		-		-		-		-		-		-		-		-
1-4 Family		-		-		1,323		1,323		1,693		-		-		1,693
Multifamily		5,965		-		-		5,965		6,018		-		-		6,018
Non-farm non residential		6,106		679		-		6,785		6,939		-		-		6,939
Total Real Estate		14,672		679		1,323		16,674		17,252		235		-		17,487
Non-Real Estate:
Agricultural		-		-		-		-		-		-		-		-
Commercial and industrial		-		-		-		-		-		-		-		-
Consumer and other		-		-		-		-		-		-		-		-
Total Non-Real Estate		-		-		-		-		-		-		-		-
Total	$	14,672	$	679	$	1,323	$	16,674	$	17,252	$	235	$	-	$	17,487

The Company did not restructure any loans considered to be a troubled debt restructuring in the first nine months of 2012. Information about the Company's TDRs occurring in the nine month period ended September 30, 2011 is presented in the following table.

Troubled Debt Restructurings	September 30, 2012					September 30, 2011
(in thousands)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real Estate:
Construction & land development	-	$	-	$	-	5	$	2,837	$	2,837
Farmland	-		-		-	-		-		-
1-4 Family	-		-		-	1		1,693		1,693
Multifamily	-		-		-	1		6,018		6,018
Non-farm non residential	-		-		-	4		6,939		6,939
Total real estate	-		-		-	11		17,487		17,487
Non-Real Estate:
Agricultural	-		-		-	-		-		-
Commercial and industrial	-		-		-	-		-		-
Consumer and other	-		-		-	-		-		-
Total Non-Real Estate	-		-		-	-		-		-
Total	-	$	-	$	-	11	$	17,487	$	17,487

The following is a summary of the TDRs that subsequently defaulted after restructuring during the previous twelve months.

Troubled Debt Restructurings that subsequently defaulted
(in thousands)	Number of Contracts	Recorded Investment
Real Estate:
Construction & land development	-	$	-
Farmland	-		-
1-4 Family	3		1,322
Multifamily	-		-
Non-farm non residential	-		-
Total real estate	3		1,322
Non-Real Estate:
Agricultural	-		-
Commercial and industrial	-		-
Consumer and other	-		-
Total Non-Real Estate	-		-
Total	3	$	1,322

The following table discloses TDR activity for the nine months ended September 30, 2012.

	Real Estate Loans:														Non-Real Estate Loans:
(in thousands)	Construction and Land Development			Farmland		1-4 family			Multi-family			Non-farm non-residential			Agricultural		Commercial and Industrial		Consumer and other		Total
Beginning balance of TDRs (12/31/2011)	$	2,840		$	-	$	1,694		$	6,015		$	6,998		$	-	$	-	$	-	$	17,547
New TDRs		-			-		-			-			-			-		-		-		-
Charge-offs post-modification		-			-		(619	)		-			-			-		-		-		(619
Paydowns		-			-		-			(50	)		(380	)		-		-		-		(430
Construction to permanent financing		(239	)		-		239			-			-			-		-		-		-
Other[1]		-			-		9			-			167			-		-		-		176
Ending balance of TDRs (9/30/2012)	$	2,601		$	-	$	1,323		$	5,965		$	6,785		$	-	$	-	$	-	$	16,674
(1)Other includes additions to the balances of TDRs to account for the expenses incurred by the Company for items such as insurance and taxes in protecting the Company's interest.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 8. Commitments and Contingencies

Off-balance sheet commitments

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit and standby and commercial letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Balance Sheets. The contract or notional amounts of those instruments reflect the extent of the involvement in particular classes of financial instruments.

The exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby and commercial letters of credit is represented by the contractual notional amount of those instruments. The same credit policies are used in making commitments and conditional obligations as it does for on-balance sheet instruments. Unless otherwise noted, collateral or other security is not required to support financial instruments with credit risk.

Set forth below is a summary of the notional amounts of the financial instruments with off-balance sheet risk at September 30, 2012 and December 31, 2011:

Contract Amount
(in thousands)	September 30, 2012		December 31, 2011
Commitments to Extend Credit	$	22,634	$	13,264
Unfunded Commitments under lines of credit	$	76,554	$	69,522
Commercial and Standby letters of credit	$	6,462	$	6,745

Litigation

The nature of the Company's business ordinarily results in a certain amount of claims, litigation and legal and administrative cases, all of which are considered incidental to the normal conduct of business. When the Company's management and counsel determine it has defenses to the claims asserted, it defends itself. The Company will consider settlement of cases when, in Management's and counsel's judgment, it is in the best interests of both the Company and its shareholders.

While the final outcome of legal proceedings is inherently uncertain, based on information currently available, advice of counsel, and available insurance coverage, Management believes that any incremental liability arising from the Company's legal proceedings will not have a material adverse effect on the Company's financial position.

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2012

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Other Intangible Assets

Note 6. Goodwill and Other Intangible Assets

Goodwill and intangible assets deemed to have indefinite lives are no longer amortized, but are subject to annual impairment tests. Other intangible assets continue to be amortized over their useful lives. Goodwill at September 30, 2012 was $2.0 million and resulted from the Homestead Bancorp acquisition in 2007. No impairment charges have been recognized since the acquisition.Mortgage servicing rights were relatively unchanged since December 31, 2011, totaling $0.2 million at September 30, 2012. Other intangible assets recorded include core deposit intangibles, which are subject to amortization. The core deposits reflect the value of deposit relationships, including the beneficial rates, which arose from the purchase of other financial institutions and the purchase of various banking center locations from other financial institutions. At September 30, 2012 and December 31, 2011, core deposit intangibles totaled $2.3 million and $2.6 million, respectively.

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Borrowings

9 Months Ended

Sep. 30, 2012

Borrowings [Abstract]

Borrowings

Note 7. Borrowings

The Company's senior long-term debt totaled $1.3 million at September 30, 2012. Long-term debt at December 31, 2011 totaled $3.2 million. The Company pays $50,000 principal plus interest on a monthly basis. In addition to its monthly principal payments, the Company has made additional principal payments totaling $1.5 million. At September 30, 2012 the Company's long-term debt was priced at Wall Street Journal Prime plus 75 basis points (4.00%) and has a contractual maturity of April 2017. It is secured by a pledge of 13.2% (735,745 shares) of First Guaranty Bank, a wholly owned subsidiary of the Company, under a Commercial Pledge Agreement dated June 22, 2011.

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Fair Value

9 Months Ended

Sep. 30, 2012

Fair Value [Abstract]

Fair Value

Note 9. Fair Value

The fair value of a financial instrument is the current amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. Valuation techniques use certain inputs to arrive at fair value. Inputs to valuation techniques are the assumptions that market participants would use in pricing the asset or liability. They may be observable or unobservable. The Company uses a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1 Inputs – Unadjusted quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds or credit risks) or inputs that are derived principally from or corroborated by market data by correlation or other means.

Level 3 Inputs – Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity's own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

A description of the valuation methodologies used for instruments measured at fair value follows, as well as the classification of such instruments within the valuation hierarchy.

Securities available for sale. Securities are classified within Level 1 where quoted market prices are available in an active market. Inputs include securities that have quoted prices in active markets for identical assets. If quoted market prices are unavailable, fair value is estimated using quoted prices of securities with similar characteristics, at which point the securities would be classified within Level 2 of the hierarchy. Securities classified Level 3 in the Company's portfolio as of September 30, 2012 includes municipal bonds and one preferred equity security.

Impaired loans. Loans are measured for impairment using the methods permitted by ASC Topic 310. Fair value of impaired loans is measured by either the loans obtainable market price, if available (Level 1), the fair value of the collateral if the loan is collateral dependent (Level 2), or the present value of expected future cash flows, discounted at the loan's effective interest rate (Level 3). Fair value of the collateral is determined by appraisals or by independent valuation.

Other real estate owned. Properties are recorded at the balance of the loan or at estimated fair value less estimated selling costs, whichever is less, at the date acquired. Fair values of other real estate owned ("OREO") at September 30, 2012 are determined by sales agreement or appraisal, and costs to sell are based on estimation per the terms and conditions of the sales agreement or amounts commonly used in real estate transactions. Inputs include appraisal values on the properties or recent sales activity for similar assets in the property's market, and thus OREO measured at fair value would be classified within Level 2 of the hierarchy.

Certain non-financial assets and non-financial liabilities are measured at fair value on a non-recurring basis including assets and liabilities related to reporting units measured at fair value in the testing of goodwill impairment, as well as intangible assets and other non-financial long-lived assets measured at fair value for impairment assessment.

The following table summarizes financial assets measured at fair value on a recurring basis as of September 30, 2012 and December 31, 2011, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

(in thousands)	September 30, 2012		December 31, 2011
Securities available for sale measured at fair value	$	619,762	$	520,497
Fair Value Measurements Using:
Quoted Prices in Active Markets For Identical Assets (Level 1)	$	12,000	$	3,203
Significant Other Observable Inputs (Level 2)	$	599,119	$	509,778
Significant Unoberservable Inputs (Level 3)	$	8,643	$	7,516

The Company's valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the methodologies used are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value. The change in level 3 securities available for sale from December 31, 2011 was the addition of a $2.0 million preferred security that was transferred from level 2 to level 3. This addition was partially offset by $0.9 million in municipal bond principal repayments.

Gains and losses on securities (realized and unrealized) included in earnings (or changes in net assets) for the first nine months of 2012 measured at fair value on a recurring basis are reported in noninterest income or other comprehensive income as follows:

(in thousands)	Noninterest Income		Other Comprehensive Income
Total gains included in earnings (or changes in net assets)	$	3,230	$	-
Impairment loss	$	-	$	-
Changes in unrealized gains (losses) relating to assets still held at September 30, 2012	$	-	$	3,367

The following table measures financial assets and financial liabilities measured at fair value on a non-recurring basis as of September 30, 2012 and December 31, 2011, segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value:

(in thousands)	At September 30, 2012		At December 31, 2011
Impaired loans measured at fair value	$	33,577	$	39,850
Fair Value Measurements Using:
Quoted Prices in Active Markets For Identical Assets (Level 1)	$	-	$	-
Significant Other Observable Inputs (Level 2)	$	6,795	$	8,113
Significant Unoberservable Inputs (Level 3)	$	26,782	$	31,737
Other real estate owned measured at fair value	$	4,435	$	5,709
Fair Value Measurements Using:
Quoted Prices in Active Markets For Identical Assets (Level 1)	$	-	$	-
Significant Other Observable Inputs (Level 2)	$	4,435	$	5,709
Significant Unoberservable Inputs (Level 3)	$	-	$	-

ASC 825-10 provides the Company with an option to report selected financial assets and liabilities at fair value. The fair value option established by this statement permits the Company to choose to measure eligible items at fair value at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in earnings at each reporting date subsequent to implementation.

The Company has chosen not to elect the fair value option for any items that are not already required to be measured at fair value in accordance with accounting principles generally accepted in the United States, and as such has not included any gains or losses in earnings for the nine months ended September 30, 2012 or 2011.

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Fair Value (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value [Abstract]

Financial assets measured at fair value on a recurring basis

The following table summarizes financial assets measured at fair value on a recurring basis as of September 30, 2012 and December 31, 2011, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

(in thousands)	September 30, 2012		December 31, 2011
Securities available for sale measured at fair value	$	619,762	$	520,497
Fair Value Measurements Using:
Quoted Prices in Active Markets For Identical Assets (Level 1)	$	12,000	$	3,203
Significant Other Observable Inputs (Level 2)	$	599,119	$	509,778
Significant Unoberservable Inputs (Level 3)	$	8,643	$	7,516

Gains and losses on securities (realized and unrealized) included in earnings (or changes in net assets)

Gains and losses on securities (realized and unrealized) included in earnings (or changes in net assets) for the first nine months of 2012 measured at fair value on a recurring basis are reported in noninterest income or other comprehensive income as follows:

(in thousands)	Noninterest Income		Other Comprehensive Income
Total gains included in earnings (or changes in net assets)	$	3,230	$	-
Impairment loss	$	-	$	-
Changes in unrealized gains (losses) relating to assets still held at September 30, 2012	$	-	$	3,367

Financial assets and financial liabilities measured at fair value on a non-recurring basis

The following table measures financial assets and financial liabilities measured at fair value on a non-recurring basis as of September 30, 2012 and December 31, 2011, segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value:

(in thousands)	At September 30, 2012		At December 31, 2011
Impaired loans measured at fair value	$	33,577	$	39,850
Fair Value Measurements Using:
Quoted Prices in Active Markets For Identical Assets (Level 1)	$	-	$	-
Significant Other Observable Inputs (Level 2)	$	6,795	$	8,113
Significant Unoberservable Inputs (Level 3)	$	26,782	$	31,737
Other real estate owned measured at fair value	$	4,435	$	5,709
Fair Value Measurements Using:
Quoted Prices in Active Markets For Identical Assets (Level 1)	$	-	$	-
Significant Other Observable Inputs (Level 2)	$	4,435	$	5,709
Significant Unoberservable Inputs (Level 3)	$	-	$	-

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Loans, Credit Exposure of Portfolio (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Credit exposure of the loan portfolio [Line Items]
Current	$ 576,341	$ 545,339
30 to 89 Days Past Due	6,259	5,218
90 Days or Greater	24,642	23,186
Total Loans	607,242	573,743
Unearned income	(1,080)	(643)
Total loans net of unearned income	606,162	573,100
Contractual amount	320	1,592
Carrying value	320	1,226
Pass [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	513,549	510,335
Special Mention [Member]
Credit exposure of the loan portfolio [Line Items]
Current	29,400
30 to 89 Days Past Due	3,900
90 Days or Greater	100
Total Loans	33,402	2,360
Substandard [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	60,291	61,048
Doubtful [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	0	0
Real Estate [Member]
Credit exposure of the loan portfolio [Line Items]
Current	442,299	439,476
30 to 89 Days Past Due	5,863	4,592
90 Days or Greater	20,596	20,857
Total Loans	468,758	464,925
Contractual amount	320	1,592
Carrying value	320	1,226
Real Estate [Member] | Pass [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	384,236	404,133
Real Estate [Member] | Special Mention [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	29,969	2,224
Real Estate [Member] | Substandard [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	54,553	58,568
Real Estate [Member] | Doubtful [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	0	0
Real Estate [Member] | Construction and Land Development [Member]
Credit exposure of the loan portfolio [Line Items]
Current	53,504	76,854
30 to 89 Days Past Due	141	240
90 Days or Greater	1,735	1,520
Total Loans	55,380	78,614
Contractual amount	0	536
Carrying value	0	301
Real Estate [Member] | Construction and Land Development [Member] | Pass [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	40,169	67,602
Real Estate [Member] | Construction and Land Development [Member] | Special Mention [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	4,757	82
Real Estate [Member] | Construction and Land Development [Member] | Substandard [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	10,454	10,930
Real Estate [Member] | Construction and Land Development [Member] | Doubtful [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	0	0
Real Estate [Member] | Farmland [Member]
Credit exposure of the loan portfolio [Line Items]
Current	9,742	10,970
30 to 89 Days Past Due	120	45
90 Days or Greater	781	562
Total Loans	10,643	11,577
Contractual amount	0	0
Carrying value	0	0
Real Estate [Member] | Farmland [Member] | Pass [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	10,099	11,485
Real Estate [Member] | Farmland [Member] | Special Mention [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	75	0
Real Estate [Member] | Farmland [Member] | Substandard [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	469	92
Real Estate [Member] | Farmland [Member] | Doubtful [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	0	0
Real Estate [Member] | One to Four Family [Member]
Credit exposure of the loan portfolio [Line Items]
Current	80,495	80,433
30 to 89 Days Past Due	2,837	2,812
90 Days or Greater	5,439	5,957
Total Loans	88,771	89,202
Contractual amount	190	704
Carrying value	190	573
Real Estate [Member] | One to Four Family [Member] | Pass [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	72,510	80,053
Real Estate [Member] | One to Four Family [Member] | Special Mention [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	8,425	1,770
Real Estate [Member] | One to Four Family [Member] | Substandard [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	7,836	7,379
Real Estate [Member] | One to Four Family [Member] | Doubtful [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	0	0
Real Estate [Member] | MultiFamily [Member]
Credit exposure of the loan portfolio [Line Items]
Current	14,753	16,297
30 to 89 Days Past Due	742	617
90 Days or Greater	0	0
Total Loans	15,495	16,914
Contractual amount	0	0
Carrying value	0	0
Real Estate [Member] | MultiFamily [Member] | Pass [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	8,173	9,545
Real Estate [Member] | MultiFamily [Member] | Special Mention [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	0	0
Real Estate [Member] | MultiFamily [Member] | Substandard [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	7,322	7,369
Real Estate [Member] | MultiFamily [Member] | Doubtful [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	0	0
Real Estate [Member] | Non Farm Non Residential [Member]
Credit exposure of the loan portfolio [Line Items]
Current	283,805	254,922
30 to 89 Days Past Due	2,023	878
90 Days or Greater	12,641	12,818
Total Loans	298,469	268,618
Contractual amount	130	352
Carrying value	130	352
Real Estate [Member] | Non Farm Non Residential [Member] | Pass [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	253,285	235,448
Real Estate [Member] | Non Farm Non Residential [Member] | Special Mention [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	16,712	372
Real Estate [Member] | Non Farm Non Residential [Member] | Substandard [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	28,472	32,798
Real Estate [Member] | Non Farm Non Residential [Member] | Doubtful [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	0	0
Non Real Estate [Member]
Credit exposure of the loan portfolio [Line Items]
Current	134,042	105,863
30 to 89 Days Past Due	396	626
90 Days or Greater	4,046	2,329
Total Loans	138,484	108,818
Contractual amount	0	0
Carrying value	0	0
Non Real Estate [Member] | Pass [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	129,313	106,202
Non Real Estate [Member] | Special Mention [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	3,433	136
Non Real Estate [Member] | Substandard [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	5,738	2,480
Non Real Estate [Member] | Doubtful [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	0	0
Non Real Estate [Member] | Agricultural [Member]
Credit exposure of the loan portfolio [Line Items]
Current	25,496	16,933
30 to 89 Days Past Due	0	90
90 Days or Greater	785	315
Total Loans	26,281	17,338
Contractual amount	0	0
Carrying value	0	0
Non Real Estate [Member] | Agricultural [Member] | Pass [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	25,800	17,304
Non Real Estate [Member] | Agricultural [Member] | Special Mention [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	56	0
Non Real Estate [Member] | Agricultural [Member] | Substandard [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	425	34
Non Real Estate [Member] | Agricultural [Member] | Doubtful [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	0	0
Non Real Estate [Member] | Commercial and Industrial [Member]
Credit exposure of the loan portfolio [Line Items]
Current	84,240	65,892
30 to 89 Days Past Due	279	147
90 Days or Greater	3,239	1,986
Total Loans	87,758	68,025
Contractual amount	0	0
Carrying value	0	0
Non Real Estate [Member] | Commercial and Industrial [Member] | Pass [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	79,238	65,553
Non Real Estate [Member] | Commercial and Industrial [Member] | Special Mention [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	3,273	93
Non Real Estate [Member] | Commercial and Industrial [Member] | Substandard [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	5,247	2,379
Non Real Estate [Member] | Commercial and Industrial [Member] | Doubtful [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	0	0
Non Real Estate [Member] | Consumer and Other [Member]
Credit exposure of the loan portfolio [Line Items]
Current	24,306	23,038
30 to 89 Days Past Due	117	389
90 Days or Greater	22	28
Total Loans	24,445	23,455
Contractual amount	0	0
Carrying value	0	0
Non Real Estate [Member] | Consumer and Other [Member] | Pass [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	24,275	23,345
Non Real Estate [Member] | Consumer and Other [Member] | Special Mention [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	104	43
Non Real Estate [Member] | Consumer and Other [Member] | Substandard [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	66	67
Non Real Estate [Member] | Consumer and Other [Member] | Doubtful [Member]
Credit exposure of the loan portfolio [Line Items]
Total Loans	$ 0	$ 0

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited) (USD $) In Thousands, unless otherwise specified	Series A - Preferred Stock $1,000 par value [Member]	Series B - Preferred Stock $1,000 par value [Member]	Series C - Preferred Stock $1,000 par value [Member]	Common Stock $1 Par (1) [Member]		Surplus [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance at beginning of period at Dec. 31, 2010	$ 19,859	$ 1,116	$ 0	$ 6,116		$ 36,240	$ 0	$ 34,866	$ (259)	$ 97,938
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	0	0			0	6,954	0	6,954
Change in unrealized gain on AFS securities, net of reclassification adjustments and taxes	0	0	0	0			0	0	4,091	4,091
Comprehensive Income	0	0		0			0	0	0	11,045
Common stock issued in acquisition	0	0	0	178		3,147	0	(295)	0	3,030
Preferred stock issued, Series C	0	0	39,435	0		0	0	0	0	39,435
Cash dividends on common stock	0	0	0	0			0	(2,695)	0	(2,695)
Preferred stock repurchase, Series A & B	(20,030)	(1,098)	0	0		0	0	0	0	(21,128)
Preferred stock dividend	171	(18)	0	0		0	0	(1,433)	0	(1,280)
Treasury shares purchased										0
Balance at end of period at Sep. 30, 2011	0	0	39,435	6,294	[1]	39,387	0	37,397	3,832	126,345
Balance at beginning of period at Dec. 31, 2011	0	0	39,435	6,294	[1]	39,387	0	37,019	4,467	126,602
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	0	0		0	0	9,048	0	9,048
Change in unrealized gain on AFS securities, net of reclassification adjustments and taxes	0	0	0	0		0	0	0	3,367	3,367
Comprehensive Income	0	0	0	0		0	0	0	0	12,415
Cash dividends on common stock	0	0	0	0		0	0	(3,028)	0	(3,028)
Preferred stock dividend	0	0	0	0		0	0	(1,479)	0	(1,479)
Treasury shares purchased	0	0	0	0		0	(54)	0	0	(54)
Balance at end of period at Sep. 30, 2012	$ 0	$ 0	$ 39,435	$ 6,294		$ 39,387	$ (54)	$ 41,560	$ 7,834	$ 134,456

[1] 2011 common share amounts have been retroactively adjusted to reflect the ten percent stock dividend paid February 24, 2012 to stockholders of record as of February 17, 2012

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Securities

9 Months Ended

Sep. 30, 2012

Securities [Abstract]

Securities

Note 3. Securities

A summary comparison of securities by type at September 30, 2012 and December 31, 2011 is shown below.

	September 30, 2012									December 31, 2011
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale:
U.S. Treasury Bills	$	12,000	$	-	$	-		$	12,000	$	-	$	-	$	-		$	-
U.S. Government Agencies		402,125		1,571		(57	)		403,639		319,113		1,422		(328	)		320,207
Corporate debt securities		172,661		9,485		(285	)		181,861		171,927		6,250		(1,222	)		176,955
Mutual funds or other equity securities		2,564		47		-			2,611		2,773		38		-			2,811
Municipal bonds		18,548		1,103		-			19,651		19,916		609		(1	)		20,524
Total available for sale securities	$	607,898	$	12,206	$	(342	)	$	619,762	$	513,729	$	8,319	$	(1,551	)	$	520,497
Held to maturity:
U.S. Government Agencies	$	24,976	$	246	$	-		$	25,222	$	112,666	$	535	$	(4	)	$	113,197
Total held to maturity securities	$	24,976	$	246	$	-		$	25,222	$	112,666	$	535	$	(4	)	$	113,197

The scheduled maturities of securities at September 30, 2012 and December 31, 2011, by contractual maturity, are shown below. As evidenced by the following table, the Company has substantially decreased the contractual maturity of its securities investment portfolio in 2012. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2012				December 31, 2011
(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available For Sale:
Due in one year or less	$	30,543	$	30,863	$	13,267	$	13,505
Due after one year through five years		132,852		135,765		59,897		61,320
Due after five years through 10 years		332,965		339,828		214,467		218,280
Over 10 years		111,538		113,306		226,098		227,392
Total available for sale securities	$	607,898	$	619,762	$	513,729	$	520,497
Held to Maturity:
Due in one year or less	$	-	$	-	$	-	$	-
Due after one year through five years		4,004		4,010		10,015		10,157
Due after five years through 10 years		20,972		21,212		50,535		50,828
Over 10 years		-		-		52,116		52,212
Total held to maturity securities	$	24,976	$	25,222	$	112,666	$	113,197

At September 30, 2012 approximately $440.8 million in securities were pledged to secure public funds deposits, and for other purposes required or permitted by law.

The following is a summary of the fair value of securities with gross unrealized losses and an aging of those gross unrealized losses at September 30, 2012.

	Less Than 12 Months					12 Months or More					Total
(in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Available for sale:
U.S. Government Agencies	$	38,083	$	(57	)	$	-	$	-		$	38,083	$	(57	)
Corporate debt securities		6,201		(78	)		2,487		(207	)		8,688		(285	)
Mutual funds or other equity securities		-		-			-		-			-		-
Municipals		-		-			-		-			-		-
Total available for sale securities	$	44,284	$	(135	)	$	2,487	$	(207	)	$	46,771	$	(342	)
Held to maturity:
U.S. Government Agencies	$	-	$	-		$	-	$	-		$	-	$	-
Total held to maturity securities	$	-	$	-		$	-	$	-		$	-	$	-

At September 30, 2012, 52 debt securities have gross unrealized losses of $0.3 million or 0.7% of amortized cost. All securities with unrealized losses were classified as available for sale at September 30, 2012. The Company believes that it will collect all amounts contractually due and has the intent and the ability to hold these securities until the fair value is at least equal to the carrying value. The Company had 13 U.S. Government agency securities and 30 corporate debt securities that had gross unrealized losses for less than 12 months. The Company had 8 corporate debt securities which have been in a continuous unrealized loss position for 12 months or longer. Securities with unrealized losses greater than 12 months had a total amortized cost of $2.7 million. Securities with unrealized losses less than 12 months had a total amortized cost of $44.4 million.

If an equity security has an impairment that is other than temporary, then an impairment loss shall be recognized in earnings equal to the entire difference between the investment's cost and its fair value at the balance sheet date of the reporting period for which the assessment is made. The fair value of the investment would then become the new amortized cost basis of the investment and is not adjusted for subsequent recoveries in fair value. For debt securities, other than temporary impairment loss is recognized in earnings if the Company is required to sell or is more likely than not to sell the security before recovery of its amortized cost. If the Company is not required to sell the security or does intend to sell the security, the other-than-temporary impairment is separated into the amount representing credit loss and the amount related to all other factors. The amount related to credit loss is recognized in earnings and the amount related to all other factors is recognized in other comprehensive income. The previous amortized cost basis less the other-than-temporary impairment recognized in earnings shall become the new amortized cost basis of the investment. Management evaluates securities for other-than-temporary impairment at least quarterly and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, (iii) the recovery of contractual principal and interest and (iv) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer's financial condition, Management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred and industry reports.

The number of investment securities issued by U.S. government and government agencies with unrealized losses and the amount of unrealized losses on those investment securities are primarily the result of market interest rates. At September 30, 2012 the Company had the ability and intent to hold these securities in its current portfolio until recovery, which may be until maturity.

The corporate debt securities consist primarily of corporate bonds issued by the following types of organizations: financial, insurance, utilities, manufacturing, industrial, consumer products and oil and gas. Also included in corporate debt securities are trust preferred capital securities, many issued by national and global financial services firms. The Company believes that the each of the issuers will be able to fulfill the obligations of these securities. At September 30, 2012 the Company had the ability and intent to hold these securities until they recover, which could be at their maturity dates.

The held to maturity portfolio is comprised of government sponsored enterprise securities such as FHLB, FNMA, FHLMC, and FFCB. The securities have maturities of 15 years or less and the securities are used to collateralize public funds. As of September 30, 2012 public funds deposits totaled $433.2 million. The Company has maintained public funds in excess of $175.0 million since December 2007. Management believes that public funds will continue to be a significant part of the Company's deposit base and will need to be collateralized by securities in the investment portfolio.

Securities with unrealized losses are currently performing according to their contractual terms. Management has the intent and ability to hold these securities for the foreseeable future. The fair value is expected to recover as the securities approach their maturity or repricing date or if market yields for such investments decline. As a result of uncertainties in the market affecting companies in the financial services industry, it is at least reasonably possible that a change in the estimate will occur in the near term.

The Company did not record an impairment write-down on its securities for the first nine months of 2012. During the first quarter of 2011, the Company recorded an impairment write-down on securities from one issuer of $0.1 million. This write-down was partially offset by a subsequent gain on sale of the securities of $45,000 in the third quarter of 2011.

At September 30, 2012, the Company's exposure to investment securities issuers that exceeded 10% of stockholders' equity as follows:

	At September 30, 2012
(in thousands)	Amortized Cost		Fair Value
Federal Home Loan Bank (FHLB)	$	108,002	$	108,247
Federal Home Loan Mortgage Corporation (Freddie Mac-FHLMC)		86,849		87,488
Federal National Mortgage Association (Fannie Mae-FNMA)		118,323		118,600
Federal Farm Credit Bank (FFCB)		113,926		114,525
Total	$	427,100	$	428,860

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Allowance for Loan Losses (Details) (USD $)	9 Months Ended			12 Months Ended
	Sep. 30, 2012		Sep. 30, 2011	Dec. 31, 2011
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	$ 8,879,000		$ 8,317,000	$ 8,317,000
Charge offs	(2,951,000)		(8,060,000)
Recoveries	565,000		592,000
Provision	3,014,000		6,855,000
Balance at end of period	9,507,000		7,704,000	8,879,000
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Ending balance: individually evaluated for impairment	2,419,000			2,456,000
Ending balance: collectively evaluated for impairment	7,088,000			6,423,000
Loans:
Loans, ending balance: individually evaluated for impairment	46,714,000			51,093,000
Loans: ending balance: collectively evaluated for impairment	560,528,000			522,650,000
Loans, balance at end of period	607,242,000			573,743,000
Unearned income	(1,080,000)			(643,000)
Notes, Loans and Financing Receivable, Net of Unearned Income	606,162,000			573,100,000
Impaired Loans [Abstract]
Impaired Financing Receivable, Recorded Investment, Total	250,000
Recorded investment - no related allowance	13,137,000			11,243,000
Unpaid principal balance - no related allowance	14,044,000			14,597,000
Average recorded investment - no related allowance	12,636,000			17,557,000
Interest income recognized - no related allowance	1,600,000			1,371,000
Interest income cash basis - no related allowance	1,432,000			607,000
Recorded investment in loans - with related allowance	33,577,000			39,850,000
Unpaid principal balance - with related allowance	36,450,000			40,937,000
Related allowance	2,419,000			2,456,000
Average balance impaired loans - with related allowance	36,738,000			35,897,000
Interest income, recognized - with related allowance	2,553,000			2,083,000
Interest income, cash basis - with related allowance	2,676,000			1,580,000
Recorded investment - total	46,714,000			51,093,000
Unpaid Principal balance - total	50,494,000			55,534,000
Related Allowance - Total	2,419,000			2,456,000
Average recorded investment, total	49,374,000			53,454,000
Interest income accrual method - total	4,153,000			3,454,000
Interest income cash basis - total	4,108,000			2,187,000
Troubled Debt Restructuring [Abstract]
Accruing Loans, Current	14,672,000		17,252,000
Accruing Loans, 30-89 Days Past Due	679,000		235,000
Nonaccrual	1,323,000		0
Total TDRs	16,674,000		17,487,000	17,547,000
Number of contracts	0		11
Pre-Modification recorded investment	0		17,487,000
Post-Modification recorded investment	0		17,487,000
Troubled Debt Restructuring That Subsequently Defaulted [Abstract]
Subsequent default, number of contracts	3
Subsequent default, recorded investment	1,322,000
TDR activity [Roll Forward]
Balance of TDRs	17,547,000
New TDRs	0
Charge-offs post-modification	(619,000)
Paydown	(430,000)
Construction to permanent financing	0
Other	176,000	[1]
Balance of TDRs	16,674,000		17,487,000	17,547,000
Real Estate [Member]
Impaired Loans [Abstract]
Recorded investment - no related allowance	9,202,000			10,505,000
Unpaid principal balance - no related allowance	10,109,000			12,860,000
Average recorded investment - no related allowance	12,471,000			14,571,000
Interest income recognized - no related allowance	1,569,000			1,133,000
Interest income cash basis - no related allowance	1,409,000			505,000
Recorded investment in loans - with related allowance	33,081,000			39,850,000
Unpaid principal balance - with related allowance	35,954,000			40,937,000
Related allowance	2,399,000			2,456,000
Average balance impaired loans - with related allowance	35,995,000			35,897,000
Interest income, recognized - with related allowance	2,534,000			2,083,000
Interest income, cash basis - with related allowance	2,676,000			1,580,000
Troubled Debt Restructuring [Abstract]
Accruing Loans, Current	14,672,000		17,252,000
Accruing Loans, 30-89 Days Past Due	679,000		235,000
Nonaccrual	1,323,000		0
Total TDRs	16,674,000		17,487,000
Number of contracts	0		11
Pre-Modification recorded investment	0		17,487,000
Post-Modification recorded investment	0		17,487,000
Troubled Debt Restructuring That Subsequently Defaulted [Abstract]
Subsequent default, number of contracts	3
Subsequent default, recorded investment	1,322,000
TDR activity [Roll Forward]
Balance of TDRs	16,674,000		17,487,000
Non Real Estate [Member]
Impaired Loans [Abstract]
Recorded investment - no related allowance	3,935,000			738,000
Unpaid principal balance - no related allowance	3,935,000			1,737,000
Average recorded investment - no related allowance	165,000			2,986,000
Interest income recognized - no related allowance	31,000			238,000
Interest income cash basis - no related allowance	23,000			102,000
Recorded investment in loans - with related allowance	496,000			0
Unpaid principal balance - with related allowance	496,000			0
Related allowance	20,000			0
Average balance impaired loans - with related allowance	743,000			0
Interest income, recognized - with related allowance	19,000			0
Interest income, cash basis - with related allowance	0			0
Troubled Debt Restructuring [Abstract]
Accruing Loans, Current	0		0
Accruing Loans, 30-89 Days Past Due	0		0
Nonaccrual	0		0
Total TDRs	0		0
Number of contracts	0		0
Pre-Modification recorded investment	0		0
Post-Modification recorded investment	0		0
Troubled Debt Restructuring That Subsequently Defaulted [Abstract]
Subsequent default, number of contracts	0
Subsequent default, recorded investment	0
TDR activity [Roll Forward]
Balance of TDRs	0		0
Construction and Land Development [Member] | Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	1,002,000		977,000	977,000
Charge offs	(58,000)		(935,000)
Recoveries	13,000		1,000
Provision	228,000		410,000
Balance at end of period	1,185,000		453,000	1,002,000
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Ending balance: individually evaluated for impairment	512,000			139,000
Ending balance: collectively evaluated for impairment	673,000			863,000
Loans:
Loans, ending balance: individually evaluated for impairment	7,396,000			7,998,000
Loans: ending balance: collectively evaluated for impairment	47,984,000			70,616,000
Loans, balance at end of period	55,380,000			78,614,000
Impaired Loans [Abstract]
Recorded investment - no related allowance	900,000			937,000
Unpaid principal balance - no related allowance	949,000			960,000
Average recorded investment - no related allowance	923,000			634,000
Interest income recognized - no related allowance	50,000			91,000
Interest income cash basis - no related allowance	26,000			64,000
Recorded investment in loans - with related allowance	6,496,000			7,061,000
Unpaid principal balance - with related allowance	6,496,000			7,061,000
Related allowance	512,000			139,000
Average balance impaired loans - with related allowance	6,601,000			7,243,000
Interest income, recognized - with related allowance	604,000			477,000
Interest income, cash basis - with related allowance	609,000			376,000
Troubled Debt Restructuring [Abstract]
Accruing Loans, Current	2,601,000		2,602,000
Accruing Loans, 30-89 Days Past Due	0		235,000
Nonaccrual	0		0
Total TDRs	2,601,000		2,837,000	2,840,000
Number of contracts	0		5
Pre-Modification recorded investment	0		2,837,000
Post-Modification recorded investment	0		2,837,000
Troubled Debt Restructuring That Subsequently Defaulted [Abstract]
Subsequent default, number of contracts	0
Subsequent default, recorded investment	0
TDR activity [Roll Forward]
Balance of TDRs	2,840,000
New TDRs	0
Charge-offs post-modification	0
Paydown	0
Construction to permanent financing	(239,000)
Other	0	[1]
Balance of TDRs	2,601,000		2,837,000	2,840,000
Farmland [Member] | Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	65,000		46,000	46,000
Charge offs	0		0
Recoveries	1,000		0
Provision	15,000		15,000
Balance at end of period	81,000		61,000	65,000
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Ending balance: individually evaluated for impairment	0			0
Ending balance: collectively evaluated for impairment	81,000			65,000
Loans:
Loans, ending balance: individually evaluated for impairment	0			0
Loans: ending balance: collectively evaluated for impairment	10,643,000			11,577,000
Loans, balance at end of period	10,643,000			11,577,000
Impaired Loans [Abstract]
Recorded investment - no related allowance	0			0
Unpaid principal balance - no related allowance	0			0
Average recorded investment - no related allowance	0			0
Interest income recognized - no related allowance	0			0
Interest income cash basis - no related allowance	0			0
Recorded investment in loans - with related allowance	0			0
Unpaid principal balance - with related allowance	0			0
Related allowance	0			0
Average balance impaired loans - with related allowance	0			0
Interest income, recognized - with related allowance	0			0
Interest income, cash basis - with related allowance	0			0
Troubled Debt Restructuring [Abstract]
Accruing Loans, Current	0		0
Accruing Loans, 30-89 Days Past Due	0		0
Nonaccrual	0		0
Total TDRs	0		0	0
Number of contracts	0		0
Pre-Modification recorded investment	0		0
Post-Modification recorded investment	0		0
Troubled Debt Restructuring That Subsequently Defaulted [Abstract]
Subsequent default, number of contracts	0
Subsequent default, recorded investment	0
TDR activity [Roll Forward]
Balance of TDRs	0
New TDRs	0
Charge-offs post-modification	0
Paydown	0
Construction to permanent financing	0
Other	0	[1]
Balance of TDRs	0		0	0
One to Four Family [Member] | Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	1,917,000		1,891,000	1,891,000
Charge offs	(1,409,000)		(1,233,000)
Recoveries	27,000		95,000
Provision	1,547,000		815,000
Balance at end of period	2,082,000		1,568,000	1,917,000
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Ending balance: individually evaluated for impairment	279,000			392,000
Ending balance: collectively evaluated for impairment	1,803,000			1,525,000
Loans:
Loans, ending balance: individually evaluated for impairment	2,149,000			3,591,000
Loans: ending balance: collectively evaluated for impairment	86,622,000			85,611,000
Loans, balance at end of period	88,771,000			89,202,000
Impaired Loans [Abstract]
Recorded investment - no related allowance	1,074,000			858,000
Unpaid principal balance - no related allowance	1,734,000			1,192,000
Average recorded investment - no related allowance	1,905,000			2,388,000
Interest income recognized - no related allowance	124,000			218,000
Interest income cash basis - no related allowance	48,000			32,000
Recorded investment in loans - with related allowance	1,075,000			2,733,000
Unpaid principal balance - with related allowance	1,234,000			2,870,000
Related allowance	279,000			392,000
Average balance impaired loans - with related allowance	1,161,000			1,127,000
Interest income, recognized - with related allowance	80,000			57,000
Interest income, cash basis - with related allowance	77,000			56,000
Troubled Debt Restructuring [Abstract]
Accruing Loans, Current	0		1,693,000
Accruing Loans, 30-89 Days Past Due	0		0
Nonaccrual	1,323,000		0
Total TDRs	1,323,000		1,693,000	1,694,000
Number of contracts	0		1
Pre-Modification recorded investment	0		1,693,000
Post-Modification recorded investment	0		1,693,000
Troubled Debt Restructuring That Subsequently Defaulted [Abstract]
Subsequent default, number of contracts	3
Subsequent default, recorded investment	1,322,000
TDR activity [Roll Forward]
Balance of TDRs	1,694,000
New TDRs	0
Charge-offs post-modification	(619,000)
Paydown	0
Construction to permanent financing	239,000
Other	9,000	[1]
Balance of TDRs	1,323,000		1,693,000	1,694,000
MultiFamily [Member] | Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	780,000		487,000	487,000
Charge offs	(187,000)		0
Recoveries	0		0
Provision	(162,000)		47,000
Balance at end of period	431,000		534,000	780,000
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Ending balance: individually evaluated for impairment	426,000			701,000
Ending balance: collectively evaluated for impairment	5,000			79,000
Loans:
Loans, ending balance: individually evaluated for impairment	7,322,000			7,369,000
Loans: ending balance: collectively evaluated for impairment	8,173,000			9,545,000
Loans, balance at end of period	15,495,000			16,914,000
Impaired Loans [Abstract]
Recorded investment - no related allowance	0			0
Unpaid principal balance - no related allowance	0			0
Average recorded investment - no related allowance	0			0
Interest income recognized - no related allowance	0			0
Interest income cash basis - no related allowance	0			0
Recorded investment in loans - with related allowance	7,322,000			7,369,000
Unpaid principal balance - with related allowance	7,322,000			7,369,000
Related allowance	426,000			701,000
Average balance impaired loans - with related allowance	7,367,000			6,347,000
Interest income, recognized - with related allowance	618,000			288,000
Interest income, cash basis - with related allowance	627,000			333,000
Troubled Debt Restructuring [Abstract]
Accruing Loans, Current	5,965,000		6,018,000
Accruing Loans, 30-89 Days Past Due	0		0
Nonaccrual	0		0
Total TDRs	5,965,000		6,018,000	6,015,000
Number of contracts	0		1
Pre-Modification recorded investment	0		6,018,000
Post-Modification recorded investment	0		6,018,000
Troubled Debt Restructuring That Subsequently Defaulted [Abstract]
Subsequent default, number of contracts	0
Subsequent default, recorded investment	0
TDR activity [Roll Forward]
Balance of TDRs	6,015,000
New TDRs	0
Charge-offs post-modification	0
Paydown	(50,000)
Construction to permanent financing	0
Other	0	[1]
Balance of TDRs	5,965,000		6,018,000	6,015,000
Non Farm Non Residential [Member] | Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	2,980,000		3,423,000	3,423,000
Charge offs	(459,000)		(3,790,000)
Recoveries	106,000		12,000
Provision	818,000		2,833,000
Balance at end of period	3,445,000		2,478,000	2,980,000
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Ending balance: individually evaluated for impairment	1,182,000			1,224,000
Ending balance: collectively evaluated for impairment	2,263,000			1,756,000
Loans:
Loans, ending balance: individually evaluated for impairment	25,416,000			31,397,000
Loans: ending balance: collectively evaluated for impairment	273,053,000			237,221,000
Loans, balance at end of period	298,469,000			268,618,000
Impaired Loans [Abstract]
Recorded investment - no related allowance	7,228,000			8,710,000
Unpaid principal balance - no related allowance	7,426,000			10,708,000
Average recorded investment - no related allowance	9,643,000			11,549,000
Interest income recognized - no related allowance	1,395,000			824,000
Interest income cash basis - no related allowance	1,335,000			409,000
Recorded investment in loans - with related allowance	18,188,000			22,687,000
Unpaid principal balance - with related allowance	20,902,000			23,637,000
Related allowance	1,182,000			1,224,000
Average balance impaired loans - with related allowance	20,866,000			21,180,000
Interest income, recognized - with related allowance	1,232,000			1,261,000
Interest income, cash basis - with related allowance	1,363,000			815,000
Troubled Debt Restructuring [Abstract]
Accruing Loans, Current	6,106,000		6,939,000
Accruing Loans, 30-89 Days Past Due	679,000		0
Nonaccrual	0		0
Total TDRs	6,785,000		6,939,000	6,998,000
Number of contracts	0		4
Pre-Modification recorded investment	0		6,939,000
Post-Modification recorded investment	0		6,939,000
Troubled Debt Restructuring That Subsequently Defaulted [Abstract]
Subsequent default, number of contracts	0
Subsequent default, recorded investment	0
TDR activity [Roll Forward]
Balance of TDRs	6,998,000
New TDRs	0
Charge-offs post-modification	0
Paydown	(380,000)
Construction to permanent financing	0
Other	167,000	[1]
Balance of TDRs	6,785,000		6,939,000	6,998,000
Agricultural [Member] | Non Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	125,000		80,000	80,000
Charge offs	(27,000)		(20,000)
Recoveries	1,000		3,000
Provision	(40,000)		126,000
Balance at end of period	59,000		189,000	125,000
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Ending balance: individually evaluated for impairment	0			0
Ending balance: collectively evaluated for impairment	59,000			125,000
Loans:
Loans, ending balance: individually evaluated for impairment	0			0
Loans: ending balance: collectively evaluated for impairment	26,281,000			17,338,000
Loans, balance at end of period	26,281,000			17,338,000
Impaired Loans [Abstract]
Recorded investment - no related allowance	0			0
Unpaid principal balance - no related allowance	0			0
Average recorded investment - no related allowance	0			0
Interest income recognized - no related allowance	0			0
Interest income cash basis - no related allowance	0			0
Recorded investment in loans - with related allowance	0			0
Unpaid principal balance - with related allowance	0			0
Related allowance	0			0
Average balance impaired loans - with related allowance	0			0
Interest income, recognized - with related allowance	0			0
Interest income, cash basis - with related allowance	0			0
Troubled Debt Restructuring [Abstract]
Accruing Loans, Current	0		0
Accruing Loans, 30-89 Days Past Due	0		0
Nonaccrual	0		0
Total TDRs	0		0	0
Number of contracts	0		0
Pre-Modification recorded investment	0		0
Post-Modification recorded investment	0		0
Troubled Debt Restructuring That Subsequently Defaulted [Abstract]
Subsequent default, number of contracts	0
Subsequent default, recorded investment	0
TDR activity [Roll Forward]
Balance of TDRs	0
New TDRs	0
Charge-offs post-modification	0
Paydown	0
Construction to permanent financing	0
Other	0	[1]
Balance of TDRs	0		0	0
Commercial and Industrial [Member] | Non Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	1,407,000		510,000	510,000
Charge offs	(455,000)		(1,596,000)
Recoveries	212,000		319,000
Provision	508,000		2,790,000
Balance at end of period	1,672,000		2,023,000	1,407,000
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Ending balance: individually evaluated for impairment	20,000			0
Ending balance: collectively evaluated for impairment	1,652,000			1,407,000
Loans:
Loans, ending balance: individually evaluated for impairment	4,431,000			738,000
Loans: ending balance: collectively evaluated for impairment	83,327,000			67,287,000
Loans, balance at end of period	87,758,000			68,025,000
Impaired Loans [Abstract]
Recorded investment - no related allowance	3,935,000			738,000
Unpaid principal balance - no related allowance	3,935,000			1,737,000
Average recorded investment - no related allowance	165,000			2,986,000
Interest income recognized - no related allowance	31,000			238,000
Interest income cash basis - no related allowance	23,000			102,000
Recorded investment in loans - with related allowance	496,000			0
Unpaid principal balance - with related allowance	496,000			0
Related allowance	20,000			0
Average balance impaired loans - with related allowance	743,000			0
Interest income, recognized - with related allowance	19,000			0
Interest income, cash basis - with related allowance	0			0
Troubled Debt Restructuring [Abstract]
Accruing Loans, Current	0		0
Accruing Loans, 30-89 Days Past Due	0		0
Nonaccrual	0		0
Total TDRs	0		0	0
Number of contracts	0		0
Pre-Modification recorded investment	0		0
Post-Modification recorded investment	0		0
Troubled Debt Restructuring That Subsequently Defaulted [Abstract]
Subsequent default, number of contracts	0
Subsequent default, recorded investment	0
TDR activity [Roll Forward]
Balance of TDRs	0
New TDRs	0
Charge-offs post-modification	0
Paydown	0
Construction to permanent financing	0
Other	0	[1]
Balance of TDRs	0		0	0
Consumer and Other [Member] | Non Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	314,000		390,000	390,000
Charge offs	(356,000)		(486,000)
Recoveries	205,000		145,000
Provision	137,000		220,000
Balance at end of period	300,000		269,000	314,000
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Ending balance: individually evaluated for impairment	0			0
Ending balance: collectively evaluated for impairment	300,000			314,000
Loans:
Loans, ending balance: individually evaluated for impairment	0			0
Loans: ending balance: collectively evaluated for impairment	24,445,000			23,455,000
Loans, balance at end of period	24,445,000			23,455,000
Impaired Loans [Abstract]
Recorded investment - no related allowance	0			0
Unpaid principal balance - no related allowance	0			0
Average recorded investment - no related allowance	0			0
Interest income recognized - no related allowance	0			0
Interest income cash basis - no related allowance	0			0
Recorded investment in loans - with related allowance	0			0
Unpaid principal balance - with related allowance	0			0
Related allowance	0			0
Average balance impaired loans - with related allowance	0			0
Interest income, recognized - with related allowance	0			0
Interest income, cash basis - with related allowance	0			0
Troubled Debt Restructuring [Abstract]
Accruing Loans, Current	0		0
Accruing Loans, 30-89 Days Past Due	0		0
Nonaccrual	0		0
Total TDRs	0		0	0
Number of contracts	0		0
Pre-Modification recorded investment	0		0
Post-Modification recorded investment	0		0
Troubled Debt Restructuring That Subsequently Defaulted [Abstract]
Subsequent default, number of contracts	0
Subsequent default, recorded investment	0
TDR activity [Roll Forward]
Balance of TDRs	0
New TDRs	0
Charge-offs post-modification	0
Paydown	0
Construction to permanent financing	0
Other	0	[1]
Balance of TDRs	0		0	0
Unallocated [Member] | Non Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Balance at beginning of period	289,000		513,000	513,000
Charge offs	0		0
Recoveries	0		17,000
Provision	(37,000)		(401,000)
Balance at end of period	252,000		129,000
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Ending balance: individually evaluated for impairment	0			0
Ending balance: collectively evaluated for impairment	252,000			289,000
Loans:
Loans, ending balance: individually evaluated for impairment	0			0
Loans: ending balance: collectively evaluated for impairment	0			0
Loans, balance at end of period	$ 0			$ 0

[1] Other includes additions to the balances of TDRs to account for the expenses incurred by the Company for items such as insurance and taxes in protecting the Company's interest.

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies [Abstract]

Schedule of notional amounts of outstanding financial instruments

Set forth below is a summary of the notional amounts of the financial instruments with off-balance sheet risk at September 30, 2012 and December 31, 2011:

Contract Amount
(in thousands)	September 30, 2012		December 31, 2011
Commitments to Extend Credit	$	22,634	$	13,264
Unfunded Commitments under lines of credit	$	76,554	$	69,522
Commercial and Standby letters of credit	$	6,462	$	6,745