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 quarterly period ended March 31, 2014
OR
☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-34142

OAK VALLEY BANCORP

(Exact name of registrant as specified in its charter)

California	26-2326676
State or other jurisdiction of	I.R.S. Employer
incorporation or organization	Identification No.

125 N. Third Ave., Oakdale, CA  95361

(Address of principal executive offices)

(209) 848-2265

Issuer’s telephone number

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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   ☒    No   ☐

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 ☒ No  ☐

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

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☒
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐ No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:  8,071,355 shares of common stock outstanding as of April 30, 2014.

Oak Valley Bancorp

March 31, 2014

Table of Contents

			Page
PART I – FINANCIAL INFORMATION		1	1
Item 1.	Consolidated Financial Statements		1
Condensed Consolidated Balance Sheets at March 31, 2014 (Unaudited), and December 31, 2013			1
Condensed Consolidated Statements of Income (Unaudited) for the Three Month Periods Ended March 31, 2014 and March 31, 2013			2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the Three Month Periods Ended March 31, 2014 and March 31, 2013			3
Condensed Consolidated Statements of Changes of Shareholders’ Equity for the Three-Month Period Ended March 31, 2014 (Unaudited) and the Year Ended December 31, 2013			4
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three-Month Periods Ended March 31, 2014 and March 31, 2013			5
Notes to Condensed Consolidated Financial Statements			6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		37
Item 4.	Controls and Procedures		37
PART II – OTHER INFORMATION			38
Item 1.	Legal Proceedings		38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		38
Item 3.	Defaults Upon Senior Securities		38
Item 4.	Mine Safety Disclosures		38
Item 5.	Other Information		38
Item 6.	Exhibits		39

PART I – FINANCIAL STATEMENTS

Item 1. Consolidated Financial Statements (Unaudited)

OAK VALLEY BANCORP

CONDENSED CONSOLIDATED BALANCE SHEETS

AT MARCH 31, 2014 (UNAUDITED) AND DECEMBER 31, 2013 (AUDITED)

ASSETS	March 31, 2014		December 31, 2013
Cash and due from banks	$	89,278,817	$	100,095,560
Federal funds sold		26,375,000		5,095,000
Cash and cash equivalents		115,653,817		105,190,560
Securities available for sale		119,597,781		117,745,653
Loans, net of allowance for loan loss of $7,614,864 and $7,659,158 at March 31, 2014 and December 31, 2013, respectively		414,425,458		411,155,607
Bank premises and equipment, net		13,940,103		13,684,161
Other real estate owned		916,205		916,205
Interest receivable and other assets		23,058,038		23,160,356
	$	687,591,402	$	671,852,542
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits	$	615,996,534	$	602,633,432
Interest payable and other liabilities		3,771,162		4,702,181
Total liabilities		619,767,696		607,335,613
Commitments and contingencies
Shareholders’ equity
Common stock, no par value; 50,000,000 shares authorized, 8,071,355 and 7,929,730 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively		24,648,704		23,758,210
Additional paid-in capital		2,670,082		2,537,208
Retained earnings		40,392,668		38,984,458
Accumulated other comprehensive income (loss), net of tax		112,252		(762,947	)
Total shareholders’ equity		67,823,706		64,516,929
	$	687,591,402	$	671,852,542

The accompanying notes are an integral part of these consolidated financial statements.

1

OAK VALLEY BANCORP

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2014 AND MARCH 31, 2013

	THREE MONTHS ENDED MARCH 31,
	2014		2013
INTEREST INCOME
Interest and fees on loans	$	5,304,683	$	5,232,140
Interest on securities available for sale		915,527		786,775
Interest on federal funds sold		13,496		6,756
Interest on deposits with banks		43,330		57,374
Total interest income		6,277,036		6,083,045
INTEREST EXPENSE
Deposits		172,808		233,813
Federal funds purchased		20		0
Total interest expense		172,828		233,813
Net interest income		6,104,208		5,849,232
PROVISION FOR LOAN LOSSES		0		100,000
Net interest income after provision for loan losses		6,104,208		5,749,232
OTHER INCOME
Service charges on deposits		308,662		286,718
Earnings on cash surrender value of life insurance		101,147		100,547
Mortgage commissions		29,554		50,514
Gains on called securities		7,856		18,352
Other		363,138		328,503
Total non-interest income		810,357		784,634
OTHER EXPENSES
Salaries and employee benefits		2,713,946		2,543,919
Occupancy expenses		745,146		740,007
Data processing fees		326,056		304,518
Regulatory assessments (FDIC & DBO)		120,000		120,000
Other operating expenses		975,957		930,641
Total non-interest expense		4,881,105		4,639,085
Net income before provision for income taxes		2,033,460		1,894,781
PROVISION FOR INCOME TAXES		625,250		595,350
NET INCOME	$	1,408,210	$	1,299,431
Preferred stock dividends		0		67,500
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	1,408,210	$	1,231,931
NET INCOME PER COMMON SHARE	$	0.18	$	0.16
NET INCOME PER DILUTED COMMON SHARE	$	0.18	$	0.16

The accompanying notes are an integral part of these consolidated financial statements.

2

OAK VALLEY BANCORP

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2014 AND MARCH 31, 2013

	THREE MONTHS ENDED MARCH 31,
	2014			2013
Net income	$	1,408,210		$	1,299,431
Available for sale securities:
Unrealized holding gains (losses) on securities arising during the current period, net of tax effect of $615,203 and ($323,681) for the periods ended March 31, 2014 and 2013, respectively		879,822			(462,907	)
Reclassification adjustment due to net gains realized on calls of securities, net of tax effect of $3,233 and $7,552 for the periods ended March 31, 2014 and 2013, respectively		(4,623	)		(10,800	)
Other comprehensive gain (loss)		875,199			(473,707	)
Comprehensive income	$	2,283,409		$	825,724

The accompanying notes are an integral part of these consolidated financial statements.

3

OAK VALLEY BANCORP

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2013 AND THE THREE-MONTH PERIOD ENDED MARCH 31, 2014 (UNAUDITED)

OAK VALLEY BANCORP

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

	YEAR ENDED DECEMBER 31, 2013 AND THREE MONTHS ENDED MARCH 31, 2014
	Common Stock					Preferred Stock						Additional Paid-in		Retained			Accumulated Other Comprehensive			Total Shareholders’
	Shares			Amount		Shares			Amount			Capital		Earnings			Income (Loss)			Equity
Balances, December 31, 2012		7,907,780		$	23,673,210		6,750		$	6,750,000		$	2,341,814	$	33,958,737		$	3,244,963		$	69,968,724
Stock options exercised		11,250			85,000																85,000
Restricted stock issued		15,000
Restricted stock cancelled		(4,300	)
Repurchase of Series B preferred stock							(6,750	)	$	(6,750,000	)										(6,750,000	)
Preferred stock dividend payments															(67,500	)					(67,500	)
Common stock dividend declared															(792,973	)					(792,973	)
Stock based compensation													195,394								195,394
Other comprehensive loss																		(4,007,910	)		(4,007,910	)
Net income															5,886,194						5,886,194
Balances, December 31, 2013		7,929,730		$	23,758,210		0		$	0		$	2,537,208	$	38,984,458		$	(762,947	)	$	64,516,929
Stock options exercised		118,125		$	890,494																890,494
Tax benefit on options exercised													49,103								49,103
Restricted stock issued		23,500
Stock based compensation													83,771								83,771
Other comprehensive income																		875,199			875,199
Net income															1,408,210						1,408,210
Balances, March 31, 2014		8,071,355		$	24,648,704		0		$	0		$	2,670,082	$	40,392,668		$	112,252		$	67,823,706

The accompanying notes are an integral part of these consolidated financial statements

4

OAK VALLEY BANCORP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2014 AND MARCH 31, 2013

	THREE MONTHS ENDED MARCH 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,408,210		$	1,299,431
Adjustments to reconcile net earnings to net cash from operating activities:
Provision for loan losses		0			100,000
(Decrease) increase in deferred fees/costs, net		(153,691	)		16,891
Depreciation		304,143			289,782
Amortization of investment securities, net		45,520			74,766
Stock based compensation		83,771			36,296
Excess tax benefits from stock-based payment arrangements		(49,103	)		0
Gain on called available for sale securities		(7,856	)		(18,352	)
Earnings on cash surrender value of life insurance		(101,147	)		(100,547	)
(Decrease) increase in interest payable and other liabilities		(138,046	)		485,807
Decrease (increase) in interest receivable		212,582			(94,962	)
Increase in other assets		(1,600,691	)		(138,677	)
Net cash from operating activities		3,693			1,950,435
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available for sale securities		(5,065,000	)		(18,690,316	)
Proceeds from maturities, calls, and principal paydowns of securities available for sale		4,662,377			7,116,014
Net increase in loans		(3,116,160	)		(307,919	)
Purchase of BOLI policies		1,028,706			0
Net purchases of premises and equipment		(560,085	)		(24,774	)
Net cash used in investing activities		(3,050,162	)		(11,906,995	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Shareholder cash dividends paid		(792,973	)		0
Preferred stock dividend payment		0			(67,500	)
Repurchase of Series B preferred stock		0			(6,750,000	)
Net increase in demand deposits and savings accounts		14,811,739			(6,323,636	)
Net decrease in time deposits		(1,448,637	)		(454,133	)
Excess tax benefits from stock-based payment arrangements		49,103			0
Proceeds from sale of common stock and exercise of stock options		890,494			85,000
Net cash from (used in) financing activities		13,509,726			(13,510,269	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		10,463,257			(23,466,829	)
CASH AND CASH EQUIVALENTS, beginning of period		105,190,560			141,334,998
CASH AND CASH EQUIVALENTS, end of period	$	115,653,817		$	117,868,169
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	188,676		$	234,626
Income taxes	$	845,000		$	40,000
NON-CASH INVESTING ACTIVITIES:
Real estate acquired through foreclosure	$	0		$	970,632
Change in unrealized gain (loss) on available-for-sale securities	$	1,487,169		$	(804,940	)

The accompanying notes are an integral part of these consolidated financial statements.

5

OAK VALLEY BANCORP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTATION

On July 3, 2008 (the “Effective Date”), a bank holding company reorganization was completed whereby Oak Valley Bancorp (“Bancorp”) became the parent holding company for Oak Valley Community Bank ( the “Bank”).  On the Effective Date, a tax-free exchange was completed whereby each outstanding share of the Company was converted into one share of Bancorp and the Company became the sole wholly-owned subsidiary of the holding company.

The consolidated financial statements include the accounts of Bancorp and its wholly-owned bank subsidiary. All material intercompany transactions have been eliminated. In the opinion of Management, the consolidated financial statements contain all adjustments necessary to present fairly the financial position, results of operations, changes in shareholders’ equity and cash flows.  All adjustments are of a normal, recurring nature.

Oak Valley Community Bank is a California State chartered bank. The Company was incorporated under the laws of the state of California on May 31, 1990, and began operations in Oakdale on May 28, 1991. The Company operates branches in Oakdale, Sonora, Bridgeport, Bishop, Mammoth Lakes, Modesto, Manteca, Patterson, Turlock, Ripon, Stockton, and Escalon, California. The Bridgeport, Mammoth Lakes, and Bishop branches operate as a separate division, Eastern Sierra Community Bank. The Company’s primary source of revenue is providing loans to customers who are predominantly middle-market businesses.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates reflected in the Company’s consolidated financial statements include the allowance for loan losses, determination of non-accrual loans, other-than-temporary impairment of investment securities, the fair value measurements, deferred compensation plans, and the determination, recognition and measurement of impaired loans. Actual results could differ from these estimates.

The interim consolidated financial statements included in this report are unaudited but reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. The results of operations for the three month period ended March 31, 2014 are not necessarily indicative of the results of a full year’s operations. Certain prior year amounts have been reclassified to conform to the current year presentation. There was no effect on net income or shareholders’ equity as a result of reclassifications. For further information, refer to the audited consolidated financial statements and footnotes included in the Company’s Form 10-K for the year ended December 31, 2013.

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS

In February 2013, the FASB issued ASU No. 2013-04, Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. The Update requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of the following: 1) The amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors, and 2) Any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance in this Update also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, and are applied retrospectively to all prior periods presented for those obligations resulting from joint and several liability arrangements within the Update’s scope that exist at the beginning of an entity’s fiscal year of adoption. The adoption of ASU No. 2013-04 did not have a material impact on the Company's consolidated financial statements.

In July 2013, the FASB issued ASU No. 2013-10, Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes. ASU No. 2013-10 permits the use of the Fed Funds Effective Swap Rate (OIS) to be used as a U.S. benchmark interest rate for hedge account purposes. The amendment is effective prospectively for qualifying new or redesiginated hedging relationships entered into on or after July 17, 2013. The adoption of ASU No. 2013-10 did not have a material impact on the Company's consolidated financial statements.

In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU No. 2013-11 requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. No new recurring disclosures are required. The amendments are effective for annual and interim reporting periods beginning on or after December 15, 2013 and are to be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The adoption of ASU No. 2013-11 did not have a material impact on the Company's consolidated financial statements.

6

In January 2014, the FASB issued ASU No. 2014 – 01, Investments – Equity Method and Joint Ventures (Topic 323), Accounting for Investments in Qualified Affordable Housing Projects. This Update provides guidance on accounting for investments by a reporting entity in flow-through limited liability entities that manage or invest in affordable housing projects that qualify for the low-income housing tax credit. The amendments in this Update permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments in this Update are effective for public business entities for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. The adoption of ASU No. 2014-01 is not expected to have a material impact on the Company's consolidated financial statements.

In January 2014, the FASB issued ASU No. 2014 – 04, Receivables – Troubled Debt Restructurings by Creditors. This ASU provides clarification that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this ASU are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The adoption of ASU No. 2014-04 is not expected to have a material impact on the Company's consolidated financial statements.

NOTE 3 – PREFERRED STOCK REPURCHASE AND WARRANT REDEMPTION

In August 2011, the Company repurchased the $13,500,000 of Series A Preferred Stock originally issued to the U.S. Treasury in December 2008 in connection with the Company’s participation in the Capital Purchase Program (“CPP”). The Company simultaneously issued $13,500,000 in Series B Preferred Stock to the U.S. Treasury under the Small Business Lending Funding (“SBLF”) program. Subsequently, the Company fully redeemed a warrant to purchase 350,346 shares of its Common Stock, at the exercise price of $5.78 per share that the Company had granted to the U.S. Treasury pursuant to the CPP, for a purchase price of $560,000, which settled in September 2011.

In May 2012, the Company repurchased from the U.S. Treasury 6,750 shares of Series B Preferred Stock for aggregate consideration of $6.75 million. In March 2013, the Company repurchased the remaining 6,750 shares of Series B Preferred Stock for aggregate consideration of $6.75 million plus $67,500 for accrued interest. As of March 31, 2014, there are no outstanding shares of Series B Preferred Stock.

7

NOTE 4 – SECURITIES

The amortized cost and estimated fair values of debt securities as of March 31, 2014 are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross  Unrealized  Losses			Fair Value
Available-for-sale securities:
U.S. agencies	$	48,714,052	$	1,657,619	$	(823,114	)	$	49,548,557
Collateralized mortgage obligations		8,661,582		321,512		(11,217	)		8,971,877
Municipalities		45,386,720		1,019,415		(1,930,294	)		44,475,841
SBA Pools		1,073,751		0		(5,091	)		1,068,660
Corporate debt		6,704,380		114,105		0			6,818,485
Asset Backed Securities		5,865,495		29,003		(35,418	)		5,859,080
Mutual Fund		3,000,585		0		(145,304	)		2,855,281
	$	119,406,565	$	3,141,654	$	(2,950,438	)	$	119,597,781

The following tables detail the gross unrealized losses and fair values aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2014.

	Less than 12 months					12 months or more					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. agencies	$	17,285,762	$	(494,669	)	$	4,345,191	$	(328,445	)	$	21,630,953	$	(823,114	)
Collateralized mortgage obligations		1,625,138		(11,217	)		0		0			1,625,138		(11,217	)
Municipalities		18,390,309		(1,098,079	)		9,858,466		(832,215	)		28,248,775		(1,930,294	)
SBA Pools		0		0			1,063,903		(5,091	)		1,063,903		(5,091	)
Corporate debt		0		0			0		0			0		0
Asset Backed Securities		3,890,680		(35,418	)		0		0			3,890,680		(35,418	)
Mutual Fund		0		0			2,855,281		(145,304	)		2,855,281		(145,304	)
Total temporarily impaired securities	$	41,191,889	$	(1,639,383	)	$	18,122,841	$	(1,311,055	)	$	59,314,730	$	(2,950,438	)

At March 31, 2014, there were three agencies, 13 municipalities, two SBA pools and one mutual fund that comprised the total securities in an unrealized loss position for greater than 12 months and twelve agencies, one collateralized mortgage obligation, 21 municipalities, and two asset backed securities that make up the total securities in a loss position for less than 12 months. Management periodically evaluates each available-for-sale investment security in an unrealized loss position to determine if the impairment is temporary or other than temporary. This evaluation encompasses various factors including, the nature of the investment, the cause of the impairment, the severity and duration of the impairment, credit ratings and other credit related factors such as third party guarantees and volatility of the security’s fair value. Management has determined that no investment security is other than temporarily impaired. The unrealized losses are due primarily to interest rate changes and the Company does not intend to sell the securities and it is not likely that we will be required to sell the securities before the earlier of the forecasted recovery or the maturity of the underlying investment security.

8

The amortized cost and estimated fair value of debt securities at March 31, 2014, by contractual maturity or call date, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	12,001,360	$	11,421,774
Due after one year through five years		31,241,430		32,843,925
Due after five years through ten years		37,903,603		36,600,718
Due after ten years		38,260,172		38,731,364
	$	119,406,565	$	119,597,781

The amortized cost and estimated fair values of debt securities as of December 31, 2013, are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
U.S. agencies	$	52,539,479		1,844,104	$	(1,267,890	)	$	53,115,693
Collateralized mortgage obligations		9,580,443		247,763		(46,717	)		9,781,489
Municipalities		42,303,684		953,039		(2,987,755	)		40,268,968
SBA Pools		1,087,995		-		(7,480	)		1,080,515
Corporate debt		4,697,220		127,558		-			4,824,778
Asset Backed Securities		5,857,500		27,678		(28,757	)		5,856,421
Mutual Fund		2,975,285		-		(157,496	)		2,817,789
	$	119,041,606	$	3,200,142	$	(4,496,095	)	$	117,745,653

The following tables detail the gross unrealized losses and fair values aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2013.

	Less than 12 months					12 months or more					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized  Loss
U.S. agencies	$	21,700,343	$	(1,011,733	)	$	1,739,994	$	(256,157	)	$	23,440,337	$	(1,267,890	)
Collateralized mortgage obligations		1,641,929		(46,717	)		—		—			1,641,929		(46,717	)
Municipalities		25,501,929		(2,761,277	)		2,879,010		(226,478	)		28,380,939		(2,987,755	)
SBA Pools		829,375		(5,726	)		246,390		(1,754	)		1,075,765		(7,480	)
Corporate debt		—		—			—		—			—		—
Asset Backed Securities		3,893,801		(28,757	)		—		—			3,893,801		(28,757	)
Mutual Fund		2,817,790		(157,496	)		—		—			2,817,790		(157,496	)
Total temporarily impaired securities	$	56,385,167	$	(4,011,706	)	$	4,865,394	$	(484,389	)	$	61,250,561	$	(4,496,095	)

We recognized a gain of $8,000 for the three month period ended March 31, 2014, on certain available-for-sale securities that were partially called, which compares to $18,000 in the same period of 2013. There were no sales of available-for-sale securities during the first three months of 2014 and 2013.

Securities carried at $70,901,000 and $72,371,000 at March 31, 2014 and December 31, 2013, respectively, were pledged to secure deposits of public funds.

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NOTE 5 – LOANS

Our customers are primarily located in Stanislaus, San Joaquin, Tuolumne, Inyo, and Mono Counties. As of March 31, 2014, approximately 83% of the Company’s loans are commercial real estate loans which include construction loans. Approximately 10% of the Company’s loans are for general commercial uses including professional, retail, and small business. Additionally, 5% of the Company’s loans are for residential real estate and other consumer loans. The remaining 2% are agriculture loans. Loan totals were as follows:

	March 31, 2014			December 31, 2013
Commercial real estate:
Commercial real estate- construction	$	12,652,579		$	15,555,298
Commercial real estate- mortgages		305,537,995			285,839,700
Land		11,046,401			11,157,027
Farmland		20,814,022			20,321,572
Commercial and industrial		41,086,601			48,786,586
Consumer		846,345			882,667
Consumer residential		19,159,607			25,623,482
Agriculture		11,366,751			11,272,103
Total loans		422,510,301			419,438,435
Less:
Deferred loan fees and costs, net		(469,979	)		(623,670	)
Allowance for loan losses		(7,614,864	)		(7,659,158	)
Net loans	$	414,425,458		$	411,155,607

Loan Origination/Risk Management. The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentration of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

Commercial and industrial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Underwriting standards are designed to promote relationship banking rather than transactional banking. Once it is determined that the borrower’s management possesses sound ethics and solid business acumen, our management examines current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial and industrial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial and industrial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type and geographic location. This diversity helps reduce the Company’s exposure to adverse economic events that affect any single market or industry. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. As a general rule, the Company avoids financing single-purpose projects unless other underwriting factors are present to help mitigate risk. The Company also utilizes third-party experts to provide insight and guidance about economic conditions and trends affecting market areas it serves. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans. At March 31, 2014, commercial real estate loans equal to approximately 34.3% of the outstanding principal balance of our commercial real estate loans were secured by owner-occupied properties.

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With respect to loans to developers and builders that are secured by non-owner occupied properties that the Company may originate from time to time, the Company generally requires the borrower to have had an existing relationship with the Company and have a proven record of success. Construction loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates and financial analysis of the developers and property owners. Construction loans are generally based upon estimates of costs and value associated with the complete project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

Agricultural production, real estate and development lending is susceptible to credit risks including adverse weather conditions, pest and disease, as well as market price fluctuations and foreign competition. Agricultural loan underwriting standards are maintained by following Company policies and procedures in place to minimize risk in this lending segment. These standards consist of limiting credit to experienced farmers who have demonstrated farm management capabilities, requiring cash flow projections displaying margins sufficient for repayment from normal farm operations along with equity injected as required by policy, as well as providing adequate secondary repayment and sponsorship including satisfactory collateral support. Credit enhancement obtained through government guarantee programs may also be used to provide further support as available. 

The Company originates consumer loans utilizing common underwriting criteria specified in policy. To monitor and manage consumer loan risk, policies and procedures are developed and modified, as needed, jointly by line and staff personnel. This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Additionally, trend and outlook reports are reviewed by management on a regular basis. Underwriting standards for 1-4 family, home equity lines and loans follow bank policy, which include, but are not limited to, a maximum loan-to-value percentage of 80%, a maximum housing and total debt ratio of 36% and 42%, respectively and other specified credit and documentation requirements.

The Company maintains an independent loan review department that reviews and validates the credit risk program on a periodic basis. Results of these reviews are presented to management. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as the Bank’s policies and procedures.

Non-Accrual and Past Due Loans. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Non-accrual loans, segregated by class of loans, were as follows:

	March 31, 2014		December 31, 2013
Commercial real estate:
Commercial real estate- construction	$	0	$	0
Commercial real estate- mortgages		1,046,483		1,046,483
Land		3,762,894		1,182,904
Farmland		87,275		92,354
Commercial and industrial		351,076		17,839
Consumer		0		0
Consumer residential		0		0
Agriculture		0		0
Total non-accrual loans	$	5,247,728	$	2,339,580

Had non-accrual loans performed in accordance with their original contract terms, we would have recognized additional interest income of approximately $130,000 in the three month period ended March 31, 2014, as compared to $176,000 in the same period of 2013.

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The following table analyzes past due loans including the non-accrual loans in the above table, segregated by class of loans, as of March 31, 2014:

March 31, 2014	30-59 Days Past Due		60-89  Days Past  Due		Greater  Than 90  Days Past Due		Total Past  Due		Current		Total		Greater Than 90  Days Past Due and Still  Accruing
Commercial real estate:
Commercial R.E. - construction	$	0		0		0	$	0	$	12,652,579	$	12,652,579	$	0
Commercial R.E. - mortgages		1,338,804		0		1,046,483		2,385,287		303,152,708		305,537,995		0
Land		0		0		3,243,320		3,243,320		7,803,081		11,046,401		0
Farmland		0		0		87,275		87,275		20,726,747		20,814,022		0
Commercial and industrial		1,058,730		0		333,937		1,392,667		39,693,934		41,086,601		0
Consumer		0		0		0		0		846,345		846,345		0
Consumer residential		0		0		0		0		19,159,607		19,159,607		0
Agriculture		0		0		0		0		11,366,751		11,366,751		0
Total	$	2,397,534	$	0	$	4,711,015	$	7,108,549	$	415,401,752	$	422,510,301	$	0

The following table analyzes past due loans including the non-accrual loans in the above table, segregated by class of loans, as of December 31, 2013:

December 31, 2013	30-59 Days Past Due		60-89 Days Past  Due		Greater Than 90 Days Past  Due		Total Past Due		Current		Total		Greater  Than 90 Days Past Due and  Still  Accruing
Commercial real estate:
Commercial R.E. - construction	$	0	$	0	$	0	$	0	$	15,555,298	$	15,555,298	$	0
Commercial R.E. - mortgages		1,347,779		0		1,046,483		2,394,262		283,445,438		285,839,700		0
Land		0		2,651,530		658,232		3,309,762		7,847,265		11,157,027		0
Farmland		0		0		92,354		92,354		20,229,218		20,321,572		0
Commercial and industrial		0		1,406,859		0		1,406,859		47,379,727		48,786,586		0
Consumer		0		0		0		0		882,667		882,667		0
Consumer residential		0		0		0		0		25,623,482		25,623,482		0
Agriculture		0		0		0		0		11,272,103		11,272,103		0
Total	$	1,347,779	$	4,058,389	$	1,797,069	$	7,203,237	$	412,235,198	$	419,438,435	$	0

Impaired Loans. Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. There was no interest income realized on impaired loans for the three months ended March 31, 2014 and 2013. Average recorded investment in impaired loans was $3.79 million for the three months ended March 31, 2014, as compared to $6.57 million for the same period of 2013. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

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Impaired loans as of March 31, 2014 and December 31, 2013 are set forth in the following table.

	Unpaid  Contractual Principal  Balance		Recorded  Investment With No Allowance		Recorded  Investment  With  Allowance		Total  Recorded  Investment		Related Allowance		Average  Recorded  Investment
March 31, 2014
Commercial real estate:
Commercial R.E. - construction	$	0	$	0	$	0	$	0	$	0	$	0
Commercial R.E. - mortgages		3,049,170		1,046,483		0		1,046,483		0		1,046,483
Land		3,964,794		858,110		2,904,784		3,762,894		1,071,474		2,472,899
Farmland		91,586		87,275		0		87,275		0		89,815
Commercial and industrial		360,753		351,076		0		351,076		0		184,458
Consumer		0		0		0		0		0		0
Consumer residential		0		0		0		0		0		0
Agriculture		0		0		0		0		0		0
Total	$	7,466,303	$	2,342,944	$	2,904,784	$	5,247,728	$	1,071,474	$	3,793,655
December 31, 2013
Commercial real estate:
Commercial R.E. - construction	$	0	$	0	$	0	$	0	$	0	$	51,452
Commercial R.E. - mortgages		3,049,170		1,046,483		0		1,046,483		0		1,979,847
Land		1,319,519		0		1,182,904		1,182,904		392,432		1,635,686
Farmland		95,286		92,354		0		92,354		0		61,530
Commercial and industrial		27,240		17,839		0		17,839		0		19,744
Consumer		0		0		0		0		0		0
Consumer residential		0		0		0		0		0		354,124
Agriculture		0		0		0		0		0		0
Total	$	4,491,215	$	1,156,676	$	1,182,904	$	2,339,580	$	392,432	$	4,102,383

Troubled Debt Restructurings – In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

At March 31, 2014, there were 3 loans and leases that were considered to be troubled debt restructurings, all of which are considered non-accrual totaling $1,195,000. At December 31, 2013, there were 3 loans and leases that were considered to be troubled debt restructurings, all of which are considered non-accrual totaling $1,201,000. At March 31, 2014 and December 31, 2013 there were no unfunded commitments on loans classified as a troubled debt restructures. We have allocated $321,000 and $392,000 of specific reserves to loans whose terms have been modified in troubled debt restructurings as of March 31, 2014 and December 31, 2013, respectively.

During the three month period ended March 31, 2014, the terms of one loan were modified as troubled debt restructurings by extending the maturity date. The modification of the terms of such loans typically includes one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date; or a temporary payment modification in which the payment amount allocated towards principal was reduced. In some cases, a permanent reduction of the accrued interest on the loan is conceded.

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The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ended March 31, 2014 and 2013:

	Three Months Ended March 31, 2014						Three Months Ended March 31, 2013
	Number of  Loans		Pre- Modification Outstanding Recorded Investment		Post-  Modification  Outstanding Recorded  Investment		Number of  Loans		Pre- Modification  Outstanding Recorded Investment		Post-  Modification  Outstanding Recorded Investment
Commercial real estate:
Commercial R.E. - construction		0	$	0	$	0		0	$	0	$	0
Commercial R.E. - mortgages		0		0		0		0		0		0
Land		1		519,574		519,574		1		541,594		541,594
Farmland		0		0		0		0		0		0
Commercial and industrial		0		0		0		0		0		0
Consumer		0		0		0		0		0		0
Consumer residential		0		0		0		0		0		0
Agriculture		0		0		0		0		0		0
Total		1	$	519,574	$	519,574		1	$	541,594	$	541,594

The troubled debt restructuring during the three months ended March 31, 2014 did not increase the allowance for loan losses as a result of loan modifications because the loans are evaluated as an impaired loan and a specific valuation allowance would have already been allocated, if necessary, prior to the loan modification. There were no charge-offs as a result of loan modifications, as the contractual balances outstanding were determined to be collectible.

There were no loans modified as troubled debt restructurings within the previous twelve months and for which there was a payment default during the three month periods ended March 31, 2014 and 2013. A loan is considered to be in payment default once it is ninety days contractually past due under the modified terms.

Quality ratings (Risk Grades) are assigned to all commitments and stand-alone notes. Risk grades define the basic characteristics of commitments or stand-alone note in relation to their risk. All loans are graded using a system that maximizes the loan quality information contained in loan review grades, while ensuring that the system is compatible with the grades used by bank examiners.

We grade loans using the following letter system:

1 Exceptional Loan

2 Quality Loan

3A Better Than Acceptable Loan

3B Acceptable Loan

3C Marginally Acceptable Loan

4 (W) Watch Acceptable Loan

5 Other Loans Especially Mentioned

6 Substandard Loan

7 Doubtful Loan

8 Loss

1. Exceptional Loan - Loans with A+ credits that contain very little, if any, risk. Grade 1 loans are considered Pass. To qualify for this rating, the following characteristics must be present:

-A high level of liquidity and whose debt-servicing capacity exceeds expected obligations by a substantial margin.

-Where leverage is below average for the industry and earnings are consistent or growing without severe vulnerability to economic cycles.

-Also included in this rating (but not mandatory unless one or more of the preceding characteristics are missing) are loans that are fully secured and properly margined by our own time instruments or U.S. blue chip securities. To be properly margined cash collateral must be equal to, or greater than, 110% of the loan amount.

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2. Quality Loan - Loans with excellent sources of repayment that conform in all respects to bank policy and regulatory requirements. These are also loans for which little repayment risk has been identified. No credit or collateral exceptions. Grade 2 loans are considered Pass. Other factors include:

-Unquestionable debt-servicing capacity to cover all obligations in the ordinary course of business from well-defined primary and secondary sources.

-Consistent strong earnings.

-A solid equity base.

3A. Better than Acceptable Loan - In the interest of better delineating the loan portfolio’s true credit risk for reserve allocation, further granularity has been sought by splitting the grade 3 category into three classifications. The distinction between the three are bank-defined guidelines and represent a further refinement of the regulatory definition of a pass, or grade 3 loan. Grade 3A is the stronger third of the pass category, but is not strong enough to be a grade 2 and is characterized by:

-Strong earnings with no loss in last three years and ample cash flow to service all debt well above policy guidelines.

-Long term experienced management with depth and defined management succession.

-The loan has no exceptions to policy.

-Loan-to-value on real estate secured transactions is 10% to 20% less than policy guidelines.

-Very liquid balance sheet that may have cash available to pay off our loan completely.

-Little to no debt on balance sheet.

3B. Acceptable Loan - 3B loans are simply defined as all loans that are less qualified than 3A loans and are stronger than 3C loans. These loans are characterized by acceptable sources of repayment that conform to bank policy and regulatory requirements. Repayment risks are acceptable for these loans. Credit or collateral exceptions are minimal, are in the process of correction, and do not represent repayment risk. These loans:

-Are those where the borrower has average financial strengths, a history of profitable operations and experienced management.

-Are those where the borrower can be expected to handle normal credit needs in a satisfactory manner.

3C. Marginally Acceptable - 3C loans have similar characteristics as that of 3Bs with the following additional characteristics:

Requires collateral. A credit facility where the borrower has average financial strengths, but usually lacks reliable secondary sources of repayment other than the subject collateral. Other common characteristics can include some or all of the following: minimal background experience of management, lacking continuity of management, a start-up operation, erratic historical profitability (acceptable reasons-well identified), lack of or marginal sponsorship of guarantor, and government guaranteed loans.

4W Watch Acceptable - Watch grade will be assigned to any credit that is adequately secured and performing but monitored for a number of indicators. These characteristics may include any unexpected short-term adverse financial performance from budgeted projections or prior period’s results (i.e., declining profits, sales, margins, cash flow, or increased reliance on leverage, including adverse balance sheet ratios, trade debt issues, etc.). Additionally, any managerial or personal problems of company management, decline in the entire industry or local economic conditions failure to provide financial information or other documentation as requested; issues regarding delinquency, overdrafts, or renewals; and any other issues that cause concern for the company. Loans to individuals or loans supported by guarantors with marginal net worth and/or marginal collateral. Weakness identified in a Watch credit is short-term in nature. Loans in this category are usually accounts the Bank would want to retain providing a positive turnaround can be expected within a reasonable time frame. Grade 4 loans are considered Pass.

5 Other Loans Especially Mentioned (Special Mention) - A special mention extension of credit is defined as having potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may, at some future date result in the deterioration of the repayment prospects for the credit or the institution’s credit position. Extensions of credit that might be detailed in this category include the following:

-The lending officer may be unable to properly supervise the credit because of an inadequate loan or credit agreement.

-Questions exist regarding the condition of and/or control over collateral.

-Economic or market conditions may unfavorably affect the obligor in the future.

-A declining trend in the obligor’s operations or an imbalanced position in the balance sheet exists, but not to the point that repayment is jeopardized.

6 Substandard Loan - A “substandard” extension of credit is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Extensions of credit so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard credits, does not have to exist in individual extensions of credit classified substandard.

7 Doubtful Loan - An extension of credit classified “doubtful” has all the weaknesses inherent in one classified substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high but because of certain important and reasonably specific pending factors that may work to the advantage of and strengthen the credit, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceedings, capital injection, perfecting liens on additional collateral or refinancing plans. The entire loan need not be classified doubtful when collection of a specific portion appears highly probable. An example of proper use of the doubtful category is the case of a company being liquidated, with the trustee-in-bankruptcy indicating a minimum disbursement of 40 percent and a maximum of 65 percent to unsecured creditors, including the Bank. In this situation, estimates are based on liquidation value appraisals with actual values yet to be realized. By definition, the only portion of the credit that is doubtful is the 25 percent difference between 40 and 65 percent. A proper classification of such a credit would show 40 percent substandard, 25 percent doubtful, and 35 percent loss. A credit classified as doubtful should be resolved within a “reasonable’ period of time. Reasonable is generally defined as the period between examinations. In other words, a credit classified doubtful at an examination should be cleared up before the next exam. However, there may be situations that warrant continuation of the doubtful classification a while longer.

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8. Loss - Extensions of credit classified “loss” are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the credit has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off, even though partial recovery may be affected in the future. It should not be the Company’s practice to attempt long-term recoveries while the credit remains on the books. Losses should be taken in the period in which they surface as uncollectible.

As of March 31, 2014, there are no loans that are classified with a risk grade of 8- Loss.

The following table presents weighted average risk grades of our loan portfolio:

	March 31, 2014		December 31, 2013
	Weighted Average Risk Grade		Weighted Average Risk Grade
Commercial real estate:
Commercial real estate - construction		3.10		3.84
Commercial real estate - mortgages		3.17		3.14
Land		4.50		4.50
Farmland		3.07		3.04
Commercial and industrial		3.27		3.13
Consumer		2.40		2.31
Consumer residential		3.06		3.05
Agriculture		3.26		3.27
Total gross loans		3.21		3.20

The following table presents risk grade totals by class of loans as of March 31, 2014 and December 31, 2013. Risk grades 1 through 4 have been aggregated in the “Pass” line.

Dollars in thousands	Commercial R.E. Construction		Commercial R.E. Mortgages		Land		Farmland		Commercial and Industrial		Consumer		Consumer Residential		Agriculture		Total
March 31, 2014
Pass	$	12,652,579	$	297,874,608	$	7,283,507	$	20,181,024	$	35,685,654	$	830,952	$	18,737,965	$	11,366,751	$	404,613,040
Special mention		-		4,139,041		3,762,894		545,723		249,861		-		-		-		8,697,519
Substandard		-		3,524,346		-		87,275		5,151,086		15,393		421,642		-		9,199,742
Doubtful		-		-		-		-		-		-		-		-		-
Total loans	$	12,652,579	$	305,537,995	$	11,046,401	$	20,814,022	$	41,086,601	$	846,345	$	19,159,607	$	11,366,751	$	422,510,301
December 31, 2013
Pass	$	15,555,298	$	278,532,923	$	7,322,593	$	20,229,218	$	46,712,369	$	866,490	$	25,200,497	$	11,272,103	$	405,691,492
Special mention		-		3,757,796		-		-		252,706		-		-		-		4,010,502
Substandard		-		3,548,980		3,834,434		92,354		1,821,511		16,177		422,985		-		9,736,441
Doubtful		-		-		-		-		-		-		-		-		-
Total loans	$	15,555,298	$	285,839,700	$	11,157,027	$	20,321,572	$	48,786,586	$	882,667	$	25,623,482	$	11,272,103	$	419,438,435

Allowance for Loan Losses. The allowance for loan losses is a reserve established by the Company through a provision for loan losses charged to expense, which represents management’s best estimate of probable losses that have been incurred within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. The allowance for loan loss methodology includes allowance allocations calculated in accordance with ASC Topic 310, “Receivables” and allowance allocations calculated in accordance with ASC Topic 450, “Contingencies.” Accordingly, the methodology is based on historical loss experience by type of credit and internal risk grade, specific homogeneous risk pools and specific loss allocations, with adjustments for current events and conditions. The process for determining the appropriate level of the allowance for loan losses is designed to account for credit deterioration as it occurs. The provision for loan losses reflects loan quality trends, including the levels of and trends related to non-accrual loans, past due loans, potential problem loans, criticized loans and net charge-offs or recoveries, among other factors. The provision for loan losses also reflects the totality of actions taken on all loans for a particular period. In other words, the amount of the provision reflects not only the necessary increases in the allowance for loan losses related to newly identified criticized loans, but it also reflects actions taken related to other loans including, among other things, any necessary increases or decreases in required allowances for specific loans or loan pools.

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The level of the allowance reflects management’s continuing evaluation of industry concentrations, specific credit risks, loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Company’s control, including, among other things, the performance of the Company’s loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications.

The Company’s allowance for loan losses consists of three elements: (i) specific valuation allowances determined in accordance with ASC Topic 310 based on probable losses on specific loans; (ii) historical valuation allowances determined in accordance with ASC Topic 450 based on historical loan loss experience for similar loans with similar characteristics and trends, adjusted, as necessary, to reflect the impact of current conditions; and (iii) general valuation allowances determined in accordance with ASC Topic 450 based on general economic conditions and other qualitative risk factors both internal and external to the Bank and the Company.

The allowances established for probable losses on specific loans are based on a regular analysis and evaluation of problem loans. Loans are classified based on an internal credit risk grading process that evaluates, among other things: (i) the obligor’s ability to repay; (ii) the underlying collateral, if any; and (iii) the economic environment and industry in which the borrower operates. This analysis is performed at the relationship manager level for all commercial loans. When a loan has a calculated grade of 5 or higher, a special assets officer analyzes the loan to determine whether the loan is impaired and, if impaired, the need to specifically allocate a portion of the allowance for loan losses to the loan. Specific valuation allowances are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things.

Historical valuation allowances are calculated based on the historical loss experience of specific types of loans and the internal risk grade of such loans at the time they were charged-off. The Company calculates historical loss ratios for pools of similar loans with similar characteristics based on the proportion of actual charge-offs experienced to the total population of loans in the pool. The historical loss ratios are periodically updated based on actual charge-off experience. A historical valuation allowance is established for each pool of similar loans based upon the product of the historical loss ratio and the total dollar amount of the loans in the pool. The Company’s pools of similar loans include similarly risk-graded groups of commercial and industrial loans, commercial real estate loans, consumer real estate loans and consumer and other loans.

General valuation allowances are based on general economic conditions and other qualitative risk factors both internal and external to the Bank and the Company. In general, such valuation allowances are determined by evaluating, among other things: (i) the experience, ability and effectiveness of the Bank’s lending management and staff; (ii) the effectiveness of the Bank’s loan policies, procedures and internal controls; (iii) changes in asset quality; (iv) changes in loan portfolio volume; (v) the composition and concentrations of credit; (vi) the impact of competition on loan structuring and pricing; (vii) the effectiveness of the internal loan review function; (viii) the impact of environmental risks on portfolio risks; and (ix) the impact of rising interest rates on portfolio risk. Management evaluates the degree of risk that each one of these components has on the quality of the loan portfolio on a quarterly basis. Each component is determined to have either a high, moderate or low degree of risk. The results are then input into a “general allocation matrix” to determine an appropriate general valuation allowance.

Included in the general valuation allowances are allocations for groups of similar loans with risk characteristics that exceed certain concentration limits established by management. Concentration risk limits have been established, among other things, for certain industry concentrations, large balance and highly leveraged credit relationships that exceed specified risk grades, and loans originated with policy exceptions that exceed specified risk grades.

Loans identified as losses by management, internal loan review and/or bank examiners are charged-off. Furthermore, consumer loan accounts are charged-off automatically based on regulatory requirements.

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The following table details activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2014 and 2013. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

Allowance for Loan Losses
For the Three Months Ended March 31, 2014 and 2013
Three Months Ended March 31, 2014	Commercial Real Estate			Commercial and Industrial			Consumer			Consumer Residential			Agriculture			Unallocated			Total
Beginning balance	$	6,247,603		$	662,625		$	47,359		$	440,049		$	216,808		$	44,714		$	7,659,158
Charge-offs		(50,188	)		0			(3,327	)		0			0			0			(53,515	)
Recoveries		0			0			714			8,507			0			0			9,221
Provision		(5,644	)		79,802			290			(31,317	)		(1,986	)		(41,145	)		0
Ending balance	$	6,191,771		$	742,427		$	45,036		$	417,239		$	214,822		$	3,569		$	7,614,864
Three Months Ended March 31, 2013
Beginning balance	$	6,571,290		$	473,727		$	50,062		$	383,653		$	285,734		$	210,509		$	7,974,975
Charge-offs		(236,114	)		0			(4,343	)		(100,000	)		0			0			(340,457	)
Recoveries		6,096			0			880			1,945						0			8,921
Provision		194,241			(3,586	)		(3,135	)		153,169			(82,122	)		(158,567	)		100,000
Ending balance	$	6,535,513		$	470,141		$	43,464		$	438,767		$	203,612		$	51,942		$	7,743,439

The following table details the allowance for loan losses and ending gross loan balances as of March 31, 2014 and December 31, 2013, summarized by collective and individual evaluation methods of impairment.

March 31, 2014	Commercial Real Estate		Commercial and Industrial		Consumer		Consumer Residential		Agriculture		Unallocated		Total
Allowance for loan losses for loans:
Individually evaluated for impairment	$	1,071,474	$	0	$	0	$	0	$	0	$	0	$	1,071,474
Collectively evaluated for impairment		5,120,297		742,427		45,036		417,239		214,822		3,569		6,543,390
	$	6,191,771	$	742,427	$	45,036	$	417,239	$	214,822	$	3,569	$	7,614,864
Ending gross loan balances:
Individually evaluated for impairment	$	4,896,652	$	351,076	$	0	$	0	$	0	$	0	$	5,247,728
Collectively evaluated for impairment		345,154,345		40,735,525		846,345		19,159,607		11,366,751		0		417,262,573
	$	350,050,997	$	41,086,601	$	846,345	$	19,159,607	$	11,366,751	$	0	$	422,510,301
December 31, 2013
Allowance for loan losses for loans:
Individually evaluated for impairment	$	392,432	$	0	$	0	$	0	$	0	$	0	$	392,432
Collectively evaluated for impairment		5,855,171		662,625		47,359		440,049		216,808		44,714		7,266,726
	$	6,247,603	$	662,625	$	47,359	$	440,049	$	216,808	$	44,714	$	7,659,158
Ending balances of loans:
Individually evaluated for impairment	$	2,321,741	$	17,839	$	0	$	0	$	0	$	0	$	2,339,580
Collectively evaluated for impairment		330,551,856		48,768,747		882,667		25,623,482		11,272,103		0		417,098,855
	$	332,873,597	$	48,786,586	$	882,667	$	25,623,482	$	11,272,103	$	0	$	419,438,435

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Changes in the reserve for off-balance-sheet commitments were as follows:

	THREE MONTHS ENDED MARCH 31,
	2014			2013
Balance, beginning of period	$	133,765		$	108,209
(Recovery) provision charged to operations for off balance sheet commitments		(2,519	)		15,768
Balance, end of period	$	131,246		$	123,977

The method for calculating the reserve for off-balance-sheet loan commitments is based on a reserve percentage which is less than other outstanding loan types because they are at a lower risk level.  This reserve percentage, based on many factors including historical losses and existing economic conditions, is evaluated by management periodically and is applied to the total undisbursed loan commitment balance to calculate the reserve for off-balance-sheet commitments. Reserves for off-balance-sheet commitments are recorded in interest payable and other liabilities on the condensed consolidated balance sheets.

At March 31, 2014 and December 31, 2013, loans carried at $422,510,000 and $419,438,000, respectively, were pledged as collateral on advances from the Federal Home Loan Bank.

NOTE 6 – OTHER REAL ESTATE OWNED

As of March 31, 2014 and December 31, 2013, the Company owned three properties classified as other real estate with outstanding balances of $916,000, which includes one property consisting of residential land that was written down to a zero balance. Each of these properties was acquired through loan foreclosure. The residential land property the Company owned at March 31, 2014 and December 31, 2013, was written down to a zero balance because the public utilities have not been obtainable rendering these land lots unmarketable at this time. There were no sales of OREO property during the three months ended March 31, 2014 and 2013.

Real estate properties acquired through, or in lieu of, loan foreclosure are to be sold and are initially recorded at the lower of carrying amount of the loan or fair value of the property at the date of foreclosure less selling costs. Subsequent to foreclosure, valuations are periodically performed and any subject revisions in the estimate of fair value are reported as adjustment to the carrying value of the real estate, provided the adjusted carrying amount does not exceed the original amount at foreclosure. Revenues and expenses from operations and changes in the valuation allowance are included in other operating expenses.

NOTE 7– OTHER POST-RETIREMENT BENEFIT PLANS

During January 2008, the Bank awarded certain officers a salary continuation plan (the “Plan”). Under the Plan, the participants will be provided with a fixed annual retirement benefit for twenty years after retirement. The Bank is also responsible for certain pre-retirement death benefits under the Plan. In connection with the implementation of the Plan, the Bank purchased single premium life insurance policies on the life of each of the officers covered under the Plan. The Bank is the owner and partial beneficiary of these life insurance policies. The assets of the Plan, under Internal Revenue Service regulations, are owned by the Bank and are available to satisfy the Company’s general creditors.

The Bank awarded a director retirement plan (“DRP”) to two of its directors in January 2008 and to three of its newest directors in March 2014. Under the DRP, the participants will be provided with a fixed annual retirement benefit for ten years after retirement. The Bank is also responsible for certain pre-retirement death benefits under the DRP. In connection with the implementation of the DRP, the Bank purchased single premium life insurance policies on the life of each director covered under the DRP. The Bank is the owner and partial beneficiary of these life insurance policies. The assets of the DRP, under Internal Revenue Service regulations, are the property of the Bank and are available to satisfy the Bank’s general creditors.

Future compensation under both plans is earned for services rendered through retirement. The Bank accrues for the salary continuation liability based on anticipated years of service and vesting schedules provided under the plans. The Bank’s current benefit liability is determined based on vesting and the present value of the benefits at a corresponding discount rate. The discount rate used is an equivalent rate for investment-grade bonds with lives matching those of the service periods remaining for the salary continuation contracts, which average approximately 20 years. The salary continuation liability as of March 31, 2014 and December 31, 2013 was $2,082,000 and $2,021,000, respectively, and is reported in interest payable and other liabilities on the condensed consolidated balance sheets.

During January 2008, the Bank purchased $4.7 million in bank owned life insurance policies and entered into split-dollar life insurance agreements with certain officers and directors. During March 2014, the Bank purchased an additional $1.0 million in bank owned life insurance policies and entered into split-dollar life insurance agreements with its three newest directors. In connection with the implementation of the split-dollar agreements, the Bank purchased single premium life insurance policies on the life of each of the officers and directors covered by the split-dollar life insurance agreements. The Bank is the owner of the policies and the partial beneficiary in an amount equal to the cash surrender value of the policies.

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The combined cash surrender value of all Bank-owned life insurance policies recorded in other assets on the condensed consolidated balance sheet was $13,213,000 and $12,083,000 at March 31, 2014 and December 31, 2013, respectively.

NOTE 8 — FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Fair values of financial instruments — The consolidated financial statements include various estimated fair value information as of March 31, 2014 and December 31, 2013. Such information, which pertains to the Company’s financial instruments, does not purport to represent the aggregate net fair value of the Company. Further, the fair value estimates are based on various assumptions, methodologies, and subjective considerations, which vary widely among different financial institutions and which are subject to change.

Fair value measurements defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follow:

Level 1:  Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2:  Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3:  Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.  In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety.  The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstance that caused the transfer, which generally corresponds with the Company’s quarterly valuation process.

Following is a description of valuation methodologies used for assets and liabilities in the tables below:

Cash and cash equivalents – The carrying amounts of cash and cash equivalents approximate their fair value and are considered a level 1 valuation.

Restricted Equity Securities- The carrying amounts of the stock the Company’s owns in FRB and FHLB approximate their fair value and are considered a level 2 valuation.

Loans receivable — For variable-rate loans that reprice frequently and have no significant change in credit risk, fair values are based on carrying values. The fair values for other loans (e.g., real estate construction and mortgage, commercial, and installment loans) are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. The allowance for loan losses is considered to be a reasonable estimate of loan discount due to credit risks. The Company’s fair value model takes into account many inputs including current market rates on new loans, the U.S. treasury yield curve, LIBOR yield curve, rate floors, rate ceilings, remaining maturity, and average life based on specific loan type. Net loans are considered to be a level 3 valuation.

Deposit liabilities — The fair values estimated for demand deposits (interest and non-interest checking, savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e. their carrying amounts). The carrying amounts for variable-rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of the aggregate expected monthly maturities on time deposits. The fair value of deposits is determined by the Company’s internal assets and liabilities modeling system that accounts for various inputs such as decay rates, rate floors, FHLB yield curve, maturities and current rates offered on new accounts. Fair value on deposits is considered a level 3 valuation.

Interest receivable and payable - The carrying amounts of accrued interest approximate their fair value and are considered to be a level 2 valuation.

Off-balance-sheet instruments — Fair values for the Bank’s off-balance-sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the credit standing of the counterparties. The Company considers the Bank’s off balance sheet instruments to be a level 3 valuation.

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The estimated fair values of the Company’s financial instruments at March 31, 2014 were as follows:

	Carrying Amount			Fair Value			Hierarchy Valuation Level
Financial assets:
Cash and cash equivalents	$	115,653,817		$	115,653,817			1
Restricted equity securities		3,170,250			3,170,250			2
Loans, net		414,425,458			429,287,284			3
Interest receivable		1,798,505			1,798,505			2
Financial liabilities:
Deposits		(615,996,534	)		(603,968,814	)		3
Interest payable		(44,386	)		(44,386	)		2
Off-balance-sheet assets (liabilities):
Commitments and standby letters of credit					(522,905	)		3

The estimated fair values of the Company’s financial instruments at December 31, 2013 were as follows:

	Carrying Amount			Fair Value			Hierarchy Valuation Level
Financial assets:
Cash and cash equivalents	$	105,190,560		$	105,190,560			1
Restricted equity securities		3,170,250			3,170,250			2
Loans, net		411,155,607			426,433,358			3
Interest receivable		2,011,086			2,011,086			2
Financial liabilities:
Deposits		(602,633,432	)		(590,494,886	)		3
Interest payable		(60,234	)		(60,234	)		2
Off-balance-sheet assets (liabilities):
Commitments and standby letters of credit					(525,585	)		3

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The following table presents the carrying value of recurring and nonrecurring financial instruments that were measured at fair value and that were still held in the condensed consolidated balance sheets at each respective period end, by level within the fair value hierarchy as of March 31, 2014 and December 31, 2013.

	Fair Value Measurements at March 31, 2014 Using
	March 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets and liabilities measured on a recurring basis:
Available-for-sale securities:
U.S. agencies	$	49,548,557	$	0	$	49,548,557	$	0
Collateralized mortgage obligations		8,971,877		0		8,971,877		0
Municipalities		44,475,841		0		44,475,841		0
SBA Pools		1,068,660		0		1,068,660		0
Corporate Debt		6,818,485		0		6,818,485		0
Asset backed securities		5,859,080		0		5,859,080
Mutual Fund		2,855,281		2,855,281		0		0
Assets and liabilities measured on a non-recurring basis:
Impaired loans	$	0	$	0	$	0	$	0
Other real estate owned	$	0	$	0	$	0	$	0

	Fair Value Measurements at December 31, 2013 Using
	December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets and liabilities measured on a recurring basis:
Available-for-sale securities
U.S. agencies	$	53,115,693	$	0	$	53,115,693	$	0
Collateralized mortgage obligations		9,781,489		0		9,781,489		0
Municipalities		40,268,968		0		40,268,968		0
SBA pools		1,080,515		0		1,080,515		0
Corporate debt		4,824,778		0		4,824,778		0
Asset backed securities		5,856,421		0		5,856,421		0
Mutual fund		2,817,789		2,817,789		0		0
Assets and liabilities measured on a non-recurring basis:
Impaired loans	$	790,472	$	0	$	0	$	790,472
Other real estate owned	$	916,205	$	0	$	0	$	916,205

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Following is a description of valuation methodologies used for assets and liabilities recorded at fair value.

Available-for-sale securities - Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, if available. If quoted market prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions, and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets where significant inputs are unobservable.

Impaired loans - ASC Topic 820 applies to loans measured for impairment using the practical expedients permitted by ASC Topic 310, Accounting by Creditors for Impairment of a Loan. The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Impaired loans where an allowance is established based on the fair value of collateral less the cost related to liquidation of the collateral require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the impaired loan as non-recurring Level 3. Likewise, when an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the impaired loan as non-recurring Level 3.

Other Real Estate Owned - Other real estate assets (“OREO”) acquired through, or in lieu of, foreclosure are held-for-sale and are initially recorded at the lower of cost or fair value, less selling costs. Any write-downs to fair value at the time of transfer to OREO are charged to the allowance for loan losses, subsequent to foreclosure. Appraisals or evaluations are then done periodically thereafter charging any additional write-downs or valuation allowances to the appropriate expense accounts. Values are derived from appraisals of underlying collateral and discounted cash flow analysis. OREO is classified within Level 3 of the hierarchy.

Net realizable value of the underlying collateral is the fair value of the collateral less estimated selling costs and any prior liens. Appraisals, recent comparable sales, offers and listing prices are factored in when valuing the collateral. We review and verify the qualifications and licenses of the certified general appraisers used for appraising commercial properties or certified residential appraisers for residential properties. Real estate appraisals may utilize a combination of approaches including replacement cost, sales comparison and the income approach. Comparable sales and income data are analyzed by the appraisers and adjusted to reflect differences between them and the subject property such as type, leasing status and physical condition. When the appraisals are received, Management reviews the assumptions and methodology utilized in the appraisal, as well as the overall resulting value in conjunction with independent data sources such as recent market data and industry-wide statistics. We generally use a 6% discount for selling costs which is applied to all properties, regardless of size. Appraised values may be adjusted to reflect changes in market conditions that have occurred subsequent to the appraisal date, or for revised estimates regarding the timing or cost of the property sale. These adjustments are based on qualitative judgments made by management on a case-by-case basis.

There have been no significant changes in the valuation techniques during the period ended March 31, 2014.

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NOTE 9 – EARNINGS PER SHARE

Earnings per share (“EPS”) are based upon the weighted average number of common shares outstanding during each year. The following table shows: (1) weighted average basic shares, (2) effect of dilutive securities related to stock options and non-vested restricted stock, and (3) weighted average shares of common stock and common stock equivalents. Net income available to common stockholders is calculated as net income reduced by dividends accumulated on preferred stock. Basic EPS are calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding during each period, excluding unvested restricted stock awards. Diluted EPS are calculated using the weighted average diluted shares, which reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The dilutive shares included in year-to-date diluted EPS is a weighted average of the dilutive shares included in each quarterly diluted EPS computation under the treasury stock method. We have two forms of outstanding common stock: common stock and unvested restricted stock awards. Holders of restricted stock awards receive non-forfeitable dividends at the same rate as common stockholders and they both share equally in undistributed earnings.

The Company’s calculation of basic and diluted earnings per share (“EPS”) for the three month periods ended March 31, 2014 and 2013 are reflected in the table below.

In thousands (except share and per share amounts)	THREE MONTHS ENDED MARCH 31,
	2014		2013
BASIC EARNINGS PER SHARE
Net income available to common shareholders	$	1,408,210	$	1,231,931
Weighted average shares outstanding		7,878,152		7,778,333
Net income per common share	$	0.18	$	0.16
DILUTED EARNINGS PER SHARE
Net income available to common shareholders	$	1,408,210	$	1,231,931
Weighted average shares outstanding		7,878,152		7,778,333
Effect of dilutive stock options		14,228		16,141
Effect of dilutive non-vested restricted shares		49,076		35,965
Weighted average shares of common stock and common stock equivalents		7,941,456		7,830,439
Net income per diluted common share	$	0.18	$	0.16

During the three month period ended March 31, 2014, anti-dilutive weighted average options to purchase 68,500 shares of common stock were outstanding, with prices ranging from $9.95 to $15.67. Anti-dilutive weighted average stock options of 73,500 were outstanding during the three month period of 2013, with prices ranging from $8.25 to $15.67. These options were not included in the computation of diluted EPS because the options’ exercise price was greater than the average market price of the common shares. These options begin to expire in 2015.

There were no anti-dilutive non-vested restricted stock grants for the three months ended March 31, 2014 and 2013.

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

The following discussion explains the significant factors affecting our operations and financial position for the periods presented. The discussion should be read in conjunction with our financial statements and the notes related thereto which appear or that are referenced to elsewhere in this report, and with the audited consolidated financial statements and accompanying notes included in our 2013 Annual Report on Form 10-K, as amended. Average balances, including balances used in calculating certain financial ratios, are generally comprised of average daily balances.

The discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions. This discussion and analysis includes executive management’s (“Management”) insight of the Company’s financial condition and results of operations of Oak Valley Bancorp and its subsidiary.  Unless otherwise stated, the “Company” refers to the consolidated entity, Oak Valley Bancorp, while the “Bank” refers to Oak Valley Community Bank.

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Forward-Looking Statements

Some matters discussed in this Form 10-Q may be “forward-looking statements” within the meaning of the Private Litigation Reform Act of 1995 and therefore may involve risks, uncertainties and other factors which may cause our actual results to be materially different from the results expressed or implied by our forward-looking statements.  These statements generally appear with words such as “anticipate,” “believe,” “estimate,” “may,” “intend,” and “expect.”  Although management believes that the assumptions and expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.  Factors that could cause actual results to differ from results discussed in forward-looking statements include, but are not limited to: economic conditions (both generally and in the markets where the Company operates); competition from other providers of financial services offered by the Company; changes in government regulation and legislation; changes in interest rates; material unforeseen changes in the financial stability and liquidity of the Company’s credit customers; risks associated with concentrations in real estate related loans; changes in accounting standards and interpretations; and other risks as may be detailed from time to time in the Company’s filings with the Securities and Exchange Commission, all of which are difficult to predict and which may be beyond the control of the Company or the Company.  The Company undertakes no obligation to revise forward-looking statements to reflect events or changes after the date of this discussion or to reflect the occurrence of unanticipated events.

Forward-looking statements speak only as of the date they are made, and the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, whether as a result of new information, future developments or otherwise, except as may be required by law.

Critical Accounting Estimates

Management has determined the following five accounting policies to be critical:

Allowance for Loan Losses

Accounting for allowance for loan losses involves significant judgment and assumptions by management and is based on historical data and management’s view of the current economic environment. At least on a quarterly basis, our management reviews the methodology and adequacy of allowance for loan losses and reports its assessment to the Board of Directors for its review and approval.

We base our allowance for loan losses on an estimation of probable losses inherent in our loan portfolio. Our methodology for assessing loan loss allowances are intended to reduce the differences between estimated and actual losses and involves a detailed analysis of our loan portfolio in three phases:

● the specific review of individual loans,

● the segmenting and review of loan pools with similar characteristics, and

● our judgmental estimate based on various subjective factors.

The first phase of our methodology involves the specific review of individual loans to identify and measure impairment. We evaluate each loan by use of a risk rating system, except for homogeneous loans, such as automobile loans and home mortgages. Specific risk rated loans are deemed impaired if all amounts, including principal and interest, will likely not be collected in accordance with the contractual terms of the related loan agreement. Impairment for commercial and real estate loans is measured either based on the present value of the loan’s expected future cash flows or, if collection on the loan is collateral dependent, the estimated fair value of the collateral, less selling and holding costs.

The second phase involves the segmenting of the remainder of the risk rated loan portfolio into groups or pools of loans, together with loans with similar characteristics, for evaluation. We determine the calculated loss ratio to each loan pool based on its historical net losses and benchmark it against the levels of other peer banks.

In the third phase, we consider relevant internal and external factors that may affect the collectability of loan portfolio and each group of loan pool. The factors considered are, but are not limited to:

● concentration of credits,

● nature and volume of the loan portfolio,

● delinquency trends,

● non-accrual loan trend,

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● problem loan trend,

● loss and recovery trend,

● quality of loan review,

● lending and management staff,

● lending policies and procedures,

● economic and business conditions, and

● other external factors, including regulatory review.

Our management estimates the probable effect of such conditions based on our judgment, experience and known or anticipated trends. Such estimation may be reflected as an additional allowance to each group of loans, if necessary. Management reviews these conditions with our senior credit officers. To the extent that any of these conditions is evidenced by a specifically identifiable problem credit or portfolio segment as of the evaluation date, management’s estimate of the effect of such condition may be reflected as a specific allowance applicable to such credit or portfolio segment. Where any of these conditions is not evidenced by a specific, identifiable problem credit or portfolio segment as of the evaluation date, management’s evaluation of the inherent loss related to such condition is reflected in the unallocated allowance.

Central to our credit risk management and our assessment of appropriate loss allowance is our loan risk rating system. Under this system, the originating credit officer assigns borrowers an initial risk rating based on a thorough analysis of each borrower’s financial capacity in conjunction with industry and economic trends. Approvals are made based upon the amount of inherent credit risk specific to the transaction and are reviewed for appropriateness by senior line and credit administration personnel. Credits are monitored by line and credit administration personnel for deterioration in a borrower’s financial condition which may impact the ability of the borrower to perform under the contract. Although management has allocated a portion of the allowance to specific loans, specific loan pools, and off-balance sheet credit exposures (which are reported separately as part of other liabilities), the adequacy of the allowance is considered in its entirety.

Non-Accrual Loan Policy

Interest on loans is credited to income as earned and is accrued only if deemed collectible. Accrual of interest is discontinued when a loan is over 90 days delinquent or if management believes that collection is highly uncertain. Generally, payments received on non-accrual loans are recorded as principal reductions. Interest income is recognized after all principal has been repaid or an improvement in the condition of the loan has occurred that would warrant resumption of interest accruals. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due.

Asset Impairment Judgments

Certain of our assets are carried in our consolidated balance sheets at fair value or at the lower of cost or fair value. Valuation allowances are established when necessary to recognize impairment of such assets. We periodically perform analyses to test for impairment of various assets. In addition to our impairment analyses related to loans, another significant impairment analysis relates to other than temporary declines in the value of our securities.

Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired and are carried at fair value or below. Appraisals are done periodically on impaired loans and if required an allowance is established based on the fair value of collateral less the cost related to liquidation of the collateral. In some circumstances, an impaired loan may be charged off to bring the carrying value to fair value.

Other real estate assets (“OREO”) acquired through, or in lieu of, foreclosure are held-for-sale and are initially recorded at the lower of cost or fair value, less selling costs. Any write-downs to fair value at the time of transfer to OREO are charged to the allowance for loan losses, subsequent to foreclosure. Appraisals or evaluations are then done periodically and any subsequent declines in the fair value of the OREO property after the date of transfer are recorded through a write-down of the asset. Any subsequent operating expenses or income, reduction in estimated fair values, and gains or losses on disposition of such properties are charged or credited to current operations.

Net realizable value of the underlying collateral is the fair value of the collateral less estimated selling costs and any prior liens. Appraisals, recent comparable sales, offers and listing prices are factored in when valuing the collateral. We review and verify the qualifications and licenses of the certified general appraisers used for appraising commercial properties or certified residential appraisers for residential properties. Real estate appraisals may utilize a combination of approaches including replacement cost, sales comparison and the income approach. Comparable sales and income data are analyzed by the appraisers and adjusted to reflect differences between them and the subject property such as type, leasing status and physical condition. When the appraisals are received, Management reviews the assumptions and methodology utilized in the appraisal, as well as the overall resulting value in conjunction with independent data sources such as recent market data and industry-wide statistics. We generally use a 6% discount for selling costs which is applied to all properties, regardless of size. Appraised values may be adjusted to reflect changes in market conditions that have occurred subsequent to the appraisal date, or for revised estimates regarding the timing or cost of the property sale. These adjustments are based on qualitative judgments made by management on a case-by-case basis.

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Our available for sale portfolio is carried at estimated fair value, with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income in shareholders’ equity. We conduct a periodic review and evaluation of the securities portfolio to determine if the value of any security has declined below its carrying value and whether such decline is other than temporary. If such decline is deemed other than temporary, we would adjust the carrying amount of the security by writing down the security to fair market value through a charge to current period income. The market values of our securities are significantly affected by changes in interest rates.

In general, as interest rates rise, the market value of fixed-rate securities will decrease; as interest rates fall, the market value of fixed-rate securities will increase. With significant changes in interest rates, we evaluate our intent and ability to hold the security for a sufficient time to recover the recorded principal balance. Estimated fair values for securities are based on published or securities dealers’ market values. Market volatility is unpredictable and may impact such values.

Fair Value Measurements

We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. We base our fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Securities available for sale, derivatives, and loans held for sale, if any, are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record certain assets at fair value on a non-recurring basis, such as certain impaired loans held for investment and securities held to maturity that are other-than-temporarily impaired. These non-recurring fair value adjustments typically involve write-downs of individual assets due to application of lower-of-cost or market accounting.

We have established and documented a process for determining fair value. We maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements. Whenever there is no readily available market data, management uses its best estimate and assumptions in determining fair value, but these estimates involve inherent uncertainties and the application of management's judgment. As a result, if other assumptions had been used, our recorded earnings or disclosures could have been materially different from those reflected in these financial statements.

Deferred Compensations Plans

Future compensation under the Company’s executive salary continuation plan and director retirement plan is earned for services rendered through retirement. The Company accrues for the salary continuation liability based on anticipated years of service and vesting schedules provided under the plans. The Company’s current benefit liability is determined based on vesting and the present value of the benefits at a corresponding discount rate. The discount rate used is an equivalent rate for investment-grade bonds with lives matching those of the service periods remaining for the salary continuation contracts, which average approximately 20 years.

Introduction

Oak Valley Community Bank commenced operations in May 1991.  We are an insured bank under the Federal Deposit Insurance Act and are a member of the Federal Reserve.  Since its formation, the Bank has provided basic banking services to individuals and business enterprises in Oakdale, California and the surrounding areas. The focus of the Bank is to offer a range of commercial banking services designed for both individuals and small to medium-sized businesses in the two main areas of service of the Company: the Central Valley and the Eastern Sierras.

The Bank offers a complement of business checking and savings accounts for its business customers.  The Bank also offers commercial and real estate loans, as well as lines of credit.  Real estate loans are generally of a short-term nature for both residential and commercial purposes.  Longer-term real estate loans are generally made with adjustable interest rates and contain normal provisions for acceleration.  In addition, the Bank offers traditional residential mortgages through a third party.

The Bank also offers other services for both individuals and businesses including online banking, remote deposit capture, merchant services, night depository, extended hours, traveler’s checks, wire transfer of funds, note collection, and automated teller machines in a national network.  The Bank does not currently offer international banking or trust services although the Bank may make such services available to the Bank’s customers through financial institutions with which the Bank has correspondent banking relationships.  The Bank does not offer stock transfer services nor does it directly issue credit cards.

Effective July 3, 2008, Oak Valley Community Bank became a subsidiary of Oak Valley Bancorp, a newly established bank holding company. Oak Valley Bancorp operates Oak Valley Community Bank as a community bank in the general commercial banking business, with our primary market encompassing the California Central Valley around Oakdale and Modesto, and the Eastern Sierras. As such, unless otherwise noted, all references are about Oak Valley Bancorp (the “Company”).

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Overview of Results of Operations and Financial Condition

The purpose of this summary is to provide an overview of the items management focuses on when evaluating the condition of the Company and its success in implementing its business and shareholder value strategies. The Company’s business strategy is to operate the Bank as a well-capitalized, profitable and independent community oriented bank.  The Company’s shareholder value strategy has three major themes: (1) enhancing shareholder value; (2) making its retail banking franchise more valuable; and (3) efficiently utilizing its capital.

Management believes the following were important factors in the Company’s performance during the three month period ended March 31, 2014:

• Thanks to our deep roots in the communities that we serve, our focus on customer care and our selectivity in lending, during the first three months of 2014, our performance has been better than most institutions of our size that compete in our market. Despite the stagnant economy affecting our primary market areas, we have been able to increase our core deposits to $604.3 million and have posted net income available to common shareholders of $0.18 per diluted share for the three month period ended March 31, 2014. While recently published economic data indicates that the current downturn may be easing, it is not clear when or at what speed the economy will recover. To the extent that the weak business climate continues, it will affect the market areas that we serve and our results accordingly.

• The Company recognized net income available to common shareholders of $1,408,000 for the three month period ended March 31, 2014, as compared to $1,232,000 for the same period in 2013.  The Company recognized net income before preferred stock dividends of $1,408,000 for the three months ended March 31, 2014, as compared to $1,299,000 for the same period in 2013. The factors contributing to these results will be discussed below.

• The Company recognized $68,000 in the first quarter ended March 31, 2013, associated with the accrual for preferred stock dividends for the Series B Preferred Stock that the U.S. Treasury owned under the Small Business Lending Fund (“SBLF”). The Company repurchased 6,750 shares of Series B Preferred Stock in May 2012 and the remaining 6,750 shares were repurchased in March 2013, therefore there were no shares of Series B Preferred Stock outstanding at March 31, 2014 and there were no preferred stock dividends paid in 2014.

• The Company has taken significant steps to reduce the risk of loan losses.   In the three month period ended March 31, 2014, there was no provision for loan loss, compared to $100,000 recorded in the same period in 2013. The decrease was mainly due to management’s assessment of the appropriate level for the allowance for loan losses and a decrease in the level of non-accrual loans as compared to March 31, 2013. The Company continues to monitor the Bank’s loan portfolio with the objective of avoiding defaults or write-downs.  Despite these actions, the possibility of additional losses cannot be eliminated, but the Board of Directors and all employees continue to work hard to make the best of these continuing challenging conditions.

• Net interest income increased $255,000 or 4.4% for the three month period ended March 31, 2014, compared to the same period in 2013.  The increase was primarily due to growth of our loan and investment security portfolios. 

• Non-interest income increased by $26,000 or 3.3% for the three months ended March 31, 2014, as compared to the same period in 2013. The increase was primarily due to service charge income from an increase in the number of deposit accounts.

• Non-interest expense increased by $242,000 or 5.2% for the three month period ended March 31, 2014, as compared to the same period in 2013. The increase was mainly from an increase in staffing necessary to support the loan and deposit growth and from a combination of expenses incurred to support the growth of our product lines and services.

• Total assets increased $15.7 million or 2.3% from December 31, 2013.  Total net loans increased by $3.3 million or 0.8% and investment securities increased by $1.9 million or 1.6% from December 31, 2013 to March 31, 2014, while deposits increased by $13.4 million or 2.2% for the same period.

Income Summary

For the three month period ended March 31, 2014, the Company recorded net income available to common shareholders of $1,408,000, representing a increase of $176,000, as compared to the same period in 2013.  Return on average assets (annualized) was 0.84% for the three months ended March 31, 2014, as compared with 0.81% for the same period in 2013.  Annualized return on average common equity was 8.59% for the three months ended March 31, 2014, as compared to 7.82% for the same period of 2013.

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Net income before provisions for income taxes and preferred stock dividends and accretion increased $139,000 for the first quarter ended March 31, 2014, from the comparable 2013 period.  The income statement components of these variances are as follows:

Pre-Tax Income Variance Summary:

(In thousands)	Effect on Pre-Tax Income
	Increase (Decrease)
	Three Months Ended
	March 31, 2014
Change from 2013 to 2014 in:
Net interest income	$	255
Provision for loan losses		100
Non-interest income		26
Non-interest expense		(242	)
Change in net income before provision for income taxes	$	139

These variances will be explained in the discussion below.

Net Interest Income

Net interest income is the largest source of the Company’s operating income.  For the three month period ended March 31, 2014, net interest income was $6.1 million, which represented an increase of $255,000 or 4.4% from the comparable period in 2013.

The net interest margin (net interest income as a percentage of average interest earning assets) was 4.04% for the three month period ended March 31, 2014, which remained relatively flat as compared to 4.05% for the same period in 2013.  The current low market interest rate environment has had a positive impact on net interest income in previous years because the Company’s balance sheet is liability sensitive which typically results in our average cost of funds decreasing faster than the average yield on interest earning assets in a declining rate environment. In 2014, we have not recognized this benefit to the same degree, as deposit interest rates are at historic lows and have essentially reached a threshold in which they cannot reasonably be further reduced. However, the cost of funds on interest-bearing liabilities did recognize a moderate decrease of 6 basis points for the three months ended March 31, 2014, compared to 2013 due to further rate reductions and a shift from high cost CDs into demand deposit and savings accounts. In addition, average non-interest-bearing demand deposit balances increased by $14.0 million for the three month period ended March 31, 2014, as compared to the same period of 2013.

Earning asset yield decreased by 6 basis points for the three month period ended March 31, 2014, compared to the same period of 2013. The yield on loans decreased by 38 basis points for the first quarter of 2014, as compared to 2013, in spite of the significant portion of our loans that are at their contractual rate floors. This decrease in loan yield was primarily a result of competitive pressure on the pricing of new loan fundings. The drop in loan yield was offset by deploying a portion of the low yielding cash equivalent balances into loan and investment balances which recognized increases of $33.9 million and $16.3 million, respectively, in the first quarter of 2014 as compared to 2013, thus leaving the net interest margin relatively the same in both periods.

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The following tables shows the relative impact of changes in average balances of interest earning assets and interest bearing liabilities, and interest rates earned and paid by the Company on those assets and liabilities for the three month periods ended March 31, 2014 and 2013:

Net Interest Analysis

		Three months ended							Three months ended
		March 31, 2014							March 31, 2013
	(Dollars in thousands)	Average Balance		Interest Income/ Expense		Avg Rate/ Yield			Average Balance		Interest Income/ Expense		Avg Rate/ Yield
Assets:
Earning assets:
	Gross loans (1) (2)	$	418,627	$	5,305		5.14	%	$	384,738	$	5,234		5.52	%
	Investment securities (2)		118,932		1,089		3.71	%		102,621		903		3.57	%
	Federal funds sold		23,471		13		0.22	%		11,867		7		0.24	%
	Interest-earning deposits		69,348		43		0.25	%		98,107		57		0.24	%
Total interest-earning assets			630,378		6,450		4.15	%		597,333		6,201		4.21	%
Total noninterest earning assets			52,520							53,125
	Total assets		682,898							650,458
Liabilities and Shareholders' Equity:
Interest-bearing liabilities:
	Interest-earning DDA		11,556		1		0.04	%		8,783		4		0.18	%
	Money market deposits		245,693		74		0.12	%		246,728		94		0.15	%
	NOW deposits		93,878		16		0.07	%		77,612		22		0.11	%
	Savings deposits		41,137		13		0.13	%		32,236		14		0.18	%
	Time certificates of deposit $100,000 or more		33,513		50		0.61	%		37,948		75		0.80	%
	Other time deposits		18,595		19		0.41	%		20,138		25		0.50	%
Total interest-bearing liabilities			444,372		173		0.16	%		423,445		234		0.22	%
Noninterest-bearing liabilities:
	Noninterest-bearing deposits		168,096							154,113
	Other liabilities		3,988							3,704
Total noninterest-bearing liabilities			172,084							157,817
Shareholders' equity			66,442							69,196
	Total liabilities and shareholders' equity	$	682,898						$	650,458
Net interest income				$	6,277						$	5,967
Net interest spread (3)							3.99	%						3.99	%
Net interest margin (4)							4.04	%						4.05	%

(1)  Loan fees have been included in the calculation of interest income.

(2) Yields and interest income on municipal securities and loans have been adjusted to their fully-taxable equivalents, based on a federal marginal tax rate of 34.0%.

(3) Represents the average rate earned on interest-earning assets less the average rate paid on interest-bearing liabilities.

(4) Represents net interest income as a percentage of average interest-earning assets.

(5) Annual interest rates are computed by dividing the interest income/expense by the number of days in the period multiplied by 365.

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Shown in the following tables are the relative impacts on net interest income of changes in the average outstanding balances (volume) of earning assets and interest bearing liabilities and the rates earned and paid by the Company on those assets and liabilities for the three month periods ended March 31, 2014 and 2013.  Changes in interest income and expense that are not attributable specifically to either rate or volume are allocated to the rate column below.

Rate / Volume Variance Analysis

(In thousands)

	For the Three Months Ended March 31,
	2014 vs 2013
	Increase (Decrease)
	in interest income and expense
	due to changes in:
	Volume			Rate			Total
Interest income:
Gross loans (1) (2)	$	461		$	(390	)	$	71
Investment securities (2)		144			42			186
Federal funds sold		7			(1	)		6
Interest-earning deposits		(17	)		3			(14	)
Total interest income	$	595		$	(346	)	$	249
Interest expense:
Interest-earning DDA	$	1		$	(4	)	$	(3	)
Money market deposits		0			(20	)		(20	)
NOW deposits		5			(11	)		(6	)
Savings deposits		4			(5	)		(1	)
Time CD $100K or more		(9	)		(16	)		(25	)
Other time deposits		(2	)		(4	)		(6	)
Other borrowings		0			0			0
Total interest expense	$	(1	)	$	(60	)	$	(61	)
Change in net interest income	$	596		$	(286	)	$	310

(1) Loan fees have been included in the calculation of interest income.

(2) Interest income on municipal securities and loans has been adjusted to their fully-taxable equivalents, based on a federal marginal tax rate of 34.0%.

The table above reflects the current low interest rate environment has impacted assets more than liabilities as indicated by the decrease of $286,000 in net interest income due to the rate change for the first quarter of 2014.  This is not typical for the Company, as we have historically been liability sensitive. The decrease in loan yields resulted in a $390,000 decrease to loan interest income for the quarter compared to prior year. The increase in earning asset balances combined with the overall change in mix of balances resulted in an increase of $596,000 to net interest income over the same period.

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 Non-Interest Income

Non-interest income represents service charges on deposit accounts and other non-interest related charges and fees, including fees from mortgage commissions and investment service fee income.  For the three month period ended March 31, 2014, non-interest income was $810,000, an increase of $26,000 or 3.3%, compared to the same period in 2013.

The following tables show the major components of non-interest income:

	For the Three Months Ended March 31,
	2014		2013		$ change			% change
Service charges on deposits	$	308,662	$	286,718	$	21,944			7.7	%
Earnings on cash surrender value of life insurance		101,147		100,547		600			0.6	%
Mortgage commissions		29,554		50,514		(20,960	)		(41.5	%)
Gains on called securities		7,856		18,352		(10,496	)		(57.2	%)
Other income		363,138		328,503		34,635			10.5	%
Total non-interest income	$	810,357	$	784,634	$	25,723			3.3	%

Service charges on deposits increased by $22,000 for the first quarter ended March 31, 2014, compared to the same period in 2013, as a result of an increase in the number of transaction deposit accounts.

Mortgage commissions have decreased by $21,000 for the three month period of 2014, as compared to the same period of 2013 as a result of the slow demand for home purchases and refinancing due in part to the increase in long-term interest rates compared to last year.

Other income increased by $35,000 for the three month period ended March 31, 2014, as compared to the same period of 2013 mainly as a result of increased debit card fee income of $19,000, compared to the first quarter of 2013.

Non-Interest Expense

Non-interest expense represents salaries and benefits, occupancy expenses, professional expenses, outside services, and other miscellaneous expenses necessary to conduct business.

The following tables show the major components of non-interest expenses:

	For the Three Months Ended March 31,
	2014		2013		$ change		% change
Salaries and employee benefits	$	2,713,946	$	2,543,919	$	170,027		6.7	%
Occupancy		745,146		740,007		5,139		0.7	%
Data processing fees		326,056		304,518		21,538		7.1	%
Regulatory assessments (FDIC & DBO)		120,000		120,000		0		0.0	%
Other		975,957		930,641		45,316		4.9	%
Total non-interest income	$	4,881,105	$	4,639,085	$	242,020		5.2	%

Non-interest expenses increased by $242,000 or 5.2% for the three months ended March 31, 2014, as compared to the same period of 2013.  Salaries and employee benefits increased $170,000 for the three months ended March 31, 2014, as compared to the same period of 2013, primarily due to full time equivalent staffing increase from 134 to 142 to support continued loan and deposit growth. Occupancy expenses increased by $5,000 for the three months ended March 31, 2014, as compared to the prior year.

Data processing fees increased by $22,000 for the three month period ended March 31, 2014, as a result of an increased number of transaction accounts. Other expense increased by $45,000 for the three months ended March 31, 2014, compared to the same period in 2013, due to a combination of expenses incurred to support the growth of our product lines and services.

FDIC and DBO (California Department of Business Oversight) regulatory assessments were $120,000 for the three months ended March 31, 2014 and 2013.  The initial base assessment rate for financial institutions varies based on the overall risk profile of the institution as defined by the FDIC. The assessment rate decreased as a result of our improved risk profile, but was offset by a higher deposit base in 2014 as compared to 2013, as the FDIC assessment rates are applied to average quarterly total liabilities as the primary basis.

Management anticipates that non-interest expense will continue to increase as we continue to grow.  However, management remains committed to cost-control and efficiency, and we expect to keep these increases to a minimum relative to growth.

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Income Taxes

We reported a provision for income taxes of $625,000 for the three month period ended March 31, 2014, representing an increase of $30,000 as compared to the provisions reported in the comparable period of 2013. The effective income tax rate on income from continuing operations was 30.7% for the three months ended March 31, 2014, compared to 31.4% for the comparable period of 2013. These provisions reflect accruals for taxes at the applicable rates for federal income tax and California franchise tax based upon reported pre-tax income, and adjusted for the effects of all permanent differences between income for tax and financial reporting purposes (such as earnings on qualified municipal securities, BOLI and certain tax-exempt loans). The disparity between the effective tax rates is primarily due to tax benefits of $34,000 from the exercise of employee incentive stock options during the first quarter of 2014, as compared to $15,000 recorded during the first quarter of 2013. These tax benefits offset an increase to the effective tax rate in 2014 due to credits from California Enterprise Zones and low income housing projects as well as tax free-income on loans within these enterprise zones and municipal securities and loans that comprise a larger proportion of pre-tax income in 2013 as compared to 2014.

Asset Quality

Non-performing assets consist of loans on non-accrual status, including loans restructured on non-accrual status, where the terms of repayment have been renegotiated resulting in a reduction or deferral of interest or principal, loans 90 days or more past due and still accruing interest and other real estate owned (“OREO”).

Loans are generally placed on non-accrual status when they become 90 days past due, unless management believes the loan is adequately collateralized and in the process of collection. The past due loans may or may not be adequately collateralized, but collection efforts are continuously pursued. Loans may be restructured by management when a borrower has experienced some changes in financial status, causing an inability to meet the original repayment terms, and where we believe the borrower will eventually overcome those circumstances and repay the loan in full. OREO consists of properties acquired by foreclosure or similar means and which management intends to offer for sale.

Non-accrual loans totaled $5.25 million at March 31, 2014, as compared to $2.34 million at December 31, 2013.  The non-accrual loans as of March 31, 2014 are loans made to five borrowers primarily for purposes of commercial real estate. As of March 31, 2014, we had three loans considered troubled debt restructurings totaling $1.21 million, all of which are included in non-accrual loans.

OREO as of March 31, 2014 consisted of three properties, one of which was a residential land acquired through foreclosure that was written down to a zero balance because the public utilities have not been obtainable rendering these land lots unmarketable at this time. The other two OREO properties consisted of commercial real estate totaling $916,000 and were acquired through foreclosure.

The following table presents information about the Bank’s non-performing assets, including asset quality ratios as of March 31, 2014 and December 31, 2013:

Non-Performing Assets

(in thousands)	March 31,			December 31,
	2014			2013
Loans in non-accrual status	$	5,248		$	2,340
Loans past due 90 days or more and accruing		0			0
Total non-performing loans		5,248			2,340
Other real estate owned		916			916
Total non-performing assets	$	6,164		$	3,256
Allowance for loan losses	$	7,615		$	7,659
Asset quality ratios:
Non-performing assets to total assets		0.90	%		0.48	%
Non-performing loans to total loans		1.24	%		0.56	%
Allowance for loan losses to total loans		1.80	%		1.83	%
Allowance for loan losses to total non-performing loans		145.1	%		327.4	%

Non-performing assets increased by $2.9 million as of March 31, 2014, as compared to December 31, 2013, as a result of $3.0 million of loans placed on non-accrual loans status during the first quarter of 2014. This was offset by principal payments of $21,000 and charge-offs of $50,000. There were no changes in OREO balances during the three month period ended March 31, 2014, as the Company continued to hold the three properties mentioned above and no further market value write downs were required.

33

Allowance for Loan and Lease Losses (“ALLL”)

In anticipation of credit risk inherent in our lending business, we routinely set aside allowances through charges to earnings. Such charges are not only made for the outstanding loan portfolio, but also for off-balance sheet items, such as commitments to extend credits or letters of credit. Charges made for the outstanding loan portfolio have been credited to the allowance for loan losses, whereas charges for off-balance sheet items have been credited to the reserve for off-balance sheet items, which is presented as a component of other liabilities.  The Company recorded no loan loss provisions for the three month period in 2014, as compared to the $100,000 in provisions recorded in the same period of 2013.

The allowance for loan losses decreased by $44,000 or 0.6%, to $7.61 million at March 31, 2014, as compared with $7.66 million at December 31, 2013.  The Company recognized the decrease in the allowance for loan losses during the first three months of the year due to the net loan charge-offs of $44,000. The decrease to the allowance for loan losses resulted in a decrease in the allowance for loan losses as a percentage of total loans to 1.80% at March 31, 2014, as compared to 1.83% at December 31, 2013.

The Company will continue to monitor the adequacy of the allowance for loan losses and make additions to the allowance in accordance with the analysis referred to above. Because of uncertainties inherent in estimating the appropriate level of the allowance for loan losses, actual results may differ from management’s estimate of credit losses and the related allowance.

The Company makes provisions for loan losses when required to bring the total allowance for loan and lease losses to a level deemed appropriate for the level of risk in the loan portfolio.  At least quarterly, management conducts an assessment of the overall quality of the loan portfolio and general economic trends in the local market.  The determination of the appropriate level for the allowance is based on that review, considering such factors as historical experience, the volume and type of lending conducted, the amount of and identified potential loss associated with specific non-performing loans, regulatory policies, general economic conditions, and other factors related to the collectability of loans in the portfolio.

Although management believes the allowance at March 31, 2014 was adequate to absorb probable losses from any known and inherent risks in the portfolio, no assurance can be given that the adverse effect of current and future economic conditions on our service areas, or other variables, will not result in increased losses in the loan portfolio in the future.

Investment Activities

Investments are a key source of interest income. Management of our investment portfolio is set in accordance with strategies developed and overseen by our Investment Committee. Investment balances, including cash equivalents and interest-bearing deposits in other financial institutions, are subject to change over time based on our asset/liability funding needs and interest rate risk management objectives. Our liquidity levels take into consideration anticipated future cash flows and all available sources of credits, and are maintained at levels management believes are appropriate to assure future flexibility in meeting anticipated funding needs.

Cash Equivalents

The Company holds federal funds sold, unpledged available-for-sale securities and salable government guaranteed loans to help meet liquidity requirements and provide temporary holdings until the funds can be otherwise deployed or invested. As of March 31, 2014, and December 31, 2013, we had $115.7 million and $105.2 million, respectively, in cash and cash equivalents.

Investment Securities

Management of our investment securities portfolio focuses on providing an adequate level of liquidity and establishing an interest rate-sensitive position, while earning an adequate level of investment income without taking undue risk. Investment securities that we intend to hold until maturity are classified as held-to-maturity securities, and all other investment securities are classified as available-for-sale.  Currently, all of our investment securities are classified as available-for-sale. The carrying values of available-for-sale investment securities are adjusted for unrealized gains or losses as a valuation allowance and any gain or loss is reported on an after-tax basis as a component of other comprehensive income.

Management has evaluated the investment securities portfolio to determine if the impairment of any security in an unrealized loss position is temporary or other than temporary.  We conduct a periodic review and evaluation of the securities portfolio to determine if the value of any security has declined below its carrying value. If such decline is deemed other than temporary, we would adjust the carrying amount of the security by writing down the security to fair value through a charge to current period income or a charge to accumulated other comprehensive income depending on the nature of the impairment and managements intent or requirement to sell the security. Management has determined that no investment security is other than temporarily impaired.  The unrealized losses are due primarily to interest rate changes.

34

Deposits

Total deposits at March 31, 2014 were $616.0 million, a $13.4 million or 2.2% increase from the deposit total of $602.6 million at December 31, 2013.  Average deposits increased $34.9 million to $612.5 million for the three month period ended March 31, 2014 as compared to the same period in 2013. We attracted deposits due to the safety and soundness of the Bank and our focus on customer service.

Deposits Outstanding

	March 31,		December 31,		Three month change
(in thousands)	2014		2013		$			%
Demand	$	185,384	$	187,577	$	(2,193	)		(1.2	%)
NOW		94,709		90,758		3,951			4.4	%
MMDA		242,455		236,547		5,908			2.5	%
Savings		41,921		34,774		7,147			20.6	%
Time < $100K		18,331		18,723		(392	)		(2.1	%)
Time > $100K		33,197		34,254		(1,057	)		(3.1	%)
	$	615,997	$	602,633	$	13,364			2.2	%

Because our client base is comprised primarily of commercial and industrial accounts, individual account balances are generally higher than those of consumer-oriented banks. Four of our clients carry deposit balances of more than 1% of our total deposits, two of which had a deposit balance of more than 3% of total deposits at March 31, 2014.

Since our deposit growth strategy emphasizes core deposit growth we have avoided relying on brokered deposits as a consistent source of funds. The Company had $2.7 million and $1.9 million in brokered deposits as of March 31, 2014 and December 31, 2013, respectively. The only brokered deposits the Bank holds are from CDARS and ICS, a certificate of deposit and money market account program, respectively, that exchanges funds with other network banks to offer full FDIC insurance coverage to the customer.

Borrowings

Although deposits are the primary source of funds for our lending and investment activities and for general business purposes, we may obtain advances from the Federal Home Loan Bank of San Francisco (“FHLB”) as an alternative to retail deposit funds. Our outstanding FHLB advances were paid in full during the first quarter of 2012 and remained a zero balance at December 31, 2013 and March 31, 2014, due to elevated liquidity levels from increased deposits and loan payments that allowed us to pay the advances off. See “Liquidity Management” below for the details on the FHLB borrowings program.

Capital Ratios

We are regulated by the Board of Governors of the Federal Reserve Board (FRB) and are subject to the securities registration and public reporting regulations of the Securities and Exchange Commission. Our banking subsidiary is regulated by the Federal Deposit Insurance Corporation (FDIC) and the California Department of Business Oversight (DBO). We are not aware of any recommendations of regulatory authorities or otherwise which, if they were to be implemented, would have a material effect on our liquidity, capital resources, or operations.

We must comply with regulatory capital requirements established by the FRB and FDIC. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Our capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. These capital standards require us to maintain minimum ratios of “Tier 1” capital to total risk-weighted assets and total capital to risk-weighted assets of 4.00% and 8.00%, respectively. Tier 1 capital is comprised of total shareholders’ equity calculated in accordance with generally accepted accounting principles, excluding accumulated other comprehensive income (loss), less intangible assets, and total capital is comprised of Tier 1 capital plus certain adjustments, the largest of which is our allowance for loan losses. Risk-weighted assets refer to our on- and off-balance sheet exposures, adjusted for their related risk levels using formulas set forth in FRB and FDIC regulations.

35

In addition to the risk-based capital requirements described above, we are subject to a leverage capital requirement, which calls for a minimum ratio of Tier 1 capital (as defined above) to quarterly average total assets of 3.00% to 5.00%, depending upon the institution’s composite ratings as determined by its regulators. The FRB has not advised us of any requirement specifically applicable to us.

Failure to meet minimum capital requirements can trigger regulatory actions that could have a material adverse effect on our financial statements and operations. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that rely on quantitative measures of our assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Our capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

The following table shows our capital ratios, as calculated under regulatory guidelines, compared to the regulatory minimum capital ratios and the regulatory minimum capital ratios needed to qualify as a “well-capitalized” institution at March 31, 2014 and December 31, 2013:

									To be well
									capitalized under
(in thousands)						For capital			prompt corrective
	Actual					adequacy purposes			action provisions
	Amount		Ratio			Amount		Ratio	Amount		Ratio
Capital ratios for Bank:
As of March 31, 2014
Total capital (to Risk- Weighted Assets)	$	72,589		14.6	%	$	39,713	>8.0%	$	49,641	>10.0%
Tier I capital (to Risk- Weighted Assets)	$	66,365		13.4	%	$	19,857	>4.0%	$	29,785	>6.0%
Tier I capital (to Average Assets)	$	66,365		9.7	%	$	27,312	>4.0%	$	34,140	>5.0%
As of December 31, 2013
Total capital (to Risk- Weighted Assets)	$	71,876		14.6	%	$	39,492	>8.0%	$	49,365	>10.0%
Tier I capital (to Risk- Weighted Assets)	$	65,685		13.3	%	$	19,746	>4.0%	$	29,619	>6.0%
Tier I capital (to Average Assets)	$	65,685		9.8	%	$	26,780	>4.0%	$	33,475	>5.0%
Capital ratios for Bancorp:
As of March 31, 2014
Total capital (to Risk- Weighted Assets)	$	73,793		14.9	%	$	39,726	>8.0%	N/A		N/A
Tier I capital (to Risk- Weighted Assets)	$	67,567		13.6	%	$	19,863	>4.0%	N/A		N/A
Tier I capital (to Average Assets)	$	67,567		9.9	%	$	27,316	>4.0%	N/A		N/A
As of December 31, 2013
Total capital (to Risk- Weighted Assets)	$	71,313		14.5	%	$	39,494	>8.0%	N/A		N/A
Tier I capital (to Risk- Weighted Assets)	$	65,122		13.2	%	$	19,747	>4.0%	N/A		N/A
Tier I capital (to Average Assets)	$	65,122		9.7	%	$	26,782	>4.0%	N/A		N/A

Our bank subsidiary is also subject to capital requirements similar to those discussed above. The bank subsidiary’s capital ratios do not vary materially from our capital ratios presented above. At March 31, 2014, our bank subsidiary exceeded the minimum ratios established by the FRB and FDIC.

Liquidity Management

Since the Company is a holding company and does not conduct regular banking operations, its primary sources of liquidity are dividends from the Bank. Under the California Financial Code, payment of a dividend from the Bank to the Company is restricted to the lesser of the Bank’s retained earnings or the amount of the Bank’s undistributed net profits from the previous three fiscal years. The primary uses of funds for the Company are stockholder dividends, investment in the Bank and ordinary operating expenses. Management anticipates that there will be sufficient earnings at the Bank level to provide dividends to the Company to meet its funding requirements for the foreseeable future.

36

Maintenance of adequate liquidity requires that sufficient resources be available at all times to meet our cash flow requirements. Liquidity in a banking institution is required primarily to provide for deposit withdrawals and the credit needs of its customers and to take advantage of investment opportunities as they arise. Liquidity management involves our ability to convert assets into cash or cash equivalents without incurring significant loss, and to raise cash or maintain funds without incurring excessive additional cost. For this purpose, we maintain a portion of our funds in cash and cash equivalents, salable government guaranteed loans and securities available for sale. We obtain funds from the repayment and maturity of loans as well as deposit inflows, investment security maturities and paydowns, Federal funds purchased, FHLB advances, and other borrowings. Our primary uses of funds are the origination of loans, the purchase of investment securities, withdrawals of deposits, maturity of certificate of deposits, repayment of borrowings and dividends to common and preferred stockholders. Our liquid assets at March 31, 2014 were $192.7 million compared to $183.3 million at December 31, 2013.  Our liquidity level measured as the percentage of liquid assets to total assets was 28.0% and 27.3% at March 31, 2014 and December 31, 2013, respectively. We anticipate that cash and cash equivalents on hand and other sources of funds will provide adequate liquidity for our operating, investing and financing needs and our regulatory liquidity requirements for the foreseeable future. Management monitors our liquidity position daily, balancing loan funding/payments with changes in deposit activity and overnight investments.

As a secondary source of liquidity, we rely on advances from the FHLB to supplement our supply of lendable funds and to meet deposit withdrawal requirements. Advances from the FHLB are typically secured by a portion of our loan portfolio. The FHLB determines limitations on the amount of advances by assigning a percentage to each eligible loan category that will count towards the borrowing capacity. As of March 31, 2014, our borrowing capacity from the FHLB was approximately $168.0 million and there were no outstanding advances. We also maintain 2 lines of credit with correspondent banks to purchase up to $25 million in federal funds, for which there were no advances as of March 31, 2014.

Off-Balance-Sheet Arrangements

During the ordinary course of business, we provide various forms of credit lines to meet the financing needs of our customers. These commitments, which represent a credit risk to us, are not represented in any form on our balance sheets.

As of March 31, 2014 and December 31, 2013, we had commitments to extend credit of $52.3 million and $52.6 million, respectively, which includes obligations under letters of credit of $0.1 million and $0.3 million, respectively.

The effect on our revenues, expenses, cash flows and liquidity from the unused portion of the commitments to provide credit cannot be reasonably predicted because there is no guarantee that the lines of credit will be used.

Item 3.                      Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4.                      Controls and Procedures

The Company’s Chief Executive Officer and its Chief Financial Officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures, as defined in Exchange Act Rules 13 a-15(e) and 15(d)-15(e) promulgated under the Exchange Act, as of the end of the period covered by this report (the “Evaluation Date”) have concluded that as of the Evaluation Date, the Company’s disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company would be made known to them by others within the Company, particularly during the period in which this report was being prepared.  Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There were no significant changes in our internal control over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting subsequent to the Evaluation Date, nor were there any significant deficiencies or material weaknesses in such controls requiring corrective actions.

37

PART II - OTHER INFORMATION

Item 1.                       Legal Proceedings

There are no pending, or to management's knowledge, any threatened, material legal proceedings to which we are a defendant, or to which any of our properties are subject. There are no material legal proceedings to which any director, any nominee for election as a director, any executive officer, or any associate of any such director, nominee or officer is a party adverse to us.

Item 2.                       Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.                       Defaults Upon Senior Securities

None.

Item 4.                       Mine Safety Disclosures

None.

Item 5.                       Other Information

None.

38

Item 6.                       Exhibits

The following exhibits are filed as part of this report or hereby incorporated by reference to filings previously made with the SEC:

Exhibit No.		Exhibit Description
	3.1	Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 10-12B filed with the Securities and Exchange Commission on July 31, 2008).
	3.2	First Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form 10-12B filed with the Securities and Exchange Commission on July 31, 2008).
	3.3	Bylaws (incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement on Form 10-12B filed with the Securities and Exchange Commission on July 31, 2008).
	3.4	Certificate of Amendment of Bylaws (incorporated by reference to Exhibit 3.5 to the Company’s Registration Statement on Form 8-A12B filed with the Securities and Exchange Commission on January 14, 2009).
	3.7	Certificate of Amendment of Bylaws dated effective as of August 11, 2011. (incorporated by reference to the Company’s Form 10-Q for the quarter ending September 30, 2011, filed on November 14, 2011)
	31.01	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.02	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.01	Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101.INS*	XBRL Instance Document
	101.SCH*	XBRL Taxonomy Extension Schema Document
	101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
	101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
	101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
	101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

*In accordance with Rule 406T of Regulation S-T, the information in these exhibits is “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

39

SIGNATURES

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

	Oak Valley Bancorp
Date: May 12, 2014	By:	/s/    RICHARD A. MCCARTY
		Richard A. McCarty
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer and duly authorized signatory)

40

EXHIBIT INDEX

Exhibit		Description
	31.01	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.02	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.01	Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101.INS	XBRL Instance Document
	101.SCH	XBRL Taxonomy Extension Schema Document
	101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
	101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
	101.LAB	XBRL Taxonomy Extension Label Linkbase Document
	101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

EX-31

Exhibit 31.01

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Christopher M. Courtney, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Oak Valley Bancorp;

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 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 officer 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; and

5. The registrant’s other certifying officer 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.

Date: May 12, 2014

 /s/  CHRISTOPHER M. COURTNEY

Christopher M. Courtney

President and Chief Executive Officer

EX-31

Exhibit 31.02

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard A. McCarty, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Oak Valley Bancorp;

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 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 officer 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; and

5. The registrant’s other certifying officer 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.

Date: May 12, 2014

/s/  RICHARD A. MCCARTY

Richard A. McCarty

Chief Financial Officer

EX-32

Exhibit 32.01

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Christopher M. Courtney, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Oak Valley Bancorp on Form 10-Q for the quarterly period ended March 31, 2014, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Oak Valley Bancorp.

Date:  May 12, 2014	By:	/s/    CHRISTOPHER M. COURTNEY
	Name:	Christopher M. Courtney
	Title:	President and Chief Executive Officer

I, Richard A. McCarty, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Oak Valley Bancorp on Form 10-Q for the quarterly period ended March 31, 2014, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Oak Valley Bancorp.

Date: May 12, 2014	By:	/s/    RICHARD A. MCCARTY
	Name:	Richard A. McCarty
	Title:	Chief Financial Officer

XML

Note 8 - Fair Value Measurements (Details) (Other Real Estate Owned [Member])	3 Months Ended
	Mar. 31, 2014
Other Real Estate Owned [Member]
Note 8 - Fair Value Measurements (Details) [Line Items]
Fair Value Inputs, Discount Rate	6.00%

XML

Note 5 - Loans (Details) - Weighted Average Risk Grades Of Loan Portfolio	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable- Weighted Average Risk Grade	3.21	3.20
Commercial Real Estate-Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable- Weighted Average Risk Grade	3.10	3.84
Commercial Real Estate-Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable- Weighted Average Risk Grade	3.17	3.14
Land [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable- Weighted Average Risk Grade	4.50	4.50
Farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable- Weighted Average Risk Grade	3.07	3.04
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable- Weighted Average Risk Grade	3.27	3.13
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable- Weighted Average Risk Grade	2.40	2.31
Consumer Residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable- Weighted Average Risk Grade	3.06	3.05
Agriculture [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans Receivable- Weighted Average Risk Grade	3.26	3.27

XML

Note 4 - Securities (Details) - Gross Unrealized Losses and Fair Value of Investments (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Note 4 - Securities (Details) - Gross Unrealized Losses and Fair Value of Investments [Line Items]
Description of Securities- Fair Value Less than 12 months	$ 41,191,889	$ 56,385,167
Description of Securities-Unrealized Loss Less than 12 months	(1,639,383)	(4,011,706)
Description of Securities-Fair Value 12 months or more	18,122,841	4,865,394
Description of Securities-Unrealized Loss 12 months or more	(1,311,055)	(484,389)
Description of Securities-Fair Value	59,314,730	61,250,561
Description of Securities-Unrealized Loss	(2,950,438)	(4,496,095)
US Government Agencies Debt Securities [Member]
Note 4 - Securities (Details) - Gross Unrealized Losses and Fair Value of Investments [Line Items]
Description of Securities- Fair Value Less than 12 months	17,285,762	21,700,343
Description of Securities-Unrealized Loss Less than 12 months	(494,669)	(1,011,733)
Description of Securities-Fair Value 12 months or more	4,345,191	1,739,994
Description of Securities-Unrealized Loss 12 months or more	(328,445)	(256,157)
Description of Securities-Fair Value	21,630,953	23,440,337
Description of Securities-Unrealized Loss	(823,114)	(1,267,890)
Collateralized Mortgage Obligations [Member]
Note 4 - Securities (Details) - Gross Unrealized Losses and Fair Value of Investments [Line Items]
Description of Securities- Fair Value Less than 12 months	1,625,138	1,641,929
Description of Securities-Unrealized Loss Less than 12 months	(11,217)	(46,717)
Description of Securities-Fair Value 12 months or more	0
Description of Securities-Unrealized Loss 12 months or more	0
Description of Securities-Fair Value	1,625,138	1,641,929
Description of Securities-Unrealized Loss	(11,217)	(46,717)
US States and Political Subdivisions Debt Securities [Member]
Note 4 - Securities (Details) - Gross Unrealized Losses and Fair Value of Investments [Line Items]
Description of Securities- Fair Value Less than 12 months	18,390,309	25,501,929
Description of Securities-Unrealized Loss Less than 12 months	(1,098,079)	(2,761,277)
Description of Securities-Fair Value 12 months or more	9,858,466	2,879,010
Description of Securities-Unrealized Loss 12 months or more	(832,215)	(226,478)
Description of Securities-Fair Value	28,248,775	28,380,939
Description of Securities-Unrealized Loss	(1,930,294)	(2,987,755)
SBA Pool [Member]
Note 4 - Securities (Details) - Gross Unrealized Losses and Fair Value of Investments [Line Items]
Description of Securities- Fair Value Less than 12 months	0	829,375
Description of Securities-Unrealized Loss Less than 12 months	0	(5,726)
Description of Securities-Fair Value 12 months or more	1,063,903	246,390
Description of Securities-Unrealized Loss 12 months or more	(5,091)	(1,754)
Description of Securities-Fair Value	1,063,903	1,075,765
Description of Securities-Unrealized Loss	(5,091)	(7,480)
Corporate Debt Securities [Member]
Note 4 - Securities (Details) - Gross Unrealized Losses and Fair Value of Investments [Line Items]
Description of Securities- Fair Value Less than 12 months	0
Description of Securities-Unrealized Loss Less than 12 months	0
Description of Securities-Fair Value 12 months or more	0
Description of Securities-Unrealized Loss 12 months or more	0
Description of Securities-Fair Value	0
Description of Securities-Unrealized Loss	0
Asset-backed Securities [Member]
Note 4 - Securities (Details) - Gross Unrealized Losses and Fair Value of Investments [Line Items]
Description of Securities- Fair Value Less than 12 months	3,890,680	3,893,801
Description of Securities-Unrealized Loss Less than 12 months	(35,418)	(28,757)
Description of Securities-Fair Value 12 months or more	0
Description of Securities-Unrealized Loss 12 months or more	0
Description of Securities-Fair Value	3,890,680	3,893,801
Description of Securities-Unrealized Loss	(35,418)	(28,757)
Other Debt Obligations [Member]
Note 4 - Securities (Details) - Gross Unrealized Losses and Fair Value of Investments [Line Items]
Description of Securities- Fair Value Less than 12 months	0
Description of Securities-Unrealized Loss Less than 12 months	0
Description of Securities-Fair Value 12 months or more	2,855,281
Description of Securities-Unrealized Loss 12 months or more	(145,304)
Description of Securities-Fair Value	2,855,281
Description of Securities-Unrealized Loss	(145,304)
Mutual Fund [Member]
Note 4 - Securities (Details) - Gross Unrealized Losses and Fair Value of Investments [Line Items]
Description of Securities- Fair Value Less than 12 months		2,817,790
Description of Securities-Unrealized Loss Less than 12 months		(157,496)
Description of Securities-Fair Value		2,817,790
Description of Securities-Unrealized Loss		$ (157,496)

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Note 9 - Earnings Per Share (Details) (USD $)	3 Months Ended		12 Months Ended					3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2012 Equity Option [Member]	Mar. 31, 2013 Equity Option [Member] Minimum [Member]	Dec. 31, 2012 Equity Option [Member] Minimum [Member]	Mar. 31, 2013 Equity Option [Member] Maximum [Member]	Dec. 31, 2012 Equity Option [Member] Maximum [Member]	Mar. 31, 2014 Restricted Stock [Member]	Mar. 31, 2013 Restricted Stock [Member]
Note 9 - Earnings Per Share (Details) [Line Items]
Number Of Forms Of Outstanding Common Stock	2
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		73,500	68,500					0	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price				$ 8.25	$ 9.95	$ 15.67	$ 15.67

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Note 6 - Other Real Estate Owned (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Note 6 - Other Real Estate Owned (Details) [Line Items]
Number of Real Estate Properties	3		3
Real Estate Acquired Through Foreclosure	$ 916,000		$ 916,000
Proceeds from Sale of Other Real Estate	0	0
Residential Land [Member]
Note 6 - Other Real Estate Owned (Details) [Line Items]
Number of Real Estate Properties	1		1
Real Estate Acquired Through Foreclosure	$ 0		$ 0

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Note 1 - Basis of Presentation

3 Months Ended

Mar. 31, 2014

Disclosure Text Block [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE 1 – BASIS OF PRESENTATION

On July 3, 2008 (the “Effective Date”), a bank holding company reorganization was completed whereby Oak Valley Bancorp (“Bancorp”) became the parent holding company for Oak Valley Community Bank ( the “Bank”).  On the Effective Date, a tax-free exchange was completed whereby each outstanding share of the Company was converted into one share of Bancorp and the Company became the sole wholly-owned subsidiary of the holding company.

The consolidated financial statements include the accounts of Bancorp and its wholly-owned bank subsidiary. All material intercompany transactions have been eliminated. In the opinion of Management, the consolidated financial statements contain all adjustments necessary to present fairly the financial position, results of operations, changes in shareholders’ equity and cash flows.  All adjustments are of a normal, recurring nature.

Oak Valley Community Bank is a California State chartered bank. The Company was incorporated under the laws of the state of California on May 31, 1990, and began operations in Oakdale on May 28, 1991. The Company operates branches in Oakdale, Sonora, Bridgeport, Bishop, Mammoth Lakes, Modesto, Manteca, Patterson, Turlock, Ripon, Stockton, and Escalon, California. The Bridgeport, Mammoth Lakes, and Bishop branches operate as a separate division, Eastern Sierra Community Bank. The Company’s primary source of revenue is providing loans to customers who are predominantly middle-market businesses.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates reflected in the Company’s consolidated financial statements include the allowance for loan losses, determination of non-accrual loans, other-than-temporary impairment of investment securities, the fair value measurements, deferred compensation plans, and the determination, recognition and measurement of impaired loans. Actual results could differ from these estimates.

The interim consolidated financial statements included in this report are unaudited but reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the interim periods presented. All such adjustments are of a normal recurring nature. The results of operations for the three month period ended March 31, 2014 are not necessarily indicative of the results of a full year’s operations. Certain prior year amounts have been reclassified to conform to the current year presentation. There was no effect on net income or shareholders’ equity as a result of reclassifications. For further information, refer to the audited consolidated financial statements and footnotes included in the Company’s Form 10-K for the year ended December 31, 2013.

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Note 9 - Earnings Per Share (Details) - Earnings Per Share (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
BASIC EARNINGS PER SHARE
Net income available to common shareholders (in Dollars)	$ 1,408,210	$ 1,231,931
Weighted average shares outstanding	7,878,152	7,778,333
Net income per common share (in Dollars per share)	$ 0.18	$ 0.16
DILUTED EARNINGS PER SHARE
Net income available to common shareholders (in Dollars)	$ 1,408,210	$ 1,231,931
Weighted average shares outstanding	7,878,152	7,778,333
Effect of dilutive stock options	14,228	16,141
Effect of dilutive non-vested restricted shares	49,076	35,965
Weighted average shares of common stock and common stock equivalents	7,941,456	7,830,439
Net income per diluted common share (in Dollars per share)	$ 0.18	$ 0.16

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Note 5 - Loans (Details) - Non Accrual Loans (USD $)	Mar. 31, 2014	Dec. 31, 2013
Note 5 - Loans (Details) - Non Accrual Loans [Line Items]
Non Accrual Loans	$ 5,247,728	$ 2,339,580
Commercial Real Estate-Construction [Member]
Note 5 - Loans (Details) - Non Accrual Loans [Line Items]
Non Accrual Loans	0	0
Commercial Real Estate-Mortgages [Member]
Note 5 - Loans (Details) - Non Accrual Loans [Line Items]
Non Accrual Loans	1,046,483	1,046,483
Land [Member]
Note 5 - Loans (Details) - Non Accrual Loans [Line Items]
Non Accrual Loans	3,762,894	1,182,904
Farmland [Member]
Note 5 - Loans (Details) - Non Accrual Loans [Line Items]
Non Accrual Loans	87,275	92,354
Commercial And Industrial [Member]
Note 5 - Loans (Details) - Non Accrual Loans [Line Items]
Non Accrual Loans	351,076	17,839
Consumer [Member]
Note 5 - Loans (Details) - Non Accrual Loans [Line Items]
Non Accrual Loans	0	0
Consumer Residential [Member]
Note 5 - Loans (Details) - Non Accrual Loans [Line Items]
Non Accrual Loans	0	0
Agriculture [Member]
Note 5 - Loans (Details) - Non Accrual Loans [Line Items]
Non Accrual Loans	$ 0	$ 0

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Note 5 - Loans (Details) - Loans (USD $)	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net Loans	$ 422,510,000	$ 419,438,000
Deferred loan fees and costs, net	(469,979)	(623,670)
Allowance for loan losses	(7,614,864)	(7,659,158)	(7,743,439)	(7,974,975)
Net loans	414,425,458	411,155,607
Commercial Real Estate-Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net Loans	12,652,579	15,555,298
Commercial Real Estate-Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net Loans	305,537,995	285,839,700
Land [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net Loans	11,046,401	11,157,027
Farmland [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net Loans	20,814,022	20,321,572
Commercial And Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net Loans	41,086,601	48,786,586
Allowance for loan losses	(742,427)	(662,625)	(470,141)	(473,727)
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net Loans	846,345	882,667
Allowance for loan losses	(45,036)	(47,359)	(43,464)	(50,062)
Consumer Residential [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net Loans	19,159,607	25,623,482
Allowance for loan losses	(417,239)	(440,049)	(438,767)	(383,653)
Agriculture [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net Loans	11,366,751	11,272,103
Allowance for loan losses	$ (214,822)	$ (216,808)	$ (203,612)	$ (285,734)

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Note 5 - Loans (Details) - Aging of Past Due Loans (USD $)	Mar. 31, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment, Past Due [Line Items]
Commercial - 30-59 Days Past Due	$ 2,397,534	$ 1,347,779
Commercial - 60-89 Days Past Due	0	4,058,389
Commercial - Greater Than 90 Days Past Due	4,711,015	1,797,069
Commercial - Total Past Due	7,108,549	7,203,237
Commercial - Current	415,401,752	412,235,198
Commercial - Total	422,510,000	419,438,000
Commercial - Greater Than 90 Days Past Due and Still Accruing	0	0
Commercial Real Estate-Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Commercial - 30-59 Days Past Due	0	0
Commercial - 60-89 Days Past Due	0	0
Commercial - Greater Than 90 Days Past Due	0	0
Commercial - Total Past Due	0	0
Commercial - Current	12,652,579	15,555,298
Commercial - Total	12,652,579	15,555,298
Commercial - Greater Than 90 Days Past Due and Still Accruing	0	0
Commercial Real Estate-Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Commercial - 30-59 Days Past Due	1,338,804	1,347,779
Commercial - 60-89 Days Past Due	0	0
Commercial - Greater Than 90 Days Past Due	1,046,483	1,046,483
Commercial - Total Past Due	2,385,287	2,394,262
Commercial - Current	303,152,708	283,445,438
Commercial - Total	305,537,995	285,839,700
Commercial - Greater Than 90 Days Past Due and Still Accruing	0	0
Land [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Commercial - 30-59 Days Past Due	0	0
Commercial - 60-89 Days Past Due	0	2,651,530
Commercial - Greater Than 90 Days Past Due	3,243,320	658,232
Commercial - Total Past Due	3,243,320	3,309,762
Commercial - Current	7,803,081	7,847,265
Commercial - Total	11,046,401	11,157,027
Commercial - Greater Than 90 Days Past Due and Still Accruing	0	0
Farmland [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Commercial - 30-59 Days Past Due	0	0
Commercial - 60-89 Days Past Due	0	0
Commercial - Greater Than 90 Days Past Due	87,275	92,354
Commercial - Total Past Due	87,275	92,354
Commercial - Current	20,726,747	20,229,218
Commercial - Total	20,814,022	20,321,572
Commercial - Greater Than 90 Days Past Due and Still Accruing	0	0
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Commercial - 30-59 Days Past Due	1,058,730	0
Commercial - 60-89 Days Past Due	0	1,406,859
Commercial - Greater Than 90 Days Past Due	333,937	0
Commercial - Total Past Due	1,392,667	1,406,859
Commercial - Current	39,693,934	47,379,727
Commercial - Total	41,086,601	48,786,586
Commercial - Greater Than 90 Days Past Due and Still Accruing	0	0
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Commercial - 30-59 Days Past Due	0	0
Commercial - 60-89 Days Past Due	0	0
Commercial - Greater Than 90 Days Past Due	0	0
Commercial - Total Past Due	0	0
Commercial - Current	846,345	882,667
Commercial - Total	846,345	882,667
Commercial - Greater Than 90 Days Past Due and Still Accruing	0	0
Consumer Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Commercial - 30-59 Days Past Due	0	0
Commercial - 60-89 Days Past Due	0	0
Commercial - Greater Than 90 Days Past Due	0	0
Commercial - Total Past Due	0	0
Commercial - Current	19,159,607	25,623,482
Commercial - Total	19,159,607	25,623,482
Commercial - Greater Than 90 Days Past Due and Still Accruing	0	0
Agriculture [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Commercial - 30-59 Days Past Due	0	0
Commercial - 60-89 Days Past Due	0	0
Commercial - Greater Than 90 Days Past Due	0	0
Commercial - Total Past Due	0	0
Commercial - Current	11,366,751	11,272,103
Commercial - Total	11,366,751	11,272,103
Commercial - Greater Than 90 Days Past Due and Still Accruing	$ 0	$ 0

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Note 5 - Loans (Details) - Impaired Loans (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Commercial real estate:
Loans Receivable - Unpaid Contractual Principal Balance	$ 7,466,303		$ 4,491,215
Loans Receivable - Recorded Investment With No Allowance	2,342,944		1,156,676
Loans Receivable. - Recorded Investment With Allowance	2,904,784		1,182,904
Loans Receivable - Total Recorded Investment	5,247,728		2,339,580
Loans Receivable- Related Allowance	1,071,474		392,432
Loans Receivable. - Average Recorded Investment	3,793,655	6,570,000	4,102,383
Commercial Real Estate-Construction [Member]
Commercial real estate:
Loans Receivable - Unpaid Contractual Principal Balance	0		0
Loans Receivable - Recorded Investment With No Allowance	0		0
Loans Receivable. - Recorded Investment With Allowance	0		0
Loans Receivable - Total Recorded Investment	0		0
Loans Receivable- Related Allowance	0		0
Loans Receivable. - Average Recorded Investment	0		51,452
Commercial Real Estate-Mortgages [Member]
Commercial real estate:
Loans Receivable - Unpaid Contractual Principal Balance	3,049,170		3,049,170
Loans Receivable - Recorded Investment With No Allowance	1,046,483		1,046,483
Loans Receivable. - Recorded Investment With Allowance	0		0
Loans Receivable - Total Recorded Investment	1,046,483		1,046,483
Loans Receivable- Related Allowance	0		0
Loans Receivable. - Average Recorded Investment	1,046,483		1,979,847
Land [Member]
Commercial real estate:
Loans Receivable - Unpaid Contractual Principal Balance	3,964,794		1,319,519
Loans Receivable - Recorded Investment With No Allowance	858,110		0
Loans Receivable. - Recorded Investment With Allowance	2,904,784		1,182,904
Loans Receivable - Total Recorded Investment	3,762,894		1,182,904
Loans Receivable- Related Allowance	1,071,474		392,432
Loans Receivable. - Average Recorded Investment	2,472,899		1,635,686
Farmland [Member]
Commercial real estate:
Loans Receivable - Unpaid Contractual Principal Balance	91,586		95,286
Loans Receivable - Recorded Investment With No Allowance	87,275		92,354
Loans Receivable. - Recorded Investment With Allowance	0		0
Loans Receivable - Total Recorded Investment	87,275		92,354
Loans Receivable- Related Allowance	0		0
Loans Receivable. - Average Recorded Investment	89,815		61,530
Commercial And Industrial [Member]
Commercial real estate:
Loans Receivable - Unpaid Contractual Principal Balance	360,753		27,240
Loans Receivable - Recorded Investment With No Allowance	351,076		17,839
Loans Receivable. - Recorded Investment With Allowance	0		0
Loans Receivable - Total Recorded Investment	351,076		17,839
Loans Receivable- Related Allowance	0		0
Loans Receivable. - Average Recorded Investment	184,458		19,744
Consumer [Member]
Commercial real estate:
Loans Receivable - Unpaid Contractual Principal Balance	0		0
Loans Receivable - Recorded Investment With No Allowance	0		0
Loans Receivable. - Recorded Investment With Allowance	0		0
Loans Receivable - Total Recorded Investment	0		0
Loans Receivable- Related Allowance	0		0
Loans Receivable. - Average Recorded Investment	0		0
Consumer Residential [Member]
Commercial real estate:
Loans Receivable - Unpaid Contractual Principal Balance	0		0
Loans Receivable - Recorded Investment With No Allowance	0		0
Loans Receivable. - Recorded Investment With Allowance	0		0
Loans Receivable - Total Recorded Investment	0		0
Loans Receivable- Related Allowance	0		0
Loans Receivable. - Average Recorded Investment	0		354,124
Agriculture [Member]
Commercial real estate:
Loans Receivable - Unpaid Contractual Principal Balance	0		0
Loans Receivable - Recorded Investment With No Allowance	0		0
Loans Receivable. - Recorded Investment With Allowance	0		0
Loans Receivable - Total Recorded Investment	0		0
Loans Receivable- Related Allowance	0		0
Loans Receivable. - Average Recorded Investment	$ 0		$ 0

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 1,408,210	$ 1,299,431
Adjustments to reconcile net earnings to net cash from operating activities:
Provision for loan losses	0	100,000
(Decrease) increase in deferred fees/costs, net	(153,691)	16,891
Depreciation	304,143	289,782
Amortization of investment securities, net	45,520	74,766
Stock based compensation	83,771	36,296
Gain on called available for sale securities	(7,856)	(18,352)
Earnings on cash surrender value of life insurance	(101,147)	(100,547)
(Decrease) increase in interest payable and other liabilities	(138,046)	485,807
Decrease (increase) in interest receivable	212,582	(94,962)
Increase in other assets	(1,600,691)	(138,677)
Net cash from operating activities	3,693	1,950,435
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available for sale securities	(5,065,000)	(18,690,316)
Proceeds from maturities, calls, and principal paydowns of securities available for sale	4,662,377	7,116,014
Net increase in loans	(3,116,160)	(307,919)
Purchase of BOLI policies	1,028,706	0
Net purchases of premises and equipment	(560,085)	(24,774)
Net cash used in investing activities	(3,050,162)	(11,906,995)
CASH FLOWS FROM FINANCING ACTIVITIES:
Shareholder cash dividends paid	(792,973)	0
Preferred stock dividend payment	0	(67,500)
Net increase in demand deposits and savings accounts	14,811,739	(6,323,636)
Net decrease in time deposits	(1,448,637)	(454,133)
Proceeds from sale of common stock and exercise of stock options	890,494	85,000
Net cash from (used in) financing activities	13,509,726	(13,510,269)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	10,463,257	(23,466,829)
CASH AND CASH EQUIVALENTS, beginning of period	105,190,560	141,334,998
CASH AND CASH EQUIVALENTS, end of period	115,653,817	117,868,169
Cash paid during the period for:
Interest	188,676	234,626
Income taxes	845,000	40,000
NON-CASH INVESTING ACTIVITIES:
Real estate acquired through foreclosure	0	970,632
Change in unrealized gain (loss) on available-for-sale securities	1,487,169	(804,940)
Operating Activity [Member]
Adjustments to reconcile net earnings to net cash from operating activities:
Excess tax benefits from stock-based payment arrangements	(49,103)	0
Financing Activity [Member]
Adjustments to reconcile net earnings to net cash from operating activities:
Excess tax benefits from stock-based payment arrangements	49,103	0
Series A Preferred Stock [Member]
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of Series B preferred stock	$ 0	$ (6,750,000)

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Note 5 - Loans (Details) - Troubled Debt Restructurings (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Financing Receivable, Modifications [Line Items]
Loans Receivable- Number of Loans	1	1
Loans Receivable- Pre-Modification Outstanding Recorded Investment	$ 519,574	$ 541,594
Loans Receivable- Post-Modification Outstanding Recorded Investment	519,574	541,594
Commercial Real Estate-Construction [Member]
Financing Receivable, Modifications [Line Items]
Loans Receivable- Number of Loans	0	0
Loans Receivable- Pre-Modification Outstanding Recorded Investment	0	0
Loans Receivable- Post-Modification Outstanding Recorded Investment	0	0
Commercial Real Estate-Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Loans Receivable- Number of Loans	0	0
Loans Receivable- Pre-Modification Outstanding Recorded Investment	0	0
Loans Receivable- Post-Modification Outstanding Recorded Investment	0	0
Land [Member]
Financing Receivable, Modifications [Line Items]
Loans Receivable- Number of Loans	1	1
Loans Receivable- Pre-Modification Outstanding Recorded Investment	519,574	541,594
Loans Receivable- Post-Modification Outstanding Recorded Investment	519,574	541,594
Farmland [Member]
Financing Receivable, Modifications [Line Items]
Loans Receivable- Number of Loans	0	0
Loans Receivable- Pre-Modification Outstanding Recorded Investment	0	0
Loans Receivable- Post-Modification Outstanding Recorded Investment	0	0
Commercial And Industrial [Member]
Financing Receivable, Modifications [Line Items]
Loans Receivable- Number of Loans	0	0
Loans Receivable- Pre-Modification Outstanding Recorded Investment	0	0
Loans Receivable- Post-Modification Outstanding Recorded Investment	0	0
Consumer [Member]
Financing Receivable, Modifications [Line Items]
Loans Receivable- Number of Loans	0	0
Loans Receivable- Pre-Modification Outstanding Recorded Investment	0	0
Loans Receivable- Post-Modification Outstanding Recorded Investment	0	0
Consumer Residential [Member]
Financing Receivable, Modifications [Line Items]
Loans Receivable- Number of Loans	0	0
Loans Receivable- Pre-Modification Outstanding Recorded Investment	0	0
Loans Receivable- Post-Modification Outstanding Recorded Investment	0	0
Agriculture [Member]
Financing Receivable, Modifications [Line Items]
Loans Receivable- Number of Loans	0	0
Loans Receivable- Pre-Modification Outstanding Recorded Investment	0	0
Loans Receivable- Post-Modification Outstanding Recorded Investment	$ 0	$ 0

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Note 8 - Fair Value Measurements (Details) - Fair Value of Financial Instruments (USD $)	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Financial assets:
Cash and cash equivalents	$ 115,653,817	$ 105,190,560	$ 117,868,169	$ 141,334,998
Loans, net	414,425,458	411,155,607
Financial liabilities:
Deposits	615,996,534	602,633,432
Fair Value, Inputs, Level 1 [Member]
Financial assets:
Cash and cash equivalents	115,653,817	105,190,560
Cash and cash equivalents	115,653,817	105,190,560
Fair Value, Inputs, Level 2 [Member]
Financial assets:
Restricted equity securities	3,170,250	3,170,250
Restricted equity securities	3,170,250	3,170,250
Interest receivable	1,798,505	2,011,086
Financial liabilities:
Interest payable	(44,386)	(60,234)
Fair Value, Inputs, Level 3 [Member]
Financial assets:
Loans, net	414,425,458	411,155,607
Loans, net	429,287,284	426,433,358
Financial liabilities:
Deposits	(615,996,534)	(602,633,432)
Deposits	(603,968,814)	(590,494,886)
Off-balance-sheet assets (liabilities):
Commitments and standby letters of credit	$ (522,905)	$ (525,585)

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Condensed Consolidated Balance Sheets (Current Period Unaudited) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Cash and due from banks	$ 89,278,817	$ 100,095,560
Federal funds sold	26,375,000	5,095,000
Cash and cash equivalents	115,653,817	105,190,560
Securities available for sale	119,597,781	117,745,653
Loans, net of allowance for loan loss of $7,614,864 and $7,659,158 at March 31, 2014 and December 31, 2013, respectively	414,425,458	411,155,607
Bank premises and equipment, net	13,940,103	13,684,161
Other real estate owned	916,205	916,205
Interest receivable and other assets	23,058,038	23,160,356
	687,591,402	671,852,542
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits	615,996,534	602,633,432
Interest payable and other liabilities	3,771,162	4,702,181
Total liabilities	619,767,696	607,335,613
Shareholders’ equity
Common stock, no par value; 50,000,000 shares authorized, 8,071,355 and 7,929,730 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively	24,648,704	23,758,210
Additional paid-in capital	2,670,082	2,537,208
Retained earnings	40,392,668	38,984,458
Accumulated other comprehensive income (loss), net of tax	112,252	(762,947)
Total shareholders’ equity	67,823,706	64,516,929
	$ 687,591,402	$ 671,852,542

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parentheticals) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Tax effect of unrealized holding (losses) gains on securities arising during the current period	$ 615,203	$ (323,681)
Tax effect of reclassification adjustment due to net gains realized on calls of securities	$ 3,233	$ 7,552

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Note 5 - Loans (Details) - Allowance for Loan Losses (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	$ 7,659,158	$ 7,974,975
Charge-offs	(53,515)	(340,457)
Recoveries	9,221	8,921
Provision	0	100,000
Ending balance	7,614,864	7,743,439
Individually evaluated for impairment	5,247,728		2,339,580
Collectively evaluated for impairment	417,262,573		417,098,855
Gross Loan Balance	422,510,000		419,438,000
Individually evaluated for impairment	1,071,474		392,432
Collectively evaluated for impairment	6,543,390		7,266,726
Commercial Real Estate Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	6,247,603	6,571,290
Charge-offs	(50,188)	(236,114)
Recoveries	0	6,096
Provision	(5,644)	194,241
Ending balance	6,191,771	6,535,513
Individually evaluated for impairment	4,896,652		2,321,741
Collectively evaluated for impairment	345,154,345		330,551,856
Gross Loan Balance	350,050,997		332,873,597
Individually evaluated for impairment	1,071,474		392,432
Collectively evaluated for impairment	5,120,297		5,855,171
Commercial And Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	662,625	473,727
Charge-offs	0	0
Recoveries	0	0
Provision	79,802	(3,586)
Ending balance	742,427	470,141
Individually evaluated for impairment	351,076		17,839
Collectively evaluated for impairment	40,735,525		48,768,747
Gross Loan Balance	41,086,601		48,786,586
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	742,427		662,625
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	47,359	50,062
Charge-offs	(3,327)	(4,343)
Recoveries	714	880
Provision	290	(3,135)
Ending balance	45,036	43,464
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	846,345		882,667
Gross Loan Balance	846,345		882,667
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	45,036		47,359
Consumer Residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	440,049	383,653
Charge-offs	0	(100,000)
Recoveries	8,507	1,945
Provision	(31,317)	153,169
Ending balance	417,239	438,767
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	19,159,607		25,623,482
Gross Loan Balance	19,159,607		25,623,482
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	417,239		440,049
Agriculture [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	216,808	285,734
Charge-offs	0	0
Recoveries	0
Provision	(1,986)	(82,122)
Ending balance	214,822	203,612
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	11,366,751		11,272,103
Gross Loan Balance	11,366,751		11,272,103
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	214,822		216,808
Unallocated Financing Receivables [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	44,714	210,509
Charge-offs	0	0
Recoveries	0	0
Provision	(41,145)	(158,567)
Ending balance	3,569	51,942
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	0		0
Gross Loan Balance	0		0
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	$ 3,569		$ 44,714

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Note 3 - Preferred Stock Repurchase and Warrant Redemption (Details) (USD $)	1 Months Ended
	May 31, 2012 If There Is No Loan Growth [Member] Series B Preferred Stock [Member]	Sep. 30, 2011 Common Stock [Member]	Aug. 31, 2011 Series A Preferred Stock [Member]	Mar. 31, 2013 Series B Preferred Stock [Member]	Aug. 31, 2011 Series B Preferred Stock [Member]	Mar. 31, 2014 Series B Preferred Stock [Member]
Note 3 - Preferred Stock Repurchase and Warrant Redemption (Details) [Line Items]
Stock Repurchased During Period, Value	$ 6,750,000		$ 13,500,000	$ 6,750,000
Stock Issued During Period, Value, New Issues					13,500,000
Stock Redeemed or Called During Period, Shares	6,750	350,346
Class of Warrant or Right, Exercise Price of Warrants or Rights		5.78
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		560,000
Stock Repurchased During Period, Shares				6,750
Stock Repurchased During Period Accrued Interest				$ 67,500
Preferred Stock, Shares Outstanding						0

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Note 5 - Loans (Details) - Changes in the Allowance Off Balance Sheet Commitments (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Changes in the Allowance Off Balance Sheet Commitments [Abstract]
Balance, beginning of period	$ 133,765	$ 108,209
(Recovery) provision charged to operations for off balance sheet commitments	(2,519)	15,768
Balance, end of period	$ 131,246	$ 123,977

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Note 4 - Securities (Details) - Amortized Cost And Estimated Fair Values Of Debt Securities (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities: Amortized Cost	$ 119,406,565	$ 119,041,606
Available-for-sale securities: Gross Unrealized Gains	3,141,654	3,200,142
Available-for-sale securities: Gross Unrealized Losses	(2,950,438)	(4,496,095)
Available-for-sale securities: Fair Market Value	119,597,781	117,745,653
US Government Agencies Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities: Amortized Cost	48,714,052	52,539,479
Available-for-sale securities: Gross Unrealized Gains	1,657,619	1,844,104
Available-for-sale securities: Gross Unrealized Losses	(823,114)	(1,267,890)
Available-for-sale securities: Fair Market Value	49,548,557	53,115,693
Collateralized Mortgage Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities: Amortized Cost	8,661,582	9,580,443
Available-for-sale securities: Gross Unrealized Gains	321,512	247,763
Available-for-sale securities: Gross Unrealized Losses	(11,217)	(46,717)
Available-for-sale securities: Fair Market Value	8,971,877	9,781,489
US States and Political Subdivisions Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities: Amortized Cost	45,386,720	42,303,684
Available-for-sale securities: Gross Unrealized Gains	1,019,415	953,039
Available-for-sale securities: Gross Unrealized Losses	(1,930,294)	(2,987,755)
Available-for-sale securities: Fair Market Value	44,475,841	40,268,968
SBA Pool [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities: Amortized Cost	1,073,751	1,087,995
Available-for-sale securities: Gross Unrealized Gains	0
Available-for-sale securities: Gross Unrealized Losses	(5,091)	(7,480)
Available-for-sale securities: Fair Market Value	1,068,660	1,080,515
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities: Amortized Cost	6,704,380	4,697,220
Available-for-sale securities: Gross Unrealized Gains	114,105	127,558
Available-for-sale securities: Gross Unrealized Losses	0
Available-for-sale securities: Fair Market Value	6,818,485	4,824,778
Asset-backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities: Amortized Cost	5,865,495	5,857,500
Available-for-sale securities: Gross Unrealized Gains	29,003	27,678
Available-for-sale securities: Gross Unrealized Losses	(35,418)	(28,757)
Available-for-sale securities: Fair Market Value	5,859,080	5,856,421
Other Debt Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities: Amortized Cost	3,000,585	2,975,285
Available-for-sale securities: Gross Unrealized Gains	0
Available-for-sale securities: Gross Unrealized Losses	(145,304)	(157,496)
Available-for-sale securities: Fair Market Value	$ 2,855,281	$ 2,817,789

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Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (USD $)	Common Stock [Member]	Preferred Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balances at Dec. 31, 2012	$ 23,673,210	$ 6,750,000	$ 2,341,814	$ 33,958,737	$ 3,244,963	$ 69,968,724
Balances (in Shares) at Dec. 31, 2012	7,907,780	6,750
Stock options exercised	85,000					85,000
Stock options exercised (in Shares)	11,250
Restricted stock issued (in Shares)	15,000
Restricted stock cancelled (in Shares)	(4,300)
Repurchase of Series B preferred stock		(6,750,000)				(6,750,000)
Repurchase of Series B preferred stock (in Shares)		(6,750)
Preferred stock dividend payments				(67,500)		(67,500)
Common stock dividend declared				(792,973)		(792,973)
Stock based compensation			195,394			195,394
Other comprehensive income					(4,007,910)	(4,007,910)
Net income				5,886,194		5,886,194
Balances at Dec. 31, 2013	23,758,210	0	2,537,208	38,984,458	(762,947)	64,516,929
Balances (in Shares) at Dec. 31, 2013	7,929,730	0
Stock options exercised	890,494					890,494
Stock options exercised (in Shares)	118,125
Tax benefit on options exercised			49,103			49,103
Restricted stock issued (in Shares)	23,500
Stock based compensation			83,771			83,771
Other comprehensive income					875,199	875,199
Net income				1,408,210		1,408,210
Balances at Mar. 31, 2014	$ 24,648,704	$ 0	$ 2,670,082	$ 40,392,668	$ 112,252	$ 67,823,706
Balances (in Shares) at Mar. 31, 2014	8,071,355	0

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Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Net of allowance for loan loss (in Dollars)	$ 7,614,864	$ 7,659,158
Common stock, par value (in Dollars per share)	$ 0	$ 0
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	8,071,355	7,929,730
Common stock, shares outstanding	8,071,355	7,929,730

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Note 9 - Earnings Per Share

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

NOTE 9 – EARNINGS PER SHARE

Earnings per share (“EPS”) are based upon the weighted average number of common shares outstanding during each year. The following table shows: (1) weighted average basic shares, (2) effect of dilutive securities related to stock options and non-vested restricted stock, and (3) weighted average shares of common stock and common stock equivalents. Net income available to common stockholders is calculated as net income reduced by dividends accumulated on preferred stock. Basic EPS are calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding during each period, excluding unvested restricted stock awards. Diluted EPS are calculated using the weighted average diluted shares, which reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The dilutive shares included in year-to-date diluted EPS is a weighted average of the dilutive shares included in each quarterly diluted EPS computation under the treasury stock method. We have two forms of outstanding common stock: common stock and unvested restricted stock awards. Holders of restricted stock awards receive non-forfeitable dividends at the same rate as common stockholders and they both share equally in undistributed earnings.

The Company’s calculation of basic and diluted earnings per share (“EPS”) for the three month periods ended March 31, 2014 and 2013 are reflected in the table below.

In thousands (except share and per share amounts)	THREE MONTHS ENDED MARCH 31,
	2014		2013
BASIC EARNINGS PER SHARE
Net income available to common shareholders	$	1,408,210	$	1,231,931
Weighted average shares outstanding		7,878,152		7,778,333
Net income per common share	$	0.18	$	0.16
DILUTED EARNINGS PER SHARE
Net income available to common shareholders	$	1,408,210	$	1,231,931
Weighted average shares outstanding		7,878,152		7,778,333
Effect of dilutive stock options		14,228		16,141
Effect of dilutive non-vested restricted shares		49,076		35,965
Weighted average shares of common stock and common stock equivalents		7,941,456		7,830,439
Net income per diluted common share	$	0.18	$	0.16

During the three month period ended March 31, 2014, anti-dilutive weighted average options to purchase 68,500 shares of common stock were outstanding, with prices ranging from $9.95 to $15.67. Anti-dilutive weighted average stock options of 73,500 were outstanding during the three month period of 2013, with prices ranging from $8.25 to $15.67. These options were not included in the computation of diluted EPS because the options’ exercise price was greater than the average market price of the common shares. These options begin to expire in 2015.

There were no anti-dilutive non-vested restricted stock grants for the three months ended March 31, 2014 and 2013.

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Document And Entity Information	3 Months Ended
	Mar. 31, 2014	Apr. 30, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	Oak Valley Bancorp
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		8,071,355
Amendment Flag	false
Entity Central Index Key	0001431567
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Mar. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1

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Note 4 - Securities (Tables)

3 Months Ended

Mar. 31, 2014

Securities [Abstract]

Available-for-sale Securities [Table Text Block]

	Amortized Cost		Gross Unrealized Gains		Gross  Unrealized  Losses			Fair Value
Available-for-sale securities:
U.S. agencies	$	48,714,052	$	1,657,619	$	(823,114	)	$	49,548,557
Collateralized mortgage obligations		8,661,582		321,512		(11,217	)		8,971,877
Municipalities		45,386,720		1,019,415		(1,930,294	)		44,475,841
SBA Pools		1,073,751		0		(5,091	)		1,068,660
Corporate debt		6,704,380		114,105		0			6,818,485
Asset Backed Securities		5,865,495		29,003		(35,418	)		5,859,080
Mutual Fund		3,000,585		0		(145,304	)		2,855,281
	$	119,406,565	$	3,141,654	$	(2,950,438	)	$	119,597,781

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
U.S. agencies	$	52,539,479		1,844,104	$	(1,267,890	)	$	53,115,693
Collateralized mortgage obligations		9,580,443		247,763		(46,717	)		9,781,489
Municipalities		42,303,684		953,039		(2,987,755	)		40,268,968
SBA Pools		1,087,995		-		(7,480	)		1,080,515
Corporate debt		4,697,220		127,558		-			4,824,778
Asset Backed Securities		5,857,500		27,678		(28,757	)		5,856,421
Mutual Fund		2,975,285		-		(157,496	)		2,817,789
	$	119,041,606	$	3,200,142	$	(4,496,095	)	$	117,745,653

Schedule of Unrealized Loss on Investments [Table Text Block]

	Less than 12 months					12 months or more					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. agencies	$	17,285,762	$	(494,669	)	$	4,345,191	$	(328,445	)	$	21,630,953	$	(823,114	)
Collateralized mortgage obligations		1,625,138		(11,217	)		0		0			1,625,138		(11,217	)
Municipalities		18,390,309		(1,098,079	)		9,858,466		(832,215	)		28,248,775		(1,930,294	)
SBA Pools		0		0			1,063,903		(5,091	)		1,063,903		(5,091	)
Corporate debt		0		0			0		0			0		0
Asset Backed Securities		3,890,680		(35,418	)		0		0			3,890,680		(35,418	)
Mutual Fund		0		0			2,855,281		(145,304	)		2,855,281		(145,304	)
Total temporarily impaired securities	$	41,191,889	$	(1,639,383	)	$	18,122,841	$	(1,311,055	)	$	59,314,730	$	(2,950,438	)

	Less than 12 months					12 months or more					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized  Loss
U.S. agencies	$	21,700,343	$	(1,011,733	)	$	1,739,994	$	(256,157	)	$	23,440,337	$	(1,267,890	)
Collateralized mortgage obligations		1,641,929		(46,717	)		—		—			1,641,929		(46,717	)
Municipalities		25,501,929		(2,761,277	)		2,879,010		(226,478	)		28,380,939		(2,987,755	)
SBA Pools		829,375		(5,726	)		246,390		(1,754	)		1,075,765		(7,480	)
Corporate debt		—		—			—		—			—		—
Asset Backed Securities		3,893,801		(28,757	)		—		—			3,893,801		(28,757	)
Mutual Fund		2,817,790		(157,496	)		—		—			2,817,790		(157,496	)
Total temporarily impaired securities	$	56,385,167	$	(4,011,706	)	$	4,865,394	$	(484,389	)	$	61,250,561	$	(4,496,095	)

Investments Classified by Contractual Maturity Date [Table Text Block]

	Amortized Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	12,001,360	$	11,421,774
Due after one year through five years		31,241,430		32,843,925
Due after five years through ten years		37,903,603		36,600,718
Due after ten years		38,260,172		38,731,364
	$	119,406,565	$	119,597,781

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Condensed Consolidated Statements of Income (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
INTEREST INCOME
Interest and fees on loans	$ 5,304,683	$ 5,232,140
Interest on securities available for sale	915,527	786,775
Interest on federal funds sold	13,496	6,756
Interest on deposits with banks	43,330	57,374
Total interest income	6,277,036	6,083,045
INTEREST EXPENSE
Deposits	172,808	233,813
Federal funds purchased	20	0
Total interest expense	172,828	233,813
Net interest income	6,104,208	5,849,232
PROVISION FOR LOAN LOSSES	0	100,000
Net interest income after provision for loan losses	6,104,208	5,749,232
OTHER INCOME
Service charges on deposits	308,662	286,718
Earnings on cash surrender value of life insurance	101,147	100,547
Mortgage commissions	29,554	50,514
Gains on called securities	7,856	18,352
Other	363,138	328,503
Total non-interest income	810,357	784,634
OTHER EXPENSES
Salaries and employee benefits	2,713,946	2,543,919
Occupancy expenses	745,146	740,007
Data processing fees	326,056	304,518
Regulatory assessments (FDIC & DBO)	120,000	120,000
Other operating expenses	975,957	930,641
Total non-interest expense	4,881,105	4,639,085
Net income before provision for income taxes	2,033,460	1,894,781
PROVISION FOR INCOME TAXES	625,250	595,350
NET INCOME	1,408,210	1,299,431
Preferred stock dividends	0	67,500
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$ 1,408,210	$ 1,231,931
NET INCOME PER COMMON SHARE (in Dollars per share)	$ 0.18	$ 0.16
NET INCOME PER DILUTED COMMON SHARE (in Dollars per share)	$ 0.18	$ 0.16

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Note 4 - Securities

3 Months Ended

Mar. 31, 2014

Securities [Abstract]

Securities [Text Block]

NOTE 4 – SECURITIES

The amortized cost and estimated fair values of debt securities as of March 31, 2014 are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross  Unrealized  Losses			Fair Value
Available-for-sale securities:
U.S. agencies	$	48,714,052	$	1,657,619	$	(823,114	)	$	49,548,557
Collateralized mortgage obligations		8,661,582		321,512		(11,217	)		8,971,877
Municipalities		45,386,720		1,019,415		(1,930,294	)		44,475,841
SBA Pools		1,073,751		0		(5,091	)		1,068,660
Corporate debt		6,704,380		114,105		0			6,818,485
Asset Backed Securities		5,865,495		29,003		(35,418	)		5,859,080
Mutual Fund		3,000,585		0		(145,304	)		2,855,281
	$	119,406,565	$	3,141,654	$	(2,950,438	)	$	119,597,781

The following tables detail the gross unrealized losses and fair values aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2014.

	Less than 12 months					12 months or more					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. agencies	$	17,285,762	$	(494,669	)	$	4,345,191	$	(328,445	)	$	21,630,953	$	(823,114	)
Collateralized mortgage obligations		1,625,138		(11,217	)		0		0			1,625,138		(11,217	)
Municipalities		18,390,309		(1,098,079	)		9,858,466		(832,215	)		28,248,775		(1,930,294	)
SBA Pools		0		0			1,063,903		(5,091	)		1,063,903		(5,091	)
Corporate debt		0		0			0		0			0		0
Asset Backed Securities		3,890,680		(35,418	)		0		0			3,890,680		(35,418	)
Mutual Fund		0		0			2,855,281		(145,304	)		2,855,281		(145,304	)
Total temporarily impaired securities	$	41,191,889	$	(1,639,383	)	$	18,122,841	$	(1,311,055	)	$	59,314,730	$	(2,950,438	)

At March 31, 2014, there were three agencies, 13 municipalities, two SBA pools and one mutual fund that comprised the total securities in an unrealized loss position for greater than 12 months and twelve agencies, one collateralized mortgage obligation, 21 municipalities, and two asset backed securities that make up the total securities in a loss position for less than 12 months. Management periodically evaluates each available-for-sale investment security in an unrealized loss position to determine if the impairment is temporary or other than temporary. This evaluation encompasses various factors including, the nature of the investment, the cause of the impairment, the severity and duration of the impairment, credit ratings and other credit related factors such as third party guarantees and volatility of the security’s fair value. Management has determined that no investment security is other than temporarily impaired. The unrealized losses are due primarily to interest rate changes and the Company does not intend to sell the securities and it is not likely that we will be required to sell the securities before the earlier of the forecasted recovery or the maturity of the underlying investment security.

The amortized cost and estimated fair value of debt securities at March 31, 2014, by contractual maturity or call date, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	12,001,360	$	11,421,774
Due after one year through five years		31,241,430		32,843,925
Due after five years through ten years		37,903,603		36,600,718
Due after ten years		38,260,172		38,731,364
	$	119,406,565	$	119,597,781

The amortized cost and estimated fair values of debt securities as of December 31, 2013, are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
U.S. agencies	$	52,539,479		1,844,104	$	(1,267,890	)	$	53,115,693
Collateralized mortgage obligations		9,580,443		247,763		(46,717	)		9,781,489
Municipalities		42,303,684		953,039		(2,987,755	)		40,268,968
SBA Pools		1,087,995		-		(7,480	)		1,080,515
Corporate debt		4,697,220		127,558		-			4,824,778
Asset Backed Securities		5,857,500		27,678		(28,757	)		5,856,421
Mutual Fund		2,975,285		-		(157,496	)		2,817,789
	$	119,041,606	$	3,200,142	$	(4,496,095	)	$	117,745,653

The following tables detail the gross unrealized losses and fair values aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2013.

	Less than 12 months					12 months or more					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized  Loss
U.S. agencies	$	21,700,343	$	(1,011,733	)	$	1,739,994	$	(256,157	)	$	23,440,337	$	(1,267,890	)
Collateralized mortgage obligations		1,641,929		(46,717	)		—		—			1,641,929		(46,717	)
Municipalities		25,501,929		(2,761,277	)		2,879,010		(226,478	)		28,380,939		(2,987,755	)
SBA Pools		829,375		(5,726	)		246,390		(1,754	)		1,075,765		(7,480	)
Corporate debt		—		—			—		—			—		—
Asset Backed Securities		3,893,801		(28,757	)		—		—			3,893,801		(28,757	)
Mutual Fund		2,817,790		(157,496	)		—		—			2,817,790		(157,496	)
Total temporarily impaired securities	$	56,385,167	$	(4,011,706	)	$	4,865,394	$	(484,389	)	$	61,250,561	$	(4,496,095	)

We recognized a gain of $8,000 for the three month period ended March 31, 2014, on certain available-for-sale securities that were partially called, which compares to $18,000 in the same period of 2013. There were no sales of available-for-sale securities during the first three months of 2014 and 2013.

Securities carried at $70,901,000 and $72,371,000 at March 31, 2014 and December 31, 2013, respectively, were pledged to secure deposits of public funds.

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Note 3 - Preferred Stock Repurchase and Warrant Redemption

3 Months Ended

Mar. 31, 2014

Preferred Stock Repurchase And Warrant Redemption [Abstract]

Preferred Stock Repurchase And Warrant Redemption [Text Block]

NOTE 3 – PREFERRED STOCK REPURCHASE AND WARRANT REDEMPTION

In August 2011, the Company repurchased the $13,500,000 of Series A Preferred Stock originally issued to the U.S. Treasury in December 2008 in connection with the Company’s participation in the Capital Purchase Program (“CPP”). The Company simultaneously issued $13,500,000 in Series B Preferred Stock to the U.S. Treasury under the Small Business Lending Funding (“SBLF”) program. Subsequently, the Company fully redeemed a warrant to purchase 350,346 shares of its Common Stock, at the exercise price of $5.78 per share that the Company had granted to the U.S. Treasury pursuant to the CPP, for a purchase price of $560,000, which settled in September 2011.

In May 2012, the Company repurchased from the U.S. Treasury 6,750 shares of Series B Preferred Stock for aggregate consideration of $6.75 million. In March 2013, the Company repurchased the remaining 6,750 shares of Series B Preferred Stock for aggregate consideration of $6.75 million plus $67,500 for accrued interest. As of March 31, 2014, there are no outstanding shares of Series B Preferred Stock.

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Note 4 - Securities (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Note 4 - Securities (Details) [Line Items]
Available-for-sale Securities, Gross Realized Gain (Loss) (in Dollars)	$ 7,856	$ 18,352
Proceeds from Sale of Available-for-sale Securities (in Dollars)	0	0
Security Owned and Pledged as Collateral, Fair Value (in Dollars)	$ 70,901,000		$ 72,371,000
US Government Agencies Debt Securities [Member]
Note 4 - Securities (Details) [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	3
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year	12
US States and Political Subdivisions Debt Securities [Member]
Note 4 - Securities (Details) [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	13
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year	21
Asset-backed Securities [Member]
Note 4 - Securities (Details) [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	2
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year	2
Mutual Fund [Member]
Note 4 - Securities (Details) [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year	1
Collateralized Mortgage Obligations [Member]
Note 4 - Securities (Details) [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year	1

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Note 5 - Loans (Tables)

3 Months Ended

Mar. 31, 2014

Note 5 - Loans (Tables) [Line Items]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	March 31, 2014			December 31, 2013
Commercial real estate:
Commercial real estate- construction	$	12,652,579		$	15,555,298
Commercial real estate- mortgages		305,537,995			285,839,700
Land		11,046,401			11,157,027
Farmland		20,814,022			20,321,572
Commercial and industrial		41,086,601			48,786,586
Consumer		846,345			882,667
Consumer residential		19,159,607			25,623,482
Agriculture		11,366,751			11,272,103
Total loans		422,510,301			419,438,435
Less:
Deferred loan fees and costs, net		(469,979	)		(623,670	)
Allowance for loan losses		(7,614,864	)		(7,659,158	)
Net loans	$	414,425,458		$	411,155,607

Schedule of Financing Receivables, Non Accrual Status [Table Text Block]

	March 31, 2014		December 31, 2013
Commercial real estate:
Commercial real estate- construction	$	0	$	0
Commercial real estate- mortgages		1,046,483		1,046,483
Land		3,762,894		1,182,904
Farmland		87,275		92,354
Commercial and industrial		351,076		17,839
Consumer		0		0
Consumer residential		0		0
Agriculture		0		0
Total non-accrual loans	$	5,247,728	$	2,339,580

Past Due Financing Receivables [Table Text Block]

March 31, 2014	30-59 Days Past Due		60-89  Days Past  Due		Greater  Than 90  Days Past Due		Total Past  Due		Current		Total		Greater Than 90  Days Past Due and Still  Accruing
Commercial real estate:
Commercial R.E. - construction	$	0		0		0	$	0	$	12,652,579	$	12,652,579	$	0
Commercial R.E. - mortgages		1,338,804		0		1,046,483		2,385,287		303,152,708		305,537,995		0
Land		0		0		3,243,320		3,243,320		7,803,081		11,046,401		0
Farmland		0		0		87,275		87,275		20,726,747		20,814,022		0
Commercial and industrial		1,058,730		0		333,937		1,392,667		39,693,934		41,086,601		0
Consumer		0		0		0		0		846,345		846,345		0
Consumer residential		0		0		0		0		19,159,607		19,159,607		0
Agriculture		0		0		0		0		11,366,751		11,366,751		0
Total	$	2,397,534	$	0	$	4,711,015	$	7,108,549	$	415,401,752	$	422,510,301	$	0

December 31, 2013	30-59 Days Past Due		60-89 Days Past  Due		Greater Than 90 Days Past  Due		Total Past Due		Current		Total		Greater  Than 90 Days Past Due and  Still  Accruing
Commercial real estate:
Commercial R.E. - construction	$	0	$	0	$	0	$	0	$	15,555,298	$	15,555,298	$	0
Commercial R.E. - mortgages		1,347,779		0		1,046,483		2,394,262		283,445,438		285,839,700		0
Land		0		2,651,530		658,232		3,309,762		7,847,265		11,157,027		0
Farmland		0		0		92,354		92,354		20,229,218		20,321,572		0
Commercial and industrial		0		1,406,859		0		1,406,859		47,379,727		48,786,586		0
Consumer		0		0		0		0		882,667		882,667		0
Consumer residential		0		0		0		0		25,623,482		25,623,482		0
Agriculture		0		0		0		0		11,272,103		11,272,103		0
Total	$	1,347,779	$	4,058,389	$	1,797,069	$	7,203,237	$	412,235,198	$	419,438,435	$	0

Impaired Financing Receivables [Table Text Block]

	Unpaid  Contractual Principal  Balance		Recorded  Investment With No Allowance		Recorded  Investment  With  Allowance		Total  Recorded  Investment		Related Allowance		Average  Recorded  Investment
March 31, 2014
Commercial real estate:
Commercial R.E. - construction	$	0	$	0	$	0	$	0	$	0	$	0
Commercial R.E. - mortgages		3,049,170		1,046,483		0		1,046,483		0		1,046,483
Land		3,964,794		858,110		2,904,784		3,762,894		1,071,474		2,472,899
Farmland		91,586		87,275		0		87,275		0		89,815
Commercial and industrial		360,753		351,076		0		351,076		0		184,458
Consumer		0		0		0		0		0		0
Consumer residential		0		0		0		0		0		0
Agriculture		0		0		0		0		0		0
Total	$	7,466,303	$	2,342,944	$	2,904,784	$	5,247,728	$	1,071,474	$	3,793,655
December 31, 2013
Commercial real estate:
Commercial R.E. - construction	$	0	$	0	$	0	$	0	$	0	$	51,452
Commercial R.E. - mortgages		3,049,170		1,046,483		0		1,046,483		0		1,979,847
Land		1,319,519		0		1,182,904		1,182,904		392,432		1,635,686
Farmland		95,286		92,354		0		92,354		0		61,530
Commercial and industrial		27,240		17,839		0		17,839		0		19,744
Consumer		0		0		0		0		0		0
Consumer residential		0		0		0		0		0		354,124
Agriculture		0		0		0		0		0		0
Total	$	4,491,215	$	1,156,676	$	1,182,904	$	2,339,580	$	392,432	$	4,102,383

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

	Three Months Ended March 31, 2014						Three Months Ended March 31, 2013
	Number of  Loans		Pre- Modification Outstanding Recorded Investment		Post-  Modification  Outstanding Recorded  Investment		Number of  Loans		Pre- Modification  Outstanding Recorded Investment		Post-  Modification  Outstanding Recorded Investment
Commercial real estate:
Commercial R.E. - construction		0	$	0	$	0		0	$	0	$	0
Commercial R.E. - mortgages		0		0		0		0		0		0
Land		1		519,574		519,574		1		541,594		541,594
Farmland		0		0		0		0		0		0
Commercial and industrial		0		0		0		0		0		0
Consumer		0		0		0		0		0		0
Consumer residential		0		0		0		0		0		0
Agriculture		0		0		0		0		0		0
Total		1	$	519,574	$	519,574		1	$	541,594	$	541,594

Financing Receivable Credit Quality Indicators [Table Text Block]

Dollars in thousands	Commercial R.E. Construction		Commercial R.E. Mortgages		Land		Farmland		Commercial and Industrial		Consumer		Consumer Residential		Agriculture		Total
March 31, 2014
Pass	$	12,652,579	$	297,874,608	$	7,283,507	$	20,181,024	$	35,685,654	$	830,952	$	18,737,965	$	11,366,751	$	404,613,040
Special mention		-		4,139,041		3,762,894		545,723		249,861		-		-		-		8,697,519
Substandard		-		3,524,346		-		87,275		5,151,086		15,393		421,642		-		9,199,742
Doubtful		-		-		-		-		-		-		-		-		-
Total loans	$	12,652,579	$	305,537,995	$	11,046,401	$	20,814,022	$	41,086,601	$	846,345	$	19,159,607	$	11,366,751	$	422,510,301
December 31, 2013
Pass	$	15,555,298	$	278,532,923	$	7,322,593	$	20,229,218	$	46,712,369	$	866,490	$	25,200,497	$	11,272,103	$	405,691,492
Special mention		-		3,757,796		-		-		252,706		-		-		-		4,010,502
Substandard		-		3,548,980		3,834,434		92,354		1,821,511		16,177		422,985		-		9,736,441
Doubtful		-		-		-		-		-		-		-		-		-
Total loans	$	15,555,298	$	285,839,700	$	11,157,027	$	20,321,572	$	48,786,586	$	882,667	$	25,623,482	$	11,272,103	$	419,438,435

Allowance for Credit Losses on Financing Receivables [Table Text Block]

Allowance for Loan Losses
For the Three Months Ended March 31, 2014 and 2013
Three Months Ended March 31, 2014	Commercial Real Estate			Commercial and Industrial			Consumer			Consumer Residential			Agriculture			Unallocated			Total
Beginning balance	$	6,247,603		$	662,625		$	47,359		$	440,049		$	216,808		$	44,714		$	7,659,158
Charge-offs		(50,188	)		0			(3,327	)		0			0			0			(53,515	)
Recoveries		0			0			714			8,507			0			0			9,221
Provision		(5,644	)		79,802			290			(31,317	)		(1,986	)		(41,145	)		0
Ending balance	$	6,191,771		$	742,427		$	45,036		$	417,239		$	214,822		$	3,569		$	7,614,864
Three Months Ended March 31, 2013
Beginning balance	$	6,571,290		$	473,727		$	50,062		$	383,653		$	285,734		$	210,509		$	7,974,975
Charge-offs		(236,114	)		0			(4,343	)		(100,000	)		0			0			(340,457	)
Recoveries		6,096			0			880			1,945						0			8,921
Provision		194,241			(3,586	)		(3,135	)		153,169			(82,122	)		(158,567	)		100,000
Ending balance	$	6,535,513		$	470,141		$	43,464		$	438,767		$	203,612		$	51,942		$	7,743,439

March 31, 2014	Commercial Real Estate		Commercial and Industrial		Consumer		Consumer Residential		Agriculture		Unallocated		Total
Allowance for loan losses for loans:
Individually evaluated for impairment	$	1,071,474	$	0	$	0	$	0	$	0	$	0	$	1,071,474
Collectively evaluated for impairment		5,120,297		742,427		45,036		417,239		214,822		3,569		6,543,390
	$	6,191,771	$	742,427	$	45,036	$	417,239	$	214,822	$	3,569	$	7,614,864
Ending gross loan balances:
Individually evaluated for impairment	$	4,896,652	$	351,076	$	0	$	0	$	0	$	0	$	5,247,728
Collectively evaluated for impairment		345,154,345		40,735,525		846,345		19,159,607		11,366,751		0		417,262,573
	$	350,050,997	$	41,086,601	$	846,345	$	19,159,607	$	11,366,751	$	0	$	422,510,301
December 31, 2013
Allowance for loan losses for loans:
Individually evaluated for impairment	$	392,432	$	0	$	0	$	0	$	0	$	0	$	392,432
Collectively evaluated for impairment		5,855,171		662,625		47,359		440,049		216,808		44,714		7,266,726
	$	6,247,603	$	662,625	$	47,359	$	440,049	$	216,808	$	44,714	$	7,659,158
Ending balances of loans:
Individually evaluated for impairment	$	2,321,741	$	17,839	$	0	$	0	$	0	$	0	$	2,339,580
Collectively evaluated for impairment		330,551,856		48,768,747		882,667		25,623,482		11,272,103		0		417,098,855
	$	332,873,597	$	48,786,586	$	882,667	$	25,623,482	$	11,272,103	$	0	$	419,438,435

Change in Allowance For Loan Losses [Table Text Block]

	THREE MONTHS ENDED MARCH 31,
	2014			2013
Balance, beginning of period	$	133,765		$	108,209
(Recovery) provision charged to operations for off balance sheet commitments		(2,519	)		15,768
Balance, end of period	$	131,246		$	123,977

Weighted Average [Member]

Note 5 - Loans (Tables) [Line Items]

Financing Receivable Credit Quality Indicators [Table Text Block]

	March 31, 2014		December 31, 2013
	Weighted Average Risk Grade		Weighted Average Risk Grade
Commercial real estate:
Commercial real estate - construction		3.10		3.84
Commercial real estate - mortgages		3.17		3.14
Land		4.50		4.50
Farmland		3.07		3.04
Commercial and industrial		3.27		3.13
Consumer		2.40		2.31
Consumer residential		3.06		3.05
Agriculture		3.26		3.27
Total gross loans		3.21		3.20

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Note 7 - Other Post-Retirement Benefit Plans

3 Months Ended

Mar. 31, 2014

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

NOTE 7–OTHER POST-RETIREMENT BENEFIT PLANS

During January 2008, the Bank awarded certain officers a salary continuation plan (the “Plan”). Under the Plan, the participants will be provided with a fixed annual retirement benefit for twenty years after retirement. The Bank is also responsible for certain pre-retirement death benefits under the Plan. In connection with the implementation of the Plan, the Bank purchased single premium life insurance policies on the life of each of the officers covered under the Plan. The Bank is the owner and partial beneficiary of these life insurance policies. The assets of the Plan, under Internal Revenue Service regulations, are owned by the Bank and are available to satisfy the Company’s general creditors.

The Bank awarded a director retirement plan (“DRP”) to two of its directors in January 2008 and to three of its newest directors in March 2014. Under the DRP, the participants will be provided with a fixed annual retirement benefit for ten years after retirement. The Bank is also responsible for certain pre-retirement death benefits under the DRP. In connection with the implementation of the DRP, the Bank purchased single premium life insurance policies on the life of each director covered under the DRP. The Bank is the owner and partial beneficiary of these life insurance policies. The assets of the DRP, under Internal Revenue Service regulations, are the property of the Bank and are available to satisfy the Bank’s general creditors.

Future compensation under both plans is earned for services rendered through retirement. The Bank accrues for the salary continuation liability based on anticipated years of service and vesting schedules provided under the plans. The Bank’s current benefit liability is determined based on vesting and the present value of the benefits at a corresponding discount rate. The discount rate used is an equivalent rate for investment-grade bonds with lives matching those of the service periods remaining for the salary continuation contracts, which average approximately 20 years. The salary continuation liability as of March 31, 2014 and December 31, 2013 was $2,082,000 and $2,021,000, respectively, and is reported in interest payable and other liabilities on the condensed consolidated balance sheets.

During January 2008, the Bank purchased $4.7 million in bank owned life insurance policies and entered into split-dollar life insurance agreements with certain officers and directors. During March 2014, the Bank purchased an additional $1.0 million in bank owned life insurance policies and entered into split-dollar life insurance agreements with its three newest directors. In connection with the implementation of the split-dollar agreements, the Bank purchased single premium life insurance policies on the life of each of the officers and directors covered by the split-dollar life insurance agreements. The Bank is the owner of the policies and the partial beneficiary in an amount equal to the cash surrender value of the policies.

The combined cash surrender value of all Bank-owned life insurance policies recorded in other assets on the condensed consolidated balance sheet was $13,213,000 and $12,083,000 at March 31, 2014 and December 31, 2013, respectively.

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Note 5 - Loans

3 Months Ended

Mar. 31, 2014

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 5 – LOANS

Our customers are primarily located in Stanislaus, San Joaquin, Tuolumne, Inyo, and Mono Counties. As of March 31, 2014, approximately 83% of the Company’s loans are commercial real estate loans which include construction loans. Approximately 10% of the Company’s loans are for general commercial uses including professional, retail, and small business. Additionally, 5% of the Company’s loans are for residential real estate and other consumer loans. The remaining 2% are agriculture loans. Loan totals were as follows:

	March 31, 2014			December 31, 2013
Commercial real estate:
Commercial real estate- construction	$	12,652,579		$	15,555,298
Commercial real estate- mortgages		305,537,995			285,839,700
Land		11,046,401			11,157,027
Farmland		20,814,022			20,321,572
Commercial and industrial		41,086,601			48,786,586
Consumer		846,345			882,667
Consumer residential		19,159,607			25,623,482
Agriculture		11,366,751			11,272,103
Total loans		422,510,301			419,438,435
Less:
Deferred loan fees and costs, net		(469,979	)		(623,670	)
Allowance for loan losses		(7,614,864	)		(7,659,158	)
Net loans	$	414,425,458		$	411,155,607

Loan Origination/Risk Management. The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentration of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

Commercial and industrial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Underwriting standards are designed to promote relationship banking rather than transactional banking. Once it is determined that the borrower’s management possesses sound ethics and solid business acumen, our management examines current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial and industrial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial and industrial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type and geographic location. This diversity helps reduce the Company’s exposure to adverse economic events that affect any single market or industry. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. As a general rule, the Company avoids financing single-purpose projects unless other underwriting factors are present to help mitigate risk. The Company also utilizes third-party experts to provide insight and guidance about economic conditions and trends affecting market areas it serves. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans. At March 31, 2014, commercial real estate loans equal to approximately 34.3% of the outstanding principal balance of our commercial real estate loans were secured by owner-occupied properties.

With respect to loans to developers and builders that are secured by non-owner occupied properties that the Company may originate from time to time, the Company generally requires the borrower to have had an existing relationship with the Company and have a proven record of success. Construction loans are underwritten utilizing feasibility studies, independent appraisal reviews, sensitivity analysis of absorption and lease rates and financial analysis of the developers and property owners. Construction loans are generally based upon estimates of costs and value associated with the complete project. These estimates may be inaccurate. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

Agricultural production, real estate and development lending is susceptible to credit risks including adverse weather conditions, pest and disease, as well as market price fluctuations and foreign competition. Agricultural loan underwriting standards are maintained by following Company policies and procedures in place to minimize risk in this lending segment. These standards consist of limiting credit to experienced farmers who have demonstrated farm management capabilities, requiring cash flow projections displaying margins sufficient for repayment from normal farm operations along with equity injected as required by policy, as well as providing adequate secondary repayment and sponsorship including satisfactory collateral support. Credit enhancement obtained through government guarantee programs may also be used to provide further support as available. 

The Company originates consumer loans utilizing common underwriting criteria specified in policy. To monitor and manage consumer loan risk, policies and procedures are developed and modified, as needed, jointly by line and staff personnel. This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Additionally, trend and outlook reports are reviewed by management on a regular basis. Underwriting standards for 1-4 family, home equity lines and loans follow bank policy, which include, but are not limited to, a maximum loan-to-value percentage of 80%, a maximum housing and total debt ratio of 36% and 42%, respectively and other specified credit and documentation requirements.

The Company maintains an independent loan review department that reviews and validates the credit risk program on a periodic basis. Results of these reviews are presented to management. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as the Bank’s policies and procedures.

Non-Accrual and Past Due Loans. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Non-accrual loans, segregated by class of loans, were as follows:

	March 31, 2014		December 31, 2013
Commercial real estate:
Commercial real estate- construction	$	0	$	0
Commercial real estate- mortgages		1,046,483		1,046,483
Land		3,762,894		1,182,904
Farmland		87,275		92,354
Commercial and industrial		351,076		17,839
Consumer		0		0
Consumer residential		0		0
Agriculture		0		0
Total non-accrual loans	$	5,247,728	$	2,339,580

Had non-accrual loans performed in accordance with their original contract terms, we would have recognized additional interest income of approximately $130,000 in the three month period ended March 31, 2014, as compared to $176,000 in the same period of 2013.

The following table analyzes past due loans including the non-accrual loans in the above table, segregated by class of loans, as of March 31, 2014:

March 31, 2014	30-59 Days Past Due		60-89  Days Past  Due		Greater  Than 90  Days Past Due		Total Past  Due		Current		Total		Greater Than 90  Days Past Due and Still  Accruing
Commercial real estate:
Commercial R.E. - construction	$	0		0		0	$	0	$	12,652,579	$	12,652,579	$	0
Commercial R.E. - mortgages		1,338,804		0		1,046,483		2,385,287		303,152,708		305,537,995		0
Land		0		0		3,243,320		3,243,320		7,803,081		11,046,401		0
Farmland		0		0		87,275		87,275		20,726,747		20,814,022		0
Commercial and industrial		1,058,730		0		333,937		1,392,667		39,693,934		41,086,601		0
Consumer		0		0		0		0		846,345		846,345		0
Consumer residential		0		0		0		0		19,159,607		19,159,607		0
Agriculture		0		0		0		0		11,366,751		11,366,751		0
Total	$	2,397,534	$	0	$	4,711,015	$	7,108,549	$	415,401,752	$	422,510,301	$	0

The following table analyzes past due loans including the non-accrual loans in the above table, segregated by class of loans, as of December 31, 2013:

December 31, 2013	30-59 Days Past Due		60-89 Days Past  Due		Greater Than 90 Days Past  Due		Total Past Due		Current		Total		Greater  Than 90 Days Past Due and  Still  Accruing
Commercial real estate:
Commercial R.E. - construction	$	0	$	0	$	0	$	0	$	15,555,298	$	15,555,298	$	0
Commercial R.E. - mortgages		1,347,779		0		1,046,483		2,394,262		283,445,438		285,839,700		0
Land		0		2,651,530		658,232		3,309,762		7,847,265		11,157,027		0
Farmland		0		0		92,354		92,354		20,229,218		20,321,572		0
Commercial and industrial		0		1,406,859		0		1,406,859		47,379,727		48,786,586		0
Consumer		0		0		0		0		882,667		882,667		0
Consumer residential		0		0		0		0		25,623,482		25,623,482		0
Agriculture		0		0		0		0		11,272,103		11,272,103		0
Total	$	1,347,779	$	4,058,389	$	1,797,069	$	7,203,237	$	412,235,198	$	419,438,435	$	0

Impaired Loans. Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. There was no interest income realized on impaired loans for the three months ended March 31, 2014 and 2013. Average recorded investment in impaired loans was $3.79 million for the three months ended March 31, 2014, as compared to $6.57 million for the same period of 2013. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

Impaired loans as of March 31, 2014 and December 31, 2013 are set forth in the following table.

	Unpaid  Contractual Principal  Balance		Recorded  Investment With No Allowance		Recorded  Investment  With  Allowance		Total  Recorded  Investment		Related Allowance		Average  Recorded  Investment
March 31, 2014
Commercial real estate:
Commercial R.E. - construction	$	0	$	0	$	0	$	0	$	0	$	0
Commercial R.E. - mortgages		3,049,170		1,046,483		0		1,046,483		0		1,046,483
Land		3,964,794		858,110		2,904,784		3,762,894		1,071,474		2,472,899
Farmland		91,586		87,275		0		87,275		0		89,815
Commercial and industrial		360,753		351,076		0		351,076		0		184,458
Consumer		0		0		0		0		0		0
Consumer residential		0		0		0		0		0		0
Agriculture		0		0		0		0		0		0
Total	$	7,466,303	$	2,342,944	$	2,904,784	$	5,247,728	$	1,071,474	$	3,793,655
December 31, 2013
Commercial real estate:
Commercial R.E. - construction	$	0	$	0	$	0	$	0	$	0	$	51,452
Commercial R.E. - mortgages		3,049,170		1,046,483		0		1,046,483		0		1,979,847
Land		1,319,519		0		1,182,904		1,182,904		392,432		1,635,686
Farmland		95,286		92,354		0		92,354		0		61,530
Commercial and industrial		27,240		17,839		0		17,839		0		19,744
Consumer		0		0		0		0		0		0
Consumer residential		0		0		0		0		0		354,124
Agriculture		0		0		0		0		0		0
Total	$	4,491,215	$	1,156,676	$	1,182,904	$	2,339,580	$	392,432	$	4,102,383

Troubled Debt Restructurings – In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

At March 31, 2014, there were 3 loans and leases that were considered to be troubled debt restructurings, all of which are considered non-accrual totaling $1,195,000. At December 31, 2013, there were 3 loans and leases that were considered to be troubled debt restructurings, all of which are considered non-accrual totaling $1,201,000. At March 31, 2014 and December 31, 2013 there were no unfunded commitments on loans classified as a troubled debt restructures. We have allocated $321,000 and $392,000 of specific reserves to loans whose terms have been modified in troubled debt restructurings as of March 31, 2014 and December 31, 2013, respectively.

During the three month period ended March 31, 2014, the terms of one loan were modified as troubled debt restructurings by extending the maturity date. The modification of the terms of such loans typically includes one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date; or a temporary payment modification in which the payment amount allocated towards principal was reduced. In some cases, a permanent reduction of the accrued interest on the loan is conceded.

The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ended March 31, 2014 and 2013:

	Three Months Ended March 31, 2014						Three Months Ended March 31, 2013
	Number of  Loans		Pre- Modification Outstanding Recorded Investment		Post-  Modification  Outstanding Recorded  Investment		Number of  Loans		Pre- Modification  Outstanding Recorded Investment		Post-  Modification  Outstanding Recorded Investment
Commercial real estate:
Commercial R.E. - construction		0	$	0	$	0		0	$	0	$	0
Commercial R.E. - mortgages		0		0		0		0		0		0
Land		1		519,574		519,574		1		541,594		541,594
Farmland		0		0		0		0		0		0
Commercial and industrial		0		0		0		0		0		0
Consumer		0		0		0		0		0		0
Consumer residential		0		0		0		0		0		0
Agriculture		0		0		0		0		0		0
Total		1	$	519,574	$	519,574		1	$	541,594	$	541,594

The troubled debt restructuring during the three months ended March 31, 2014 did not increase the allowance for loan losses as a result of loan modifications because the loans are evaluated as an impaired loan and a specific valuation allowance would have already been allocated, if necessary, prior to the loan modification. There were no charge-offs as a result of loan modifications, as the contractual balances outstanding were determined to be collectible.

There were no loans modified as troubled debt restructurings within the previous twelve months and for which there was a payment default during the three month periods ended March 31, 2014 and 2013. A loan is considered to be in payment default once it is ninety days contractually past due under the modified terms.

Quality ratings (Risk Grades) are assigned to all commitments and stand-alone notes. Risk grades define the basic characteristics of commitments or stand-alone note in relation to their risk. All loans are graded using a system that maximizes the loan quality information contained in loan review grades, while ensuring that the system is compatible with the grades used by bank examiners.

We grade loans using the following letter system:

1 Exceptional Loan

2 Quality Loan

3A Better Than Acceptable Loan

3B Acceptable Loan

3C Marginally Acceptable Loan

4 (W) Watch Acceptable Loan

5 Other Loans Especially Mentioned

6 Substandard Loan

7 Doubtful Loan

8 Loss

1. Exceptional Loan - Loans with A+ credits that contain very little, if any, risk. Grade 1 loans are considered Pass. To qualify for this rating, the following characteristics must be present:

-A high level of liquidity and whose debt-servicing capacity exceeds expected obligations by a substantial margin.

-Where leverage is below average for the industry and earnings are consistent or growing without severe vulnerability to economic cycles.

-Also included in this rating (but not mandatory unless one or more of the preceding characteristics are missing) are loans that are fully secured and properly margined by our own time instruments or U.S. blue chip securities. To be properly margined cash collateral must be equal to, or greater than, 110% of the loan amount.

2. Quality Loan - Loans with excellent sources of repayment that conform in all respects to bank policy and regulatory requirements. These are also loans for which little repayment risk has been identified. No credit or collateral exceptions. Grade 2 loans are considered Pass. Other factors include:

-Unquestionable debt-servicing capacity to cover all obligations in the ordinary course of business from well-defined primary and secondary sources.

-Consistent strong earnings.

-A solid equity base.

3A. Better than Acceptable Loan - In the interest of better delineating the loan portfolio’s true credit risk for reserve allocation, further granularity has been sought by splitting the grade 3 category into three classifications. The distinction between the three are bank-defined guidelines and represent a further refinement of the regulatory definition of a pass, or grade 3 loan. Grade 3A is the stronger third of the pass category, but is not strong enough to be a grade 2 and is characterized by:

-Strong earnings with no loss in last three years and ample cash flow to service all debt well above policy guidelines.

-Long term experienced management with depth and defined management succession.

-The loan has no exceptions to policy.

-Loan-to-value on real estate secured transactions is 10% to 20% less than policy guidelines.

-Very liquid balance sheet that may have cash available to pay off our loan completely.

-Little to no debt on balance sheet.

3B. Acceptable Loan - 3B loans are simply defined as all loans that are less qualified than 3A loans and are stronger than 3C loans. These loans are characterized by acceptable sources of repayment that conform to bank policy and regulatory requirements. Repayment risks are acceptable for these loans. Credit or collateral exceptions are minimal, are in the process of correction, and do not represent repayment risk. These loans:

-Are those where the borrower has average financial strengths, a history of profitable operations and experienced management.

-Are those where the borrower can be expected to handle normal credit needs in a satisfactory manner.

3C. Marginally Acceptable - 3C loans have similar characteristics as that of 3Bs with the following additional characteristics:

Requires collateral. A credit facility where the borrower has average financial strengths, but usually lacks reliable secondary sources of repayment other than the subject collateral. Other common characteristics can include some or all of the following: minimal background experience of management, lacking continuity of management, a start-up operation, erratic historical profitability (acceptable reasons-well identified), lack of or marginal sponsorship of guarantor, and government guaranteed loans.

4W Watch Acceptable - Watch grade will be assigned to any credit that is adequately secured and performing but monitored for a number of indicators. These characteristics may include any unexpected short-term adverse financial performance from budgeted projections or prior period’s results (i.e., declining profits, sales, margins, cash flow, or increased reliance on leverage, including adverse balance sheet ratios, trade debt issues, etc.). Additionally, any managerial or personal problems of company management, decline in the entire industry or local economic conditions failure to provide financial information or other documentation as requested; issues regarding delinquency, overdrafts, or renewals; and any other issues that cause concern for the company. Loans to individuals or loans supported by guarantors with marginal net worth and/or marginal collateral. Weakness identified in a Watch credit is short-term in nature. Loans in this category are usually accounts the Bank would want to retain providing a positive turnaround can be expected within a reasonable time frame. Grade 4 loans are considered Pass.

5 Other Loans Especially Mentioned (Special Mention) - A special mention extension of credit is defined as having potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may, at some future date result in the deterioration of the repayment prospects for the credit or the institution’s credit position. Extensions of credit that might be detailed in this category include the following:

-The lending officer may be unable to properly supervise the credit because of an inadequate loan or credit agreement.

-Questions exist regarding the condition of and/or control over collateral.

-Economic or market conditions may unfavorably affect the obligor in the future.

-A declining trend in the obligor’s operations or an imbalanced position in the balance sheet exists, but not to the point that repayment is jeopardized.

6 Substandard Loan - A “substandard” extension of credit is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Extensions of credit so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard credits, does not have to exist in individual extensions of credit classified substandard.

7 Doubtful Loan - An extension of credit classified “doubtful” has all the weaknesses inherent in one classified substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The possibility of loss is extremely high but because of certain important and reasonably specific pending factors that may work to the advantage of and strengthen the credit, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors may include a proposed merger or acquisition, liquidation proceedings, capital injection, perfecting liens on additional collateral or refinancing plans. The entire loan need not be classified doubtful when collection of a specific portion appears highly probable. An example of proper use of the doubtful category is the case of a company being liquidated, with the trustee-in-bankruptcy indicating a minimum disbursement of 40 percent and a maximum of 65 percent to unsecured creditors, including the Bank. In this situation, estimates are based on liquidation value appraisals with actual values yet to be realized. By definition, the only portion of the credit that is doubtful is the 25 percent difference between 40 and 65 percent.

A proper classification of such a credit would show 40 percent substandard, 25 percent doubtful, and 35 percent loss. A credit classified as doubtful should be resolved within a “reasonable’ period of time. Reasonable is generally defined as the period between examinations. In other words, a credit classified doubtful at an examination should be cleared up before the next exam. However, there may be situations that warrant continuation of the doubtful classification a while longer.

8. Loss - Extensions of credit classified “loss” are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the credit has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off, even though partial recovery may be affected in the future. It should not be the Company’s practice to attempt long-term recoveries while the credit remains on the books. Losses should be taken in the period in which they surface as uncollectible.

As of March 31, 2014, there are no loans that are classified with a risk grade of 8- Loss.

The following table presents weighted average risk grades of our loan portfolio:

	March 31, 2014		December 31, 2013
	Weighted Average Risk Grade		Weighted Average Risk Grade
Commercial real estate:
Commercial real estate - construction		3.10		3.84
Commercial real estate - mortgages		3.17		3.14
Land		4.50		4.50
Farmland		3.07		3.04
Commercial and industrial		3.27		3.13
Consumer		2.40		2.31
Consumer residential		3.06		3.05
Agriculture		3.26		3.27
Total gross loans		3.21		3.20

The following table presents risk grade totals by class of loans as of March 31, 2014 and December 31, 2013. Risk grades 1 through 4 have been aggregated in the “Pass” line.

Dollars in thousands	Commercial R.E. Construction		Commercial R.E. Mortgages		Land		Farmland		Commercial and Industrial		Consumer		Consumer Residential		Agriculture		Total
March 31, 2014
Pass	$	12,652,579	$	297,874,608	$	7,283,507	$	20,181,024	$	35,685,654	$	830,952	$	18,737,965	$	11,366,751	$	404,613,040
Special mention		-		4,139,041		3,762,894		545,723		249,861		-		-		-		8,697,519
Substandard		-		3,524,346		-		87,275		5,151,086		15,393		421,642		-		9,199,742
Doubtful		-		-		-		-		-		-		-		-		-
Total loans	$	12,652,579	$	305,537,995	$	11,046,401	$	20,814,022	$	41,086,601	$	846,345	$	19,159,607	$	11,366,751	$	422,510,301
December 31, 2013
Pass	$	15,555,298	$	278,532,923	$	7,322,593	$	20,229,218	$	46,712,369	$	866,490	$	25,200,497	$	11,272,103	$	405,691,492
Special mention		-		3,757,796		-		-		252,706		-		-		-		4,010,502
Substandard		-		3,548,980		3,834,434		92,354		1,821,511		16,177		422,985		-		9,736,441
Doubtful		-		-		-		-		-		-		-		-		-
Total loans	$	15,555,298	$	285,839,700	$	11,157,027	$	20,321,572	$	48,786,586	$	882,667	$	25,623,482	$	11,272,103	$	419,438,435

Allowance for Loan Losses. The allowance for loan losses is a reserve established by the Company through a provision for loan losses charged to expense, which represents management’s best estimate of probable losses that have been incurred within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. The allowance for loan loss methodology includes allowance allocations calculated in accordance with ASC Topic 310, “Receivables” and allowance allocations calculated in accordance with ASC Topic 450, “Contingencies.” Accordingly, the methodology is based on historical loss experience by type of credit and internal risk grade, specific homogeneous risk pools and specific loss allocations, with adjustments for current events and conditions. The process for determining the appropriate level of the allowance for loan losses is designed to account for credit deterioration as it occurs. The provision for loan losses reflects loan quality trends, including the levels of and trends related to non-accrual loans, past due loans, potential problem loans, criticized loans and net charge-offs or recoveries, among other factors. The provision for loan losses also reflects the totality of actions taken on all loans for a particular period. In other words, the amount of the provision reflects not only the necessary increases in the allowance for loan losses related to newly identified criticized loans, but it also reflects actions taken related to other loans including, among other things, any necessary increases or decreases in required allowances for specific loans or loan pools.

The level of the allowance reflects management’s continuing evaluation of industry concentrations, specific credit risks, loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Company’s control, including, among other things, the performance of the Company’s loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications.

The Company’s allowance for loan losses consists of three elements: (i) specific valuation allowances determined in accordance with ASC Topic 310 based on probable losses on specific loans; (ii) historical valuation allowances determined in accordance with ASC Topic 450 based on historical loan loss experience for similar loans with similar characteristics and trends, adjusted, as necessary, to reflect the impact of current conditions; and (iii) general valuation allowances determined in accordance with ASC Topic 450 based on general economic conditions and other qualitative risk factors both internal and external to the Bank and the Company.

The allowances established for probable losses on specific loans are based on a regular analysis and evaluation of problem loans. Loans are classified based on an internal credit risk grading process that evaluates, among other things: (i) the obligor’s ability to repay; (ii) the underlying collateral, if any; and (iii) the economic environment and industry in which the borrower operates. This analysis is performed at the relationship manager level for all commercial loans. When a loan has a calculated grade of 5 or higher, a special assets officer analyzes the loan to determine whether the loan is impaired and, if impaired, the need to specifically allocate a portion of the allowance for loan losses to the loan. Specific valuation allowances are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things.

Historical valuation allowances are calculated based on the historical loss experience of specific types of loans and the internal risk grade of such loans at the time they were charged-off. The Company calculates historical loss ratios for pools of similar loans with similar characteristics based on the proportion of actual charge-offs experienced to the total population of loans in the pool. The historical loss ratios are periodically updated based on actual charge-off experience. A historical valuation allowance is established for each pool of similar loans based upon the product of the historical loss ratio and the total dollar amount of the loans in the pool. The Company’s pools of similar loans include similarly risk-graded groups of commercial and industrial loans, commercial real estate loans, consumer real estate loans and consumer and other loans.

General valuation allowances are based on general economic conditions and other qualitative risk factors both internal and external to the Bank and the Company. In general, such valuation allowances are determined by evaluating, among other things: (i) the experience, ability and effectiveness of the Bank’s lending management and staff; (ii) the effectiveness of the Bank’s loan policies, procedures and internal controls; (iii) changes in asset quality; (iv) changes in loan portfolio volume; (v) the composition and concentrations of credit; (vi) the impact of competition on loan structuring and pricing; (vii) the effectiveness of the internal loan review function; (viii) the impact of environmental risks on portfolio risks; and (ix) the impact of rising interest rates on portfolio risk. Management evaluates the degree of risk that each one of these components has on the quality of the loan portfolio on a quarterly basis. Each component is determined to have either a high, moderate or low degree of risk. The results are then input into a “general allocation matrix” to determine an appropriate general valuation allowance.

Included in the general valuation allowances are allocations for groups of similar loans with risk characteristics that exceed certain concentration limits established by management. Concentration risk limits have been established, among other things, for certain industry concentrations, large balance and highly leveraged credit relationships that exceed specified risk grades, and loans originated with policy exceptions that exceed specified risk grades.

Loans identified as losses by management, internal loan review and/or bank examiners are charged-off. Furthermore, consumer loan accounts are charged-off automatically based on regulatory requirements.

The following table details activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2014 and 2013. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

Allowance for Loan Losses
For the Three Months Ended March 31, 2014 and 2013
Three Months Ended March 31, 2014	Commercial Real Estate			Commercial and Industrial			Consumer			Consumer Residential			Agriculture			Unallocated			Total
Beginning balance	$	6,247,603		$	662,625		$	47,359		$	440,049		$	216,808		$	44,714		$	7,659,158
Charge-offs		(50,188	)		0			(3,327	)		0			0			0			(53,515	)
Recoveries		0			0			714			8,507			0			0			9,221
Provision		(5,644	)		79,802			290			(31,317	)		(1,986	)		(41,145	)		0
Ending balance	$	6,191,771		$	742,427		$	45,036		$	417,239		$	214,822		$	3,569		$	7,614,864
Three Months Ended March 31, 2013
Beginning balance	$	6,571,290		$	473,727		$	50,062		$	383,653		$	285,734		$	210,509		$	7,974,975
Charge-offs		(236,114	)		0			(4,343	)		(100,000	)		0			0			(340,457	)
Recoveries		6,096			0			880			1,945						0			8,921
Provision		194,241			(3,586	)		(3,135	)		153,169			(82,122	)		(158,567	)		100,000
Ending balance	$	6,535,513		$	470,141		$	43,464		$	438,767		$	203,612		$	51,942		$	7,743,439

The following table details the allowance for loan losses and ending gross loan balances as of March 31, 2014 and December 31, 2013, summarized by collective and individual evaluation methods of impairment.

March 31, 2014	Commercial Real Estate		Commercial and Industrial		Consumer		Consumer Residential		Agriculture		Unallocated		Total
Allowance for loan losses for loans:
Individually evaluated for impairment	$	1,071,474	$	0	$	0	$	0	$	0	$	0	$	1,071,474
Collectively evaluated for impairment		5,120,297		742,427		45,036		417,239		214,822		3,569		6,543,390
	$	6,191,771	$	742,427	$	45,036	$	417,239	$	214,822	$	3,569	$	7,614,864
Ending gross loan balances:
Individually evaluated for impairment	$	4,896,652	$	351,076	$	0	$	0	$	0	$	0	$	5,247,728
Collectively evaluated for impairment		345,154,345		40,735,525		846,345		19,159,607		11,366,751		0		417,262,573
	$	350,050,997	$	41,086,601	$	846,345	$	19,159,607	$	11,366,751	$	0	$	422,510,301
December 31, 2013
Allowance for loan losses for loans:
Individually evaluated for impairment	$	392,432	$	0	$	0	$	0	$	0	$	0	$	392,432
Collectively evaluated for impairment		5,855,171		662,625		47,359		440,049		216,808		44,714		7,266,726
	$	6,247,603	$	662,625	$	47,359	$	440,049	$	216,808	$	44,714	$	7,659,158
Ending balances of loans:
Individually evaluated for impairment	$	2,321,741	$	17,839	$	0	$	0	$	0	$	0	$	2,339,580
Collectively evaluated for impairment		330,551,856		48,768,747		882,667		25,623,482		11,272,103		0		417,098,855
	$	332,873,597	$	48,786,586	$	882,667	$	25,623,482	$	11,272,103	$	0	$	419,438,435

Changes in the reserve for off-balance-sheet commitments were as follows:

	THREE MONTHS ENDED MARCH 31,
	2014			2013
Balance, beginning of period	$	133,765		$	108,209
(Recovery) provision charged to operations for off balance sheet commitments		(2,519	)		15,768
Balance, end of period	$	131,246		$	123,977

The method for calculating the reserve for off-balance-sheet loan commitments is based on a reserve percentage which is less than other outstanding loan types because they are at a lower risk level.  This reserve percentage, based on many factors including historical losses and existing economic conditions, is evaluated by management periodically and is applied to the total undisbursed loan commitment balance to calculate the reserve for off-balance-sheet commitments. Reserves for off-balance-sheet commitments are recorded in interest payable and other liabilities on the condensed consolidated balance sheets.

At March 31, 2014 and December 31, 2013, loans carried at $422,510,000 and $419,438,000, respectively, were pledged as collateral on advances from the Federal Home Loan Bank.

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Note 6 - Other Real Estate Owned

3 Months Ended

Mar. 31, 2014

Disclosure Text Block [Abstract]

Real Estate Owned [Text Block]

NOTE 6 – OTHER REAL ESTATE OWNED

As of March 31, 2014 and December 31, 2013, the Company owned three properties classified as other real estate with outstanding balances of $916,000, which includes one property consisting of residential land that was written down to a zero balance. Each of these properties was acquired through loan foreclosure. The residential land property the Company owned at March 31, 2014 and December 31, 2013, was written down to a zero balance because the public utilities have not been obtainable rendering these land lots unmarketable at this time. There were no sales of OREO property during the three months ended March 31, 2014 and 2013.

Real estate properties acquired through, or in lieu of, loan foreclosure are to be sold and are initially recorded at the lower of carrying amount of the loan or fair value of the property at the date of foreclosure less selling costs. Subsequent to foreclosure, valuations are periodically performed and any subject revisions in the estimate of fair value are reported as adjustment to the carrying value of the real estate, provided the adjusted carrying amount does not exceed the original amount at foreclosure. Revenues and expenses from operations and changes in the valuation allowance are included in other operating expenses.

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Note 8 - Fair Value Measurements

3 Months Ended

Mar. 31, 2014

Disclosure Text Block [Abstract]

Fair Value, Measurement Inputs, Disclosure [Text Block]

NOTE 8 — FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Fair values of financial instruments — The consolidated financial statements include various estimated fair value information as of March 31, 2014 and December 31, 2013. Such information, which pertains to the Company’s financial instruments, does not purport to represent the aggregate net fair value of the Company. Further, the fair value estimates are based on various assumptions, methodologies, and subjective considerations, which vary widely among different financial institutions and which are subject to change.

Fair value measurements defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follow:

Level 1:  Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2:  Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3:  Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.  In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety.  The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstance that caused the transfer, which generally corresponds with the Company’s quarterly valuation process.

Following is a description of valuation methodologies used for assets and liabilities in the tables below:

Cash and cash equivalents – The carrying amounts of cash and cash equivalents approximate their fair value and are considered a level 1 valuation.

Restricted Equity Securities- The carrying amounts of the stock the Company’s owns in FRB and FHLB approximate their fair value and are considered a level 2 valuation.

Loans receivable — For variable-rate loans that reprice frequently and have no significant change in credit risk, fair values are based on carrying values. The fair values for other loans (e.g., real estate construction and mortgage, commercial, and installment loans) are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. The allowance for loan losses is considered to be a reasonable estimate of loan discount due to credit risks. The Company’s fair value model takes into account many inputs including current market rates on new loans, the U.S. treasury yield curve, LIBOR yield curve, rate floors, rate ceilings, remaining maturity, and average life based on specific loan type. Net loans are considered to be a level 3 valuation.

Deposit liabilities — The fair values estimated for demand deposits (interest and non-interest checking, savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e. their carrying amounts). The carrying amounts for variable-rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of the aggregate expected monthly maturities on time deposits. The fair value of deposits is determined by the Company’s internal assets and liabilities modeling system that accounts for various inputs such as decay rates, rate floors, FHLB yield curve, maturities and current rates offered on new accounts. Fair value on deposits is considered a level 3 valuation.

Interest receivable and payable - The carrying amounts of accrued interest approximate their fair value and are considered to be a level 2 valuation.

Off-balance-sheet instruments — Fair values for the Bank’s off-balance-sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the credit standing of the counterparties. The Company considers the Bank’s off balance sheet instruments to be a level 3 valuation.

The estimated fair values of the Company’s financial instruments at March 31, 2014 were as follows:

	Carrying Amount			Fair Value			Hierarchy Valuation Level
Financial assets:
Cash and cash equivalents	$	115,653,817		$	115,653,817			1
Restricted equity securities		3,170,250			3,170,250			2
Loans, net		414,425,458			429,287,284			3
Interest receivable		1,798,505			1,798,505			2
Financial liabilities:
Deposits		(615,996,534	)		(603,968,814	)		3
Interest payable		(44,386	)		(44,386	)		2
Off-balance-sheet assets (liabilities):
Commitments and standby letters of credit					(522,905	)		3

The estimated fair values of the Company’s financial instruments at December 31, 2013 were as follows:

	Carrying Amount			Fair Value			Hierarchy Valuation Level
Financial assets:
Cash and cash equivalents	$	105,190,560		$	105,190,560			1
Restricted equity securities		3,170,250			3,170,250			2
Loans, net		411,155,607			426,433,358			3
Interest receivable		2,011,086			2,011,086			2
Financial liabilities:
Deposits		(602,633,432	)		(590,494,886	)		3
Interest payable		(60,234	)		(60,234	)		2
Off-balance-sheet assets (liabilities):
Commitments and standby letters of credit					(525,585	)		3

The following table presents the carrying value of recurring and nonrecurring financial instruments that were measured at fair value and that were still held in the condensed consolidated balance sheets at each respective period end, by level within the fair value hierarchy as of March 31, 2014 and December 31, 2013.

	Fair Value Measurements at March 31, 2014 Using
	March 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets and liabilities measured on a recurring basis:
Available-for-sale securities:
U.S. agencies	$	49,548,557	$	0	$	49,548,557	$	0
Collateralized mortgage obligations		8,971,877		0		8,971,877		0
Municipalities		44,475,841		0		44,475,841		0
SBA Pools		1,068,660		0		1,068,660		0
Corporate Debt		6,818,485		0		6,818,485		0
Asset backed securities		5,859,080		0		5,859,080
Mutual Fund		2,855,281		2,855,281		0		0
Assets and liabilities measured on a non-recurring basis:
Impaired loans	$	0	$	0	$	0	$	0
Other real estate owned	$	0	$	0	$	0	$	0

	Fair Value Measurements at December 31, 2013 Using
	December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets and liabilities measured on a recurring basis:
Available-for-sale securities
U.S. agencies	$	53,115,693	$	0	$	53,115,693	$	0
Collateralized mortgage obligations		9,781,489		0		9,781,489		0
Municipalities		40,268,968		0		40,268,968		0
SBA pools		1,080,515		0		1,080,515		0
Corporate debt		4,824,778		0		4,824,778		0
Asset backed securities		5,856,421		0		5,856,421		0
Mutual fund		2,817,789		2,817,789		0		0
Assets and liabilities measured on a non-recurring basis:
Impaired loans	$	790,472	$	0	$	0	$	790,472
Other real estate owned	$	916,205	$	0	$	0	$	916,205

Following is a description of valuation methodologies used for assets and liabilities recorded at fair value.

Available-for-sale securities - Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, if available. If quoted market prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions, and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets where significant inputs are unobservable.

Impaired loans - ASC Topic 820 applies to loans measured for impairment using the practical expedients permitted by ASC Topic 310, Accounting by Creditors for Impairment of a Loan. The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Impaired loans where an allowance is established based on the fair value of collateral less the cost related to liquidation of the collateral require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the impaired loan as non-recurring Level 3. Likewise, when an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the impaired loan as non-recurring Level 3.

Other Real Estate Owned - Other real estate assets (“OREO”) acquired through, or in lieu of, foreclosure are held-for-sale and are initially recorded at the lower of cost or fair value, less selling costs. Any write-downs to fair value at the time of transfer to OREO are charged to the allowance for loan losses, subsequent to foreclosure. Appraisals or evaluations are then done periodically thereafter charging any additional write-downs or valuation allowances to the appropriate expense accounts. Values are derived from appraisals of underlying collateral and discounted cash flow analysis. OREO is classified within Level 3 of the hierarchy.

Net realizable value of the underlying collateral is the fair value of the collateral less estimated selling costs and any prior liens. Appraisals, recent comparable sales, offers and listing prices are factored in when valuing the collateral. We review and verify the qualifications and licenses of the certified general appraisers used for appraising commercial properties or certified residential appraisers for residential properties. Real estate appraisals may utilize a combination of approaches including replacement cost, sales comparison and the income approach. Comparable sales and income data are analyzed by the appraisers and adjusted to reflect differences between them and the subject property such as type, leasing status and physical condition. When the appraisals are received, Management reviews the assumptions and methodology utilized in the appraisal, as well as the overall resulting value in conjunction with independent data sources such as recent market data and industry-wide statistics. We generally use a 6% discount for selling costs which is applied to all properties, regardless of size. Appraised values may be adjusted to reflect changes in market conditions that have occurred subsequent to the appraisal date, or for revised estimates regarding the timing or cost of the property sale. These adjustments are based on qualitative judgments made by management on a case-by-case basis.

There have been no significant changes in the valuation techniques during the period ended March 31, 2014.

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Note 5 - Loans (Details) - Loans by Credit Quality Indicator (USD $)	Mar. 31, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	$ 422,510,000	$ 419,438,000
Commercial Real Estate-Construction [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	12,652,579	15,555,298
Commercial Real Estate-Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	12,652,579	15,555,298
Commercial Real Estate-Mortgages [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	297,874,608	278,532,923
Commercial Real Estate-Mortgages [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	4,139,041	3,757,796
Commercial Real Estate-Mortgages [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	3,524,346	3,548,980
Commercial Real Estate-Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	305,537,995	285,839,700
Land [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	7,283,507	7,322,593
Land [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	3,762,894
Land [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class		3,834,434
Land [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	11,046,401	11,157,027
Farmland [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	20,181,024	20,229,218
Farmland [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	545,723
Farmland [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	87,275	92,354
Farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	20,814,022	20,321,572
Commercial And Industrial [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	35,685,654	46,712,369
Commercial And Industrial [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	249,861	252,706
Commercial And Industrial [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	5,151,086	1,821,511
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	41,086,601	48,786,586
Consumer [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	830,952	866,490
Consumer [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	15,393	16,177
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	846,345	882,667
Consumer Residential [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	18,737,965	25,200,497
Consumer Residential [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	421,642	422,985
Consumer Residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	19,159,607	25,623,482
Agriculture [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	11,366,751	11,272,103
Agriculture [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	11,366,751	11,272,103
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	404,613,040	405,691,492
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	8,697,519	4,010,502
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Risk Grade Total by Class	$ 9,199,742	$ 9,736,441

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Note 9 - Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

In thousands (except share and per share amounts)	THREE MONTHS ENDED MARCH 31,
	2014		2013
BASIC EARNINGS PER SHARE
Net income available to common shareholders	$	1,408,210	$	1,231,931
Weighted average shares outstanding		7,878,152		7,778,333
Net income per common share	$	0.18	$	0.16
DILUTED EARNINGS PER SHARE
Net income available to common shareholders	$	1,408,210	$	1,231,931
Weighted average shares outstanding		7,878,152		7,778,333
Effect of dilutive stock options		14,228		16,141
Effect of dilutive non-vested restricted shares		49,076		35,965
Weighted average shares of common stock and common stock equivalents		7,941,456		7,830,439
Net income per diluted common share	$	0.18	$	0.16

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Note 4 - Securities (Details) - Amortized Cost And Estimated Fair Values Of Debt Securities By Contractual Maturity Or Call Date (USD $)	Mar. 31, 2014
Amortized Cost And Estimated Fair Values Of Debt Securities By Contractual Maturity Or Call Date [Abstract]
Due in one year or less	$ 12,001,360
Due in one year or less	11,421,774
Due after one year through five years	31,241,430
Due after one year through five years	32,843,925
Due after five years through ten years	37,903,603
Due after five years through ten years	36,600,718
Due after ten years	38,260,172
Due after ten years	38,731,364
	119,406,565
	$ 119,597,781

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Note 8 - Fair Value Measurements (Details) - Assets and Liabilities Measured at Fair Value On Recurring and Non Recurring Basis (USD $)	Mar. 31, 2014	Dec. 31, 2013
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	$ 119,597,781	$ 117,745,653
Assets and liabilities measured on a non-recurring basis:
Other real estate owned	916,000	916,000
US Agency [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	0	0
US Agency [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	49,548,557	53,115,693
US Agency [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	0	0
US Agency [Member] | Fair Value, Measurements, Recurring [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	49,548,557	53,115,693
Collateralized Mortgage Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	0	0
Collateralized Mortgage Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	8,971,877	9,781,489
Collateralized Mortgage Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	0	0
Collateralized Mortgage Obligations [Member] | Fair Value, Measurements, Recurring [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	8,971,877	9,781,489
Municipalities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	0	0
Municipalities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	44,475,841	40,268,968
Municipalities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	0	0
Municipalities [Member] | Fair Value, Measurements, Recurring [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	44,475,841	40,268,968
SBA Pool [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	0	0
SBA Pool [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	1,068,660	1,080,515
SBA Pool [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	0	0
SBA Pool [Member] | Fair Value, Measurements, Recurring [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	1,068,660	1,080,515
Corporate Debt [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	0	0
Corporate Debt [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	6,818,485	4,824,778
Corporate Debt [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	0	0
Corporate Debt [Member] | Fair Value, Measurements, Recurring [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	6,818,485	4,824,778
Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	0	0
Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	5,859,080	5,856,421
Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities		0
Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	5,859,080	5,856,421
Mutual Fund [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	2,855,281	2,817,789
Mutual Fund [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	0	0
Mutual Fund [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	0	0
Mutual Fund [Member] | Fair Value, Measurements, Recurring [Member]
Assets and liabilities measured on a recurring basis:
Available-for-sale securities	2,855,281	2,817,789
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Assets and liabilities measured on a non-recurring basis:
Impaired loans	0	0
Other real estate owned	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Assets and liabilities measured on a non-recurring basis:
Impaired loans	0	0
Other real estate owned	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Assets and liabilities measured on a non-recurring basis:
Impaired loans	0	790,472
Other real estate owned	0	916,205
Fair Value, Measurements, Nonrecurring [Member]
Assets and liabilities measured on a non-recurring basis:
Impaired loans	0	790,472
Other real estate owned	$ 0	$ 916,205

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Net income	$ 1,408,210	$ 1,299,431
Available for sale securities:
Unrealized holding gains (losses) on securities arising during the current period, net of tax effect of $615,203 and ($323,681) for the periods ended March 31, 2014 and 2013, respectively	879,822	(462,907)
Reclassification adjustment due to net gains realized on calls of securities, net of tax effect of $3,233 and $7,552 for the periods ended March 31, 2014 and 2013, respectively	(4,623)	(10,800)
Other comprehensive gain (loss)	875,199	(473,707)
Comprehensive income	$ 2,283,409	$ 825,724

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Note 2 - Recent Accounting Pronoucements

3 Months Ended

Mar. 31, 2014

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS

In February 2013, the FASB issued ASU No. 2013-04, Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. The Update requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of the following: 1) The amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors, and 2) Any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance in this Update also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, and are applied retrospectively to all prior periods presented for those obligations resulting from joint and several liability arrangements within the Update’s scope that exist at the beginning of an entity’s fiscal year of adoption. The adoption of ASU No. 2013-04 did not have a material impact on the Company's consolidated financial statements.

In July 2013, the FASB issued ASU No. 2013-10, Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes. ASU No. 2013-10 permits the use of the Fed Funds Effective Swap Rate (OIS) to be used as a U.S. benchmark interest rate for hedge account purposes. The amendment is effective prospectively for qualifying new or redesiginated hedging relationships entered into on or after July 17, 2013. The adoption of ASU No. 2013-10 did not have a material impact on the Company's consolidated financial statements.

In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU No. 2013-11 requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. No new recurring disclosures are required. The amendments are effective for annual and interim reporting periods beginning on or after December 15, 2013 and are to be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The adoption of ASU No. 2013-11 did not have a material impact on the Company's consolidated financial statements.

In January 2014, the FASB issued ASU No. 2014 – 01, Investments – Equity Method and Joint Ventures (Topic 323), Accounting for Investments in Qualified Affordable Housing Projects. This Update provides guidance on accounting for investments by a reporting entity in flow-through limited liability entities that manage or invest in affordable housing projects that qualify for the low-income housing tax credit. The amendments in this Update permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments in this Update are effective for public business entities for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. The adoption of ASU No. 2014-01 is not expected to have a material impact on the Company's consolidated financial statements.

In January 2014, the FASB issued ASU No. 2014 – 04, Receivables – Troubled Debt Restructurings by Creditors. This ASU provides clarification that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this ASU are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The adoption of ASU No. 2014-04 is not expected to have a material impact on the Company's consolidated financial statements.

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Note 5 - Loans (Details) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Note 5 - Loans (Details) [Line Items]
Loans And Leases Receivable Percentage Of Outstanding Principal Balance Secured By Owner Occupied Properties	34.30%
Underwriting Standards Loan To Value Percentage	80.00%
Underwriting Standards Housing Percentage	36.00%
Underwriting Standards Total Debt Ratio	42.00%
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans (in Dollars)	$ 130,000	$ 176,000
Impaired Financing Receivable, Interest Income, Accrual Method (in Dollars)	0	0
Impaired Financing Receivable, Average Recorded Investment (in Dollars)	3,793,655	6,570,000	4,102,383
Financing Receivable Considered to be Trouble Debt Restructings	3		3
Financing Receivable, Modifications, Recorded Investment (in Dollars)	1,195,000		1,201,000
Allowance for Credit Losses, Change in Method of Calculating Impairment (in Dollars)	321,000		392,000
Financing Receivable, Modifications, Number of Contracts	1	1
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	0	0
Loans and Leases Receivable, Minimum Cash Collateral Percent	110.00%
Loans and Leases Receivable, Gross (in Dollars)	422,510,000		419,438,000
Commercial Real Estate Loans [Member]
Note 5 - Loans (Details) [Line Items]
Loans And Leases Receivable Gross Carrying Amount As Percentage Of Total Loans	83.00%
General Commercial [Member]
Note 5 - Loans (Details) [Line Items]
Loans And Leases Receivable Gross Carrying Amount As Percentage Of Total Loans	10.00%
Residential Real Estate And Other Consumer Loans [Member]
Note 5 - Loans (Details) [Line Items]
Loans And Leases Receivable Gross Carrying Amount As Percentage Of Total Loans	5.00%
Agriculture Loans [Member]
Note 5 - Loans (Details) [Line Items]
Loans And Leases Receivable Gross Carrying Amount As Percentage Of Total Loans	2.00%
Substandard [Member]
Note 5 - Loans (Details) [Line Items]
Financing Receivable Rating Example Percentage Of Loans Classified In Rating Category	40.00%
Loans and Leases Receivable, Gross (in Dollars)	$ 9,199,742		$ 9,736,441
Doubtful [Member]
Note 5 - Loans (Details) [Line Items]
Financing Receivable Rating Example Percentage Of Loans Classified In Rating Category	25.00%
Loss [Member]
Note 5 - Loans (Details) [Line Items]
Financing Receivable Rating Example Percentage Of Loans Classified In Rating Category	35.00%
Minimum [Member]
Note 5 - Loans (Details) [Line Items]
Financing Receivable Rating Example Disbursement To Unsecured Creditors By Illusory Company In Liquidation Percentage	40.00%
Maximum [Member]
Note 5 - Loans (Details) [Line Items]
Financing Receivable Rating Example Disbursement To Unsecured Creditors By Illusory Company In Liquidation Percentage	65.00%

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Note 7 - Other Post-Retirement Benefit Plans (Details) (USD $)	1 Months Ended		3 Months Ended
	Mar. 31, 2014	Jan. 31, 2008	Mar. 31, 2014	Dec. 31, 2013
Note 7 - Other Post-Retirement Benefit Plans (Details) [Line Items]
Other Postretirement Defined Benefit Plan Expected Annual Future Benefit Payments Period			20 years
Other Postretirement Defined Benefit Plan, Liabilities	$ 2,082,000		$ 2,082,000	$ 2,021,000
Payments to Acquire Life Insurance Policies	1,000,000	4,700,000
Bank Owned Life Insurance	$ 13,213,000		$ 13,213,000	$ 12,083,000
Director Retirement Plan [Member]
Note 7 - Other Post-Retirement Benefit Plans (Details) [Line Items]
Other Postretirement Defined Benefit Plan Expected Annual Future Benefit Payments Period			10 years

XML

Note 8 - Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2014

Disclosure Text Block [Abstract]

Fair Value, by Balance Sheet Grouping [Table Text Block]

	Carrying Amount			Fair Value			Hierarchy Valuation Level
Financial assets:
Cash and cash equivalents	$	115,653,817		$	115,653,817			1
Restricted equity securities		3,170,250			3,170,250			2
Loans, net		414,425,458			429,287,284			3
Interest receivable		1,798,505			1,798,505			2
Financial liabilities:
Deposits		(615,996,534	)		(603,968,814	)		3
Interest payable		(44,386	)		(44,386	)		2
Off-balance-sheet assets (liabilities):
Commitments and standby letters of credit					(522,905	)		3

	Carrying Amount			Fair Value			Hierarchy Valuation Level
Financial assets:
Cash and cash equivalents	$	105,190,560		$	105,190,560			1
Restricted equity securities		3,170,250			3,170,250			2
Loans, net		411,155,607			426,433,358			3
Interest receivable		2,011,086			2,011,086			2
Financial liabilities:
Deposits		(602,633,432	)		(590,494,886	)		3
Interest payable		(60,234	)		(60,234	)		2
Off-balance-sheet assets (liabilities):
Commitments and standby letters of credit					(525,585	)		3

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

	Fair Value Measurements at March 31, 2014 Using
	March 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets and liabilities measured on a recurring basis:
Available-for-sale securities:
U.S. agencies	$	49,548,557	$	0	$	49,548,557	$	0
Collateralized mortgage obligations		8,971,877		0		8,971,877		0
Municipalities		44,475,841		0		44,475,841		0
SBA Pools		1,068,660		0		1,068,660		0
Corporate Debt		6,818,485		0		6,818,485		0
Asset backed securities		5,859,080		0		5,859,080
Mutual Fund		2,855,281		2,855,281		0		0
Assets and liabilities measured on a non-recurring basis:
Impaired loans	$	0	$	0	$	0	$	0
Other real estate owned	$	0	$	0	$	0	$	0

	Fair Value Measurements at December 31, 2013 Using
	December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets and liabilities measured on a recurring basis:
Available-for-sale securities
U.S. agencies	$	53,115,693	$	0	$	53,115,693	$	0
Collateralized mortgage obligations		9,781,489		0		9,781,489		0
Municipalities		40,268,968		0		40,268,968		0
SBA pools		1,080,515		0		1,080,515		0
Corporate debt		4,824,778		0		4,824,778		0
Asset backed securities		5,856,421		0		5,856,421		0
Mutual fund		2,817,789		2,817,789		0		0
Assets and liabilities measured on a non-recurring basis:
Impaired loans	$	790,472	$	0	$	0	$	790,472
Other real estate owned	$	916,205	$	0	$	0	$	916,205