Fair Value of Financial Instruments and Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value of Financial Instruments and Fair Value Measurements [Abstract]

Carrying amount and estimated fair values of financial instruments

The carrying amount, estimated fair values, and placement in the fair value hierarchy of the Company's financial instruments as of June 30, 2013 and December 31, 2012 are as follows:

	Fair Value Measurements at
	June 30, 2013
	Carrying		Estimated		Level		Level		Level
	Value		Fair Value		1		2		3

Assets
Cash and Short-Term Investments	$	40,377	$	40,377	$	40,377	$	---	$	---
Investment Securities Available for Sale		267,131		267,131		---		266,002		1,129
Investment Securities Held to Maturity		38		38		---		38		---
Federal Home Loan Bank Stock		3,164		3,164		3,164		---		---
Loans, Net		730,920		730,084		---		705,922		24,162

Liabilities
Deposits		943,337		944,685		471,439		473,246		---
Subordinated Debentures		24,229		24,229		24,229		---		---
Other Borrowed Money		40,000		41,450		---		41,450		---

	Fair Value Measurements at
	December 31, 2012
	Carrying		Estimated		Level		Level		Level
	Value		Fair Value		1		2		3

Assets
Cash and Short-Term Investments	$	71,041	$	71,041	$	71,041	$	---	$	---
Investment Securities Available for Sale		268,301		268,301		---		267,163		1,138
Investment Securities Held to Maturity		41		42		---		42		---
Federal Home Loan Bank Stock		3,364		3,364		3,364		---		---
Loans, Net		734,079		735,115		---		713,109		22,006

Liabilities
Deposits		979,685		982,215		486,775		495,440		---
Subordinated Debentures		24,229		24,229		24,229		---		---
Other Borrowed Money		35,000		38,424		---		38,424		---

Assets and liabilities measured at fair value on a recurring basis

The following table presents the recorded amount of the Company's assets measured at fair value on a recurring and nonrecurring basis as of June 30, 2013 and December 31, 2012, aggregated by the level in the fair value hierarchy within which those measurements fall. The table below includes only impaired loans with a specific reserve and only other real estate properties with a valuation allowance at June 30, 2013. Those impaired loans and other real estate properties are shown net of the related specific reserves and valuation allowances.

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
	Total Fair		Identical Assets		Observable		Inputs
June 30, 2013	Value		(Level 1)		Inputs (Level 2)		(Level 3)

Recurring Securities Available for Sale
U.S. Government Agencies
Mortgage-Backed	$	261,793	$	---	$	261,793	$	---
State, County and Municipal		4,121		---		3,124		997
Corporate Obligations		1,085		---		1,085		---
Asset-Backed Securities		132		---		---		132
	$	267,131	$	---	$	266,002	$	1,129

Nonrecurring
Impaired Loans	$	24,162	$	---	$	---	$	24,162

Other Real Estate	$	8,102	$	---	$	---	$	8,102

			Fair Value Measurements at Reporting Date Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
	Total Fair		Identical Assets		Observable		Inputs
December 31, 2012	Value		(Level 1)		Inputs (Level 2)		(Level 3)

Recurring Securities Available for Sale
U.S. Government Agencies
Mortgage-Backed	$	263,060	$	---	$	263,060	$	---
State, County and Municipal		4,004		---		2,998		1,006
Corporate Obligations		1,105		---		1,105		---
Asset-Backed Securities		132		---		---		132
	$	268,301	$	---	$	267,163	$	1,138

Nonrecurring
Impaired Loans	$	22,006	$	---	$	---	$	22,006

Other Real Estate	$	8,817	$	---	$	---	$	8,817

Quantitative information for financial instruments measured at fair value

The following table presents quantitative information about the significant unobservable inputs used in the fair value measurements for assets in level 3 of the fair value hierarchy measured on a nonrecurring basis at June 30, 2013. This table is comprised primarily of collateral dependent impaired loans and other real estate owned:

			Valuation	Unobservable	Range
	June 30, 2013		Techniques	Inputs	Weighted Avg

Impaired Loans
Commercial	$	1,823	Sales Comparison	Adjustment for Differences	0.00% - 0.00%
				Between the Comparable Sales	0.00%

				Management Adjustments for	0.00% - 90.00%
				Age of Appraisals and/or Current	45.00%
				Market Conditions

Real Estate
Commercial Construction		6,887	Sales Comparison	Adjustment for Differences	(80.00%) - 450.00%
				Between the Comparable Sales	185.00%

				Management Adjustments for	0.00% - 25.00%
				Age of Appraisals and/or Current	12.50%
				Market Conditions

			Income Approach	Capitalization Rate	8.75%

Residential Real Estate		3,096	Sales Comparison	Adjustment for Differences	(0.40%) -191.70%
				Between the Comparable Sales	95.65%

				Management Adjustments for	0.00% - 10.00%
				Age of Appraisals and/or Current	5.00%
				Market Conditions

			Income Approach	Capitalization Rate	15.00

Commercial Real Estate		12,356	Sales Comparison	Adjustment for Differences	0.00% - 52.00
				Between the Comparable Sales	26.00

				Management Adjustments for	0.00% - 40.00
				Age of Appraisals and/or Current	20.00
				Market Conditions

			Income Approach	Capitalization Rate	10.50%

				Discount Rate	5.13%

Other Real Estate Owned		8,102	Sales Comparison	Adjustment for Differences	(35.00%) - 319.10%
				Between the Comparable Sales	142.05%

				Management Adjustment for	3.10% - 62.16%
				Age of Appraisals and/or Current	30.32%
				Market Conditions

			Income Approach	Discount Rate	3.00%

				Capitalization Rate	14.00%

The following table presents quantitative information about recurring level 3 fair value measurements as of June 30, 2013.

			Valuation	Unobservable	Range
	Fair Value		Techniques	Inputs	Weighted Avg

Asset-Back Securities	$	132	Discounted Cash Flow	Discount Rate		3.48% - 3.91%
						3.70%

State, County and Municipal		997	Discounted Cash Flow	Discount Rate		N/A*

* The Company relies on a third-party pricing service to value its municipal securities. The details of the unobservable inputs and other adjustments used by the third-party pricing service were not readily available to the Company.

Fair value measurement using significant unobservable inputs (Level 3)

The table below presents a reconciliation and statement of income classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (level 3) for the six months ended June 30, 2013 and the twelve months ended December 31, 2012.

	Available for Sale Securities
	June 30, 2013			December 31, 2012

Balance, Beginning	$	1,138		$	1,122
Total Realized/Unrealized Gains (Losses) Included In
Purchases, Sales, Issuances and Settlements
Transfers into Level 3		--			789
Securities Purchased During the Year		--			208
Securities Called During the Year		--			(1,000	)
Unrealized Gains Included in Other Comprehensive Income		(9	)		78
Loss on OTTI Impairment Included in Noninterest Income		--			(59	)

Balance, Ending	$	1,129		$	1,138

- Definition

Tabular disclosure related to assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a recurring and/or nonrecurring basis in periods after initial recognition. Disclosures include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3) as well as transfers between levels 1 and 2.

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- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

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-Name Statement of Financial Accounting Standard (FAS)

-Number 107

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