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

9 Months Ended

Sep. 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 September 30, 2013 and December 31, 2012 are as follows:

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

Assets
Cash and Short-Term Investments		$	41,676		$	41,676	$	41,676	$	---	$	---
Investment Securities Available for Sale			257,354			257,354		---		256,231		1,123
Investment Securities Held to Maturity			39			39		---		39		---
Federal Home Loan Bank Stock			3,164			3,164		3,164		---		---
Loans, Net			734,792			735,680		---		714,764		20,916

Liabilities
Deposits			949,463			951,007		468,512		482,495		---
Subordinated Debentures			24,229			24,229		24,229		---		---
Other Borrowed Money			40,000			41,469		---		41,469		---

	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 and non recurring basis

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 September 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 September 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
September 30, 2013	Value		(Level 1)		Inputs (Level 2)		(Level 3)


Recurring Securities Available for Sale

U.S. Government Agencies Mortgage-Backed	$	252,066	$	---	$	252,066	$	---
State, County and Municipal		4,074		---		3,083		991
Corporate Obligations		1,082		---		1,082		---
Asset-Backed Securities		132		---		---		132
	$	257,354	$	---	$	256,231	$	1,123

Nonrecurring
Impaired Loans	$	20,916	$	---	$	---	$	20,916

Other Real Estate	$	6,701	$	---	$	---	$	6,701

			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 September 30, 2013. This table is comprised primarily of collateral dependent impaired loans and other real estate owned:

			Valuation	Unobservable	Range
	September 30, 2013		Techniques	Inputs	Weighted Avg
Impaired Loans
Commercial	$	1,357	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		2,900	Sales Comparison	Adjustment for Differences		(16.00 %) - 28.00%
				Between the Comparable Sales		6.00 %

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

			Income Approach	Capitalization Rate		8.50 %

Residential Real Estate		2,030	Sales Comparison	Adjustment for Differences		(0.70 %) -191.70%
				Between the Comparable Sales		95.50 %

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

			Income Approach	Capitalization Rate		12.50 %

Commercial Real Estate		13,502	Sales Comparison	Adjustment for Differences		0.00% - 15.00 %
				Between the Comparable Sales		7.50 %

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

			Income Approach	Capitalization Rate		11.00 %

				Discount Rate		5.13 %

Farmland		1,127	Sales Comparison	Adjustment for Differences		(55.00 %) - 388.00%
				Between the Comparable Sales		166.50 %

				Management Adjustment for		30.00% - 70.00 %
				Age of Appraisals and/or Current		50.00 %
				Market Conditions

Other Real Estate Owned		6,701	Sales Comparison	Adjustment for Differences		(35.00 %) - 319.10%
				Between the Comparable Sales		142.05 %

				Management Adjustment for		3.10% - 69.36 %
				Age of Appraisals and/or Current		28.26 %
				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 September 30, 2013.

			Valuation	Unobservable	Range
	Fair Value		Techniques	Inputs	Weighted Avg

Asset-Back Securities	$	132	Discounted Cash Flow	Discount Rate		3.70% - 4.78%
						4.24%

State, County and Municipal		991	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 nine months ended September 30, 2013 and the twelve months ended December 31, 2012.

	Available for Sale Securities
	September 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 (Losses) Included in Other Comprehensive Income (Loss)		(15	)		78
Loss on OTTI Impairment Included in Noninterest Income		--			(59	)
Balance, Ending	$	1,123		$	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)

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