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

9 Months Ended

Sep. 30, 2014

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, 2014 and December 31, 2013 are as follows:

	Fair Value Measurements at
	September 30, 2014
	Carrying		Estimated		Level		Level		Level
	Value		Fair Value			1		2		3
Assets
Cash and Short-Term Investments	$	34,514	$	34,514	$	34,514	$	-	$	-
Investment Securities Available for Sale		273,547		273,547		-		272,586		961
Investment Securities Held to Maturity		33		33		-		33		-
Federal Home Loan Bank Stock		2,831		2,831		2,831		-		-
Loans, Net		733,139		733,963		-		725,124		8,839
Bank-Owned Life Insurance		14,371		14,371		14,371		-		-
Liabilities
Deposits		941,200		942,872		502,619		440,253		-
Subordinated Debentures		24,229		24,229		24,229		-		-
Other Borrowed Money		40,000		42,038		-		42,038		-

	Fair Value Measurements at
	December 31, 2013
	Carrying		Estimated		Level		Level		Level
	Value		Fair Value			1		2		3
Assets
Cash and Short-Term Investments	$	68,147	$	68,147	$	68,147	$	-	$	-
Investment Securities Available for Sale		263,258		263,258		-		262,317		941
Investment Securities Held to Maturity		37		37		-		37		-
Federal Home Loan Bank Stock		3,164		3,164		3,164		-		-
Loans, Net		739,052		741,112		-		729,436		11,676
Bank-Owned Life Insurance		10,165		10,165		10,165		-		-
Liabilities
Deposits		987,530		989,101		526,646		462,455		-
Subordinated Debentures		24,229		24,229		24,229		-		-
Other Borrowed Money		40,000		42,074		-		42,074		-

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, 2014 and December 31, 2013, 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, 2014.  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, 2014	Value		(Level 1)		Inputs (Level 2)		(Level 3)
Recurring
Securities Available for Sale
U.S. Government Agencies
Mortgage-Backed	$	270,010	$	-	$	270,010	$	-
State, County and Municipal		3,537		-		2,576		961
	$	273,547	$	-	$	272,586	$	961
Nonrecurring
Impaired Loans	$	8,839	$	-	$	-	$	8,839
Other Real Estate	$	5,347	$	-	$	-	$	5,347

			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, 2013	Value		(Level 1)		Inputs (Level 2)		(Level 3)
Recurring
Securities Available for Sale
U.S. Government Agencies
Mortgage-Backed	$	259,348	$	-	$	259,348	$	-
State, County and Municipal		3,910		-		2,969		941
	$	263,258	$	-	$	262,317	$	941
Nonrecurring
Impaired Loans	$	11,676	$	-	$	-	$	11,676
Other Real Estate	$	7,020	$	-	$	-	$	7,020

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, 2014 and December 31, 2013.  This table is comprised primarily of collateral dependent impaired loans and other real estate owned:

			Valuation	Unobservable	Range
	September 30, 2014		Techniques	Inputs	Weighted Avg
Impaired Loans
Real Estate
Commercial Construction	$	80	Sales Comparison	Adjustment for Differences		(56.60%) - 20.10%
				Between the Comparable Sales		(18.25%)
				Management Adjustments for		0.00% - 10.00%
				Age of Appraisals and/or Current		5.00%
				Market Conditions
Residential Real Estate		2,744	Sales Comparison	Adjustment for Differences		(31.50%) - 171.70%
				Between the Comparable Sales		70.10%
				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		5,648	Sales Comparison	Management Adjustment for		0.00% - 10.00%
				Age of Appraisals and/or Current		5.00%
				Market Conditions
			Income Approach	Capitalization Rate		11.00%
Farmland		367	Sales Comparison	Adjustment for Differences		(8.30%) - 252.50%
				Between the Comparable Sales		122.10%
				Management Adjustment for		10.00% - 50.00%
				Age of Appraisals and/or Current		30.00%
				Market Conditions
Other Real Estate Owned		5,347	Sales Comparison	Adjustment for Differences		(50.00%) - 955.90%
				Between the Comparable Sales		(452.95%)
				Management Adjustment for		0.33% - 78.01%
				Age of Appraisals and/or Current		35.48%
				Market Conditions
			Income Approach	Discount Rate		3.00%

			Valuation	Unobservable	Range
	December 31, 2013		Techniques	Inputs	Weighted Avg
Impaired Loans
Commercial	$	1,019	Sales Comparison	Adjustment for Differences		0.00% - 15.00%
				Between the Comparable Sales		7.50%
				Management Adjustments for		10.00% - 50.00%
				Age of Appraisals and/or Current		30.00%
				Market Conditions
Real Estate
Commercial Construction		2,641	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		1,323	Sales Comparison	Adjustment for Differences		0.00% - 46.00%
				Between the Comparable Sales		23.00%
				Management Adjustments for		0.00% - 25.00%
				Age of Appraisals and/or Current		12.50%
				Market Conditions
Commercial Real Estate		5,451	Sales Comparison	Adjustment for differences		(27.20%) - 216.80%
				Between the comparable Sales		94.80%
				Management Adjustments for		25.00% - 90.00%
				Age of Appraisals and/or Current		57.50%
				Market Conditions
			Income Approach	Capitalization Rate		11.00%
Farmland		1,242	Sales Comparison	Adjustment for Differences		(55.00%) -388.00%
				Between the Comparable Sales		166.50%
				Management Adjustments for		10.00% - 35.00%
				Age of Appraisals and/or Current		22.50%
				Market Conditions
Other Real Estate Owned		7,020	Sales Comparison	Adjustment for Differences		(10.00%) - 319.10%
				Between the Comparable Sales		154.55%
				Management Adjustment for		0.36% - 87.81%
				Age of Appraisals and/or Current		29.99%
				Market Conditions
			Income Approach	Discount Rate		10.00%

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, 2014 and the twelve months ended December 31, 2013.

	Available for Sale Securities
	September 30, 2014		December 31, 2013
Balance, Beginning	$	941	$	1,138
Transfers out of Level 3		-		(42	)
Loss on OTTI Impairment Included in Noninterest Income		-		(367	)
Unrealized Gains included in Other Comprehensive Income (Loss)		20		212
Balance, Ending	$	961	$	941

The following table presents quantitative information about recurring level 3 fair value measurements as of September 30, 2014.

			Valuation	Unobservable	Range
	Fair Value		Techniques	Inputs	Weighted Avg
State, County and Municipal	$	961	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.