Disclosures About Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2011

Disclosures About Fair Value of Financial Instruments

Note 7.   Disclosures About Fair Value of Financial Instruments

ASC 825 “Financial Instruments" defines the fair value of a financial instrument as the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced liquidation or sale.  As the majority of the Bank's financial instruments lack an available trading market, significant estimates, assumptions and present value calculations are required to determine estimated fair value.  Estimated fair value and the carrying value of financial instruments at June 30, 2011 and December 31, 2010 are as follows (in thousands):

	June 30, 2011				December 31, 2010
	Estimated		Carrying		Estimated		Carrying
	Fair Value		Value		Fair Value		Value
Financial Assets
Cash	$	6,135	$	6,135	$	4,586	$	4,586
Interest bearing deposits		1,353		1,353		2,927		2,927
Federal funds sold		-		-		16,338		16,338
Securities available for sale		15,757		15,757		15,247		15,247
Securities held to maturity		109		109		109		109
Other investments		8,117		8,117		8,789		8,789
Loans		492,178		458,930		475,166		445,147
Loans held for sale		42,679		42,679		23,764		23,764
Bank owned life insurance		7,030		7,030		6,883		6,883
Accrued interest receivable		1,653		1,653		2,001		2,001
Financial Liabilities
Demand Deposits:
Non-interest bearing		64,788		64,788		58,497		58,497
Interest bearing		116,982		116,982		116,889		116,889
Savings deposits		38,260		38,260		35,760		35,760
Time deposits		216,252		214,397		216,199		213,905
Short-term debt		11,814		11,814		5,355		5,355
Subordinated debt		10,191		10,191		9,944		9,944
Long-term debt		50,092		46,988		51,566		49,035

The carrying value of cash and cash equivalents, other investments, deposits with no stated maturities, short-term borrowings, and accrued interest approximate fair value. The fair value of securities was calculated using the most recent transaction price or a pricing model, which takes into consideration maturity, yields and quality.  The remaining financial instruments were valued based on the present value of estimated future cash flows, discounted at various rates in effect for similar instruments entered into as of the end of each respective period shown above.