10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from____________to___________

Commission File Number: 000-12896

OLD POINT FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

VIRGINIA	54-1265373
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1 West Mellen Street, Hampton, Virginia 23663

(Address of principal executive offices) (Zip Code)

(757) 728-1200

(Registrant's telephone number, including area code)

Not Applicable

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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      o 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ■ Yes    o 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 the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	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). o Yes     ■  No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

4,959,009 shares of common stock ($5.00 par value) outstanding as of October 31, 2013

OLD POINT FINANCIAL CORPORATION

FORM 10-Q

INDEX

PART I - FINANCIAL INFORMATION

		Page
Item 1	Financial Statements	1
	Consolidated Balance Sheets September 30, 2013 (unaudited) and December 31, 2012	1
	Consolidated Statements of Income Three months ended September 30, 2013 and 2012 (unaudited) Nine months ended September 30, 2013 and 2012 (unaudited)	2
	Consolidated Statements of Comprehensive Income (Loss) Three months ended September 30, 2013 and 2012 (unaudited) Nine months ended September 30, 2013 and 2012 (unaudited)	3
	Consolidated Statements of Changes in Stockholders' Equity Nine months ended September 30, 2013 and 2012 (unaudited)	4
	Consolidated Statements of Cash Flows Nine months ended September 30, 2013 and 2012 (unaudited)	5
	Notes to Consolidated Financial Statements (unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	42
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	43
	Signatures	44

i

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements.

Old Point Financial Corporation and Subsidiaries

Consolidated Balance Sheets

	September 30, 2013			December 31, 2012
	(unaudited)
Assets
Cash and due from banks	$	15,527,275		$	15,982,070
Interest-bearing due from banks		49,255,719			24,732,329
Federal funds sold		1,930,976			1,602,847
Cash and cash equivalents		66,713,970			42,317,246
Securities available-for-sale, at fair value		158,147,372			329,455,812
Securities held-to-maturity (fair value approximates $94,838,359 and $573,500)		93,819,137			570,000
Restricted securities		2,378,100			2,561,900
Loans, net of allowance for loan losses of $6,979,663 and $7,324,310		473,187,156			463,808,457
Premises and equipment, net		38,463,873			32,528,350
Bank-owned life insurance		22,471,938			21,824,197
Other real estate owned, net of valuation allowance of $1,716,858 and $1,870,285		6,888,213			6,573,398
Other assets		14,486,743			7,859,344
Total assets	$	876,556,502		$	907,498,704
Liabilities & Stockholders' Equity
Deposits:
Noninterest-bearing deposits	$	180,462,289		$	176,740,312
Savings deposits		279,577,902			268,252,782
Time deposits		270,783,394			308,822,642
Total deposits		730,823,585			753,815,736
Overnight repurchase agreements		37,019,654			35,945,800
Term repurchase agreements		411,065			1,279,574
Federal Home Loan Bank advances		25,000,000			25,000,000
Accrued expenses and other liabilities		3,145,411			2,157,558
Total liabilities		796,399,715			818,198,668
Commitments and contingencies
Stockholders' equity:
Common stock, $5 par value, 10,000,000 shares authorized;4,959,009 shares issued and outstanding		24,795,045			24,795,045
Additional paid-in capital		16,391,845			16,391,845
Retained earnings		50,464,644			48,304,609
Accumulated other comprehensive loss, net		(11,494,747	)		(191,463	)
Total stockholders' equity		80,156,787			89,300,036
Total liabilities and stockholders' equity	$	876,556,502		$	907,498,704

See Notes to Consolidated Financial Statements.

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Old Point Financial Corporation and Subsidiaries

Consolidated Statements of Income

	Three Months Ended September 30,					Nine Months Ended September 30,
	2013			2012		2013			2012
	(unaudited)					(unaudited)
Interest and Dividend Income:
Interest and fees on loans	$	5,883,652		$	6,494,629	$	17,782,921		$	20,313,095
Interest on due from banks		35,694			16,871		68,501			43,151
Interest on federal funds sold		161			401		912			1,164
Interest on securities:
Taxable		949,535			1,229,293		3,526,071			3,830,193
Tax-exempt		369,008			201,758		920,990			443,967
Dividends and interest on all other securities		25,283			15,275		69,401			60,467
Total interest and dividend income		7,263,333			7,958,227		22,368,796			24,692,037
Interest Expense:
Interest on savings deposits		71,252			95,052		227,107			283,291
Interest on time deposits		757,102			971,078		2,406,837			2,910,056
Interest on federal funds purchased, securities sold under agreements to repurchase and other borrowings		7,120			10,415		26,561			42,438
Interest on Federal Home Loan Bank advances		308,584			337,550		915,688			1,187,642
Total interest expense		1,144,058			1,414,095		3,576,193			4,423,427
Net interest income		6,119,275			6,544,132		18,792,603			20,268,610
Provision for loan losses		300,000			750,000		800,000			1,950,000
Net interest income, after provision for loan losses		5,819,275			5,794,132		17,992,603			18,318,610
Noninterest Income:
Income from fiduciary activities		868,598			776,615		2,634,092			2,396,266
Service charges on deposit accounts		1,081,896			1,050,152		3,114,761			3,153,461
Other service charges, commissions and fees		880,544			853,989		2,651,134			2,531,050
Income from bank-owned life insurance		215,307			693,745		647,133			1,142,626
Income from Old Point Mortgage		99,150			51,168		403,474			176,466
Gain (loss) on sale of available-for-sale securities, net		(5,185	)		619,936		(25,717	)		1,703,805
Other operating income		56,525			60,027		169,460			150,691
Total noninterest income		3,196,835			4,105,632		9,594,337			11,254,365
Noninterest Expense:
Salaries and employee benefits		4,554,101			5,259,880		14,280,611			15,440,042
Occupancy and equipment		1,098,172			1,110,635		3,289,055			3,273,568
Data processing		412,555			448,854		1,247,015			1,222,757
FDIC insurance		172,382			284,042		529,357			851,194
Customer development		186,030			189,037		597,508			595,925
Legal and audit expense		155,900			174,672		390,561			582,784
Other outside service fees		112,795			135,881		321,683			429,248
Employee professional development		142,651			125,844		455,432			455,828
Postage and courier expense		119,773			118,179		362,804			361,490
Advertising		52,863			138,733		300,233			430,345
Stationery and supplies		111,188			116,733		326,911			334,572
Bad checks and other losses		107,525			103,070		246,745			240,517
Capital stock tax		104,808			61,404		296,999			185,114
Loss on write-down/sale of other real estate owned		65,234			99,960		268,910			736,594
Other operating expense		380,172			385,306		1,136,902			1,108,340
Total noninterest expense		7,776,149			8,752,230		24,050,726			26,248,318
Income before income taxes		1,239,961			1,147,534		3,536,214			3,324,657
Income tax expense		202,617			73,346		582,738			533,961
Net income	$	1,037,344		$	1,074,188	$	2,953,476		$	2,790,696
Basic Earnings per Share:
Average shares outstanding		4,959,009			4,959,009		4,959,009			4,959,009
Net income per share of common stock	$	0.21		$	0.22	$	0.60		$	0.56
Diluted Earnings per Share:
Average shares outstanding		4,959,009			4,959,009		4,959,009			4,959,009
Net income per share of common stock	$	0.21		$	0.22	$	0.60		$	0.56

See Notes to Consolidated Financial Statements.

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Old Point Financial Corporation

Consolidated Statements of Comprehensive Income (Loss)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013				2012		2013				2012
	(unaudited)						(unaudited)
Net income		$	1,037,344		$	1,074,188		$	2,953,476		$	2,790,696
Other comprehensive income (loss), net
Unrealized gains (losses) on available-for-sale securities, net			(3,125,290	)		2,153,604			(11,348,274	)		2,403,011
Amortization of unrealized losses on securities transferred to held-to-maturity, net of tax			44,990			0			44,990			0
Other comprehensive income (loss), net			(3,080,300	)		2,153,604			(11,303,284	)		2,403,011
Comprehensive income (loss)		$	(2,042,956	)	$	3,227,792		$	(8,349,808	)	$	5,193,707

See Notes to Consolidated Financial Statements.

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Old Point Financial Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders' Equity

(unaudited)	Shares of Common Stock		Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
NINE MONTHS ENDED SEPTEMBER 30, 2013
Balance at beginning of period		4,959,009	$	24,795,045	$	16,391,845	$	48,304,609		$	(191,463	)	$	89,300,036
Net income		0		0		0		2,953,476			0			2,953,476
Other comprehensive loss, net of tax		0		0		0		0			(11,303,284	)		(11,303,284	)
Cash dividends ($0.16 per share)		0		0		0		(793,441	)		0			(793,441	)
Balance at end of period		4,959,009	$	24,795,045	$	16,391,845	$	50,464,644		$	(11,494,747	)	$	80,156,787
NINE MONTHS ENDED SEPTEMBER 30, 2012
Balance at beginning of period		4,959,009	$	24,795,045	$	16,309,983	$	45,109,268		$	(349,581	)	$	85,864,715
Net income		0		0		0		2,790,696			0			2,790,696
Other comprehensive income, net of tax		0		0		0		0			2,403,011			2,403,011
Stock compensation expense		0		0		81,060		0			0			81,060
Cash dividends ($0.15 per share)		0		0		0		(743,851	)		0			(743,851	)
Balance at end of period		4,959,009	$	24,795,045	$	16,391,043	$	47,156,113		$	2,053,430		$	90,395,631

See Notes to Consolidated Financial Statements.

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Old Point Financial Corporation and Subsidiaries

Consolidated Statements of Cash Flows

	Nine Months Ended September 30,
	2013			2012
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,953,476		$	2,790,696
Depreciation and amortization		1,471,114			1,411,040
Provision for loan losses		800,000			1,950,000
Net (gain) loss on sale of available-for-sale securities		25,717			(1,703,805	)
Net amortization of securities		1,947,709			1,142,043
Net loss on disposal of premises and equipment		22,666			396
Net loss on write-down/sale of other real estate owned		268,910			736,594
Income from bank owned life insurance		(647,133	)		(1,142,626	)
Stock compensation expense		0			81,060
Deferred tax (benefit) expense		(59,203	)		110,235
(Increase) decrease in other assets		(777,574	)		1,653,149
Increase in other liabilities		987,853			993,695
Net cash provided by operating activities		6,993,535			8,022,477
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of available-for-sale securities		(12,742,008	)		(277,741,641	)
Purchases of held-to-maturity securities		(25,770,691	)		0
Proceeds from sales of restricted securities		183,800			889,100
Proceeds from maturities and calls of securities		35,340,464			59,843,643
Proceeds from sales of available-for-sale securities		62,131,923			147,178,925
(Increase) decrease in loans made to customers		(11,610,600	)		53,071,871
Proceeds from sales of other real estate owned		1,386,147			2,461,219
Proceeds from payout on bank-owned life insurance policy		0			1,109,296
Purchases of premises and equipment		(7,935,599	)		(2,226,964	)
Net cash provided by (used in) investing activities		40,983,436			(15,414,551	)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in noninterest-bearing deposits		3,721,977			12,551,450
Increase in savings deposits		11,325,120			15,417,220
Increase (decrease) in time deposits		(38,039,248	)		12,826,761
Increase in federal funds purchased, repurchase agreements and other borrowings		205,345			2,062,241
Decrease in Federal Home Loan Bank advances		0			(10,000,000	)
Cash dividends paid on common stock		(793,441	)		(743,851	)
Net cash provided by (used in) financing activities		(23,580,247	)		32,113,821
Net increase in cash and cash equivalents		24,396,724			24,721,747
Cash and cash equivalents at beginning of period		42,317,246			24,854,656
Cash and cash equivalents at end of period	$	66,713,970		$	49,576,403
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest	$	3,664,860		$	4,526,922
Income tax	$	550,000		$	600,000
SUPPLEMENTAL SCHEDULE OF NONCASH TRANSACTIONS
Unrealized gain (loss) on securities available-for-sale	$	(10,962,474	)	$	3,640,925
Loans transferred to other real estate owned	$	1,431,901		$	564,480
Former branch site transferred from fixed assets to other real estate owned	$	506,296		$	0
Securities transferred from available-for-sale to held-to-maturity	$	68,015,458		$	0
Unrealized loss on securities transferred from available-for-sale to held-to-maturity	$	(6,231,880	)	$	0
Amortization of unrealized loss on securities transferred to held-to-maturity	$	68,166		$	0

See Notes to Consolidated Financial Statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. General

The accompanying unaudited consolidated financial statements of Old Point Financial Corporation (the Company) and its subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information. All significant intercompany balances and transactions have been eliminated. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments and reclassifications of a normal and recurring nature considered necessary to present fairly the financial positions at September 30, 2013 and December 31, 2012, the results of operations and statements of comprehensive income for the three and nine months ended September 30, 2013 and 2012, and the statements of changes in stockholders' equity and statements of cash flows for the nine months ended September 30, 2013 and 2012. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year.

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 2012 annual report on Form 10-K. Certain previously reported amounts have been reclassified to conform to current period presentation.

AVAILABLE INFORMATION

The Company maintains a website on the Internet at www.oldpoint.com. The Company makes available free of charge, on or through its website, its proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission (SEC). The information available on the Company's Internet website is not part of this Form 10-Q or any other report filed by the Company with the SEC. The public may read and copy any documents the Company files at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company's SEC filings can also be obtained on the SEC's website on the Internet at www.sec.gov.

SUBSEQUENT EVENTS

In accordance with Accounting Standards Codification (ASC) 855-10, "Subsequent Events," the Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (2) unrecognized, or those that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date.

The Company is expanding the building of a current branch office. The Company signed a contract with a general contractor on April 19, 2012. The contract entitles the contractor to $2.1 million for Phase I of the construction, which includes site work and construction of the building shell. The Company signed an amendment to the contract with the general contractor on October 16, 2012 for the remainder of the construction. The revised contract entitles the contractor to $12.2 million for the construction of the building. As of the writing of this quarterly report on Form 10-Q, $9.3 million had been disbursed to the contractor. The Company anticipates that the total project will likely cost between $13.0 million and $15.0 million and be completed in the next six months.

On September 6, 2013, the Company completed the consolidation of two of its branches located in Chesapeake, Virginia. Because of their proximity, the branches were serving a customer base that could be more efficiently served by one branch. The furniture and equipment from the closed branch has been redeployed or disposed of.  The Company will be using the closed branch location for non-branch personnel; therefore this location will not be transferred to other real estate owned (OREO).

On September 20, 2013, the Company completed the consolidation of two of its branches located in Newport News, Virginia. Because of their proximity, the branches were serving a customer base that could be more efficiently served by one branch. The value of furniture and equipment from the closed branch that has not been fully depreciated and needs to be redeployed is $8 thousand and the value of the furniture and equipment that needs to be disposed of is $6 thousand.  The Company transferred to OREO the book value of the land and building for the closed branch location in the amount of $379 thousand in October 2013.

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On October 1, 2013, Old Point Trust & Financial Services (Trust), a wholly-owned subsidiary of Old Point Financial Corporation, acquired Penact Associates, Inc. Trust paid $12 thousand for its assets and entered into three employee agreements.

Other than those discussed above, the Company did not identify any recognized or unrecognized subsequent events that would have required adjustment to or disclosure in the financial statements through the date filed.

Note 2. Securities

Amortized costs and fair values of securities held-to-maturity as of the dates indicated are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
September 30, 2013
Obligations of  U.S. Government agencies	$	570	$	2	$	(5	)	$	567
Obligations of state and political subdivisions		25,669		3		(716	)		24,956
Mortgage-backed securities		67,580		1,735		0			69,315
Total	$	93,819,000	$	1,740	$	(721	)	$	94,838,000
December 31, 2012
Obligations of  U.S. Government agencies	$	570	$	4	$	0		$	574,000

Amortized costs and fair values of securities available-for-sale as of the dates indicated are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
September 30, 2013
Obligations of  U.S. Government agencies	$	15,193	$	249	$	(378	)	$	15,064
Obligations of state and political subdivisions		51,362		77		(4,389	)		47,050
Mortgage-backed securities		97,245		0		(3,477	)		93,768
Money market investments		892		0		0			892
Corporate bonds		1,399		0		(26	)		1,373
Total	$	166,091	$	326	$	(8,270	)	$	158,147
December 31, 2012
Obligations of  U.S. Government agencies	$	35,787	$	1,314	$	(13	)	$	37,088
Obligations of state and political subdivisions		43,276		712		(214	)		43,774
Mortgage-backed securities		246,132		1,966		(743	)		247,355
Money market investments		541		0		0			541
Corporate bonds and other securities		700		0		(2	)		698
Total	$	326,436	$	3,992	$	(972	)	$	329,456

On August 31, 2013, the Company transferred $68.0 million of mortgage-back securities from available-for-sale to held-to-maturity.  On the date of transfer, the transferred securities had an amortized cost of $74.2 million and an unrealized loss of $6.2 million.  The unrealized loss on the transferred securities continues to be recognized as a component of accumulated other comprehensive loss within the Company's consolidated stockholder's equity (net of income tax benefit) and will be amortized over the remaining life of the securities using the effective interest method.  During the period of September 1, 2013 through September 30, 2013, amortization of this unrealized loss totaled $68 thousand.

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OTHER-THAN-TEMPORARILY IMPAIRED SECURITIES

Management assesses whether the Company intends to sell or it is more-likely-than-not that the Company will be required to sell a security before recovery of its amortized cost basis less any current-period credit losses. For debt securities that are considered other-than-temporarily impaired and that the Company does not intend to sell and will not be required to sell prior to recovery of the amortized cost basis, the Company separates the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security's amortized cost basis and the present value of its expected future cash flows. The remaining difference between the security's fair value and the present value of future expected cash flows is due to factors that are not credit related and is recognized in other comprehensive income.

The present value of expected future cash flows is determined using the best-estimate cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best-estimate cash flows vary depending on the type of security. The asset-backed securities cash flow estimates are based on bond specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds, and structural support, including subordination and guarantees.

The Company has a process in place to identify debt securities that could potentially have a credit or interest-rate related impairment that is other-than-temporary. This process involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts, and cash flow projections as indicators of credit issues. On a quarterly basis, management reviews all securities to determine whether an other-than-temporary decline in value exists and whether losses should be recognized. Management considers relevant facts and circumstances in evaluating whether a credit or interest rate-related impairment of a security is other-than-temporary. Relevant facts and circumstances considered include: (a) the extent and length of time the fair value has been below cost; (b) the reasons for the decline in value; (c) the financial position and access to capital of the issuer, including the current and future impact of any specific events; and (d) for fixed maturity securities, the Company's intent to sell a security or whether it is more-likely-than-not the Company will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity and for equity securities, the Company's ability and intent to hold the security for a period of time that allows for the recovery in value.

The Company has not recorded impairment charges through income on securities for the three or nine months ended September 30, 2013 or the year ended December 31, 2012.

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TEMPORARILY IMPAIRED SECURITIES

The following table shows the gross unrealized losses and fair value of the Company's investments with unrealized losses that are deemed to be temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of the dates indicated. The Company had no held-to-maturity securities with unrealized losses at December 31, 2012.

	September 30, 2013
	Less Than Twelve Months						More Than Twelve Months						Total
	Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Number of Securities
	(in thousands)
Securities Available-for-Sale
Debt securities:
Obligations of U.S. Government agencies		$	378		$	4,454		$	0		$	0		$	378		$	4,454		1
Obligations of state and political subdivisions			4,251			40,686			138			1,944			4,389			42,630		83
Mortgage-backed securities			2,863			84,487			614			9,282			3,477			93,769		12
Corporate bonds			24			1,175			2			98			26			1,273		10
Total securities available-for-sale		$	7,516		$	130,802		$	754		$	11,324		$	8,270		$	142,126		106
Securities Held-to-Maturity
Obligations of U.S. Government agencies		$	5		$	95		$	0		$	0		$	5		$	95		1
Obligations of state and political subdivisions			716			20,635			0			0			716			20,635		42
Total securities held-to-maturity		$	43		$	20,730		$	0		$	0		$	721		$	20,730		43

	December 31, 2012
	Less Than Twelve Months						More Than Twelve Months						Total
	Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Number of Securities
	(in thousands)
Securities Available-for-Sale
Debt securities:
Obligations of U. S. Government agencies		$	13		$	5,103		$	0		$	0		$	13		$	5,103		1
Obligations of state and political subdivisions			214			9,535			0			0			214			9,535		24
Mortgage-backed securities			743			104,066			0			0			743			104,066		9
Corporate bonds and other securities			2			700			0			0			2			700		2
Total securities available-for-sale		$	972		$	119,404		$	0		$	0		$	972		$	119,404		36

Certain investments within the Company's portfolio had unrealized losses at September 30, 2013 and December 31, 2012, as shown in the tables above. The unrealized losses were caused by increases in market interest rates. Because the Company does not intend to sell the investments and management believes it is unlikely that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider the investments to be other-than-temporarily impaired at September 30, 2013 or December 31, 2012.

- 9 -

Restricted Securities

The restricted security category is comprised of stock in the Federal Home Loan Bank of Atlanta (FHLB) and the Federal Reserve Bank (FRB). These stocks are classified as restricted securities because their ownership is restricted to certain types of entities and the securities lack a market. Therefore, FHLB and FRB stock is carried at cost and evaluated for impairment. When evaluating these stocks for impairment, their value is determined based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. Restricted stock is viewed as a long-term investment and management believes that the Company has the ability and the intent to hold this stock until its value is recovered.

Note 3. Loans and the Allowance for Loan Losses

The following is a summary of the balances in each class of the Company's loan portfolio as of the dates indicated:

	September 30, 2013		December 31, 2012
Mortgage loans on real estate:
Residential 1-4 family	$	81,982	$	77,267
Commercial		285,811		274,613
Construction		12,624		12,005
Second mortgages		12,976		14,315
Equity lines of credit		31,155		32,327
Total mortgage loans on real estate		424,548		410,527
Commercial loans		29,880		25,341
Consumer loans		10,260		13,146
Other		15,479		22,119
Total loans		480,167		471,133
Less: Allowance for loan losses		6,980		7,324
Loans, net of allowance and deferred fees	$	473,187	$	463,808

Overdrawn deposit accounts are reclassified as loans and included in the Other category in the table above. Overdrawn deposit accounts totaled $780 thousand and $1.6 million at September 30, 2013 and December 31, 2012, respectively.

CREDIT QUALITY INFORMATION

The Company uses internally-assigned risk grades to estimate the capability of borrowers to repay the contractual obligations of their loan agreements as scheduled or at all. The Company's internal risk grade system is based on experiences with similarly graded loans. Credit risk grades are updated at least quarterly as additional information becomes available, at which time management analyzes the resulting scores to track loan performance.

The Company's internally assigned risk grades are as follows:

· Pass: Loans are of acceptable risk.

· Other Assets Especially Mentioned (OAEM): Loans have potential weaknesses that deserve management's close attention.

· Substandard: Loans reflect significant deficiencies due to several adverse trends of a financial, economic or managerial nature.

· Doubtful: Loans have all the weaknesses inherent in a substandard loan with added characteristics that make collection or liquidation in full based on currently existing facts, conditions and values highly questionable or improbable.

· Loss: Loans have been charged off because they are considered uncollectible and of such little value that their continuance as bankable assets is not warranted.

- 10 -

The following table presents credit quality exposures by internally assigned risk ratings as of the dates indicated:

Credit Quality Information As of September 30, 2013
(in thousands)
	Pass		OAEM		Substandard		Total
Mortgage loans on real estate:
Residential 1-4 family	$	75,763	$	1,175	$	5,044	$	81,982
Commercial		271,020		6,245		8,546		285,811
Construction		9,916		162		2,546		12,624
Second mortgages		12,905		0		71		12,976
Equity lines of credit		30,679		0		476		31,155
Total mortgage loans on real estate		400,283		7,582		16,683		424,548
Commercial loans		28,750		110		1,020		29,880
Consumer loans		10,229		0		31		10,260
Other		15,479		0		0		15,479
Total	$	454,741	$	7,692	$	17,734	$	480,167

Credit Quality Information As of December 31, 2012
(in thousands)
	Pass		OAEM		Substandard		Total
Mortgage loans on real estate:
Residential 1-4 family	$	70,961	$	1,711	$	4,595	$	77,267
Commercial		258,195		6,781		9,637		274,613
Construction		8,651		254		3,100		12,005
Second mortgages		13,488		242		585		14,315
Equity lines of credit		31,704		239		384		32,327
Total mortgage loans on real estate		382,999		9,227		18,301		410,527
Commercial loans		23,997		209		1,135		25,341
Consumer loans		13,042		0		104		13,146
Other		22,119		0		0		22,119
Total	$	442,157	$	9,436	$	19,540	$	471,133

As of September 30, 2013 and December 31, 2012 the Company did not have any loans internally classified as Loss or Doubtful.

- 11 -

AGE ANALYSIS OF PAST DUE LOANS BY CLASS

All classes of loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Interest and fees continue to accrue on past due loans until the date the loan is placed in nonaccrual status, if applicable. The following table includes an aging analysis of the recorded investment in past due loans as of the dates indicated. Also included in the table below are loans that are 90 days or more past due as to interest and principal and still accruing interest, because they are well-secured and in the process of collection. Loans in nonaccrual status that are also past due are included in the aging categories in the table below.

Age Analysis of Past Due Loans as of September 30, 2013
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Total Current Loans (1)		Total Loans		Recorded Investment > 90 Days Past Due and Accruing
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	649	$	174	$	4,098	$	4,921	$	77,061	$	81,982	$	0
Commercial		1,263		0		2,608		3,871		281,940		285,811		0
Construction		0		402		2,545		2,947		9,677		12,624		0
Second mortgages		29		0		0		29		12,947		12,976		0
Equity lines of credit		121		0		0		121		31,034		31,155		0
Total mortgage loans on real estate		2,062		576		9,251		11,889		412,659		424,548		0
Commercial loans		35		1,025		0		1,060		28,820		29,880		0
Consumer loans		55		24		13		92		10,168		10,260		13
Other		62		17		5		84		15,395		15,479		5
Total	$	2,214	$	1,642	$	9,269	$	13,125	$	467,042	$	480,167	$	18

(1) For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

Age Analysis of Past Due Loans as of December 31, 2012
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Total Current Loans (1)		Total Loans		Recorded Investment > 90 Days Past Due and Accruing
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	1,115	$	0	$	3,783	$	4,898	$	72,369	$	77,267	$	348
Commercial		207		0		724		931		273,682		274,613		0
Construction		140		0		2,925		3,065		8,940		12,005		0
Second mortgages		113		0		544		657		13,658		14,315		60
Equity lines of credit		90		0		287		377		31,950		32,327		0
Total mortgage loans on real estate		1,665		0		8,263		9,928		400,599		410,527		408
Commercial loans		275		13		122		410		24,931		25,341		25
Consumer loans		85		22		11		118		13,028		13,146		11
Other		54		7		3		64		22,055		22,119		3
Total	$	2,079	$	42	$	8,399	$	10,520	$	460,613	$	471,133	$	447

(1) For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

- 12 -

NONACCRUAL LOANS

The Company generally places non-consumer loans in nonaccrual status when the full and timely collection of interest or principal becomes uncertain, part of the principal balance has been charged off and no restructuring has occurred or the loan reaches 90 days past due, unless the credit is well-secured and in the process of collection. Under regulatory rules, consumer loans, which are loans to individuals for household, family and other personal expenditures, and loans secured by 1-4 family residential properties are not required to be placed in nonaccrual status. Although consumer loans and loans secured by 1-4 family residential property are not required to be placed in nonaccrual status, the Company may place a consumer loan or loan secured by 1-4 family residential property in nonaccrual status, if necessary to avoid a material overstatement of interest income.

Generally, consumer loans not secured by real estate are placed in nonaccrual status only when part of the principal has been charged off. These loans are charged off or written down to the net realizable value of the collateral when deemed uncollectible, due to bankruptcy or other factors, or when they are past due based on loan product, industry practice, terms and other factors.

When management places a loan in nonaccrual status, the accrued unpaid interest receivable is reversed against interest income and the loan is accounted for by the cash or cost recovery method, until it qualifies for return to accrual status or is charged off. Generally, management returns a loan to accrual status if (a) all delinquent interest and principal payments become current under the terms of the loan agreement or (b) the loan is both well-secured and in the process of collection and collectability is no longer doubtful.

The following table presents loans in nonaccrual status by class of loan as of the dates indicated:

Nonaccrual Loans by Class
	September 30, 2013		December 31, 2012
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	4,350	$	3,663
Commercial		3,005		3,037
Construction		2,546		3,065
Second mortgages		0		484
Equity lines of credit		0		286
Total mortgage loans on real estate		9,901		10,535
Commercial loans		0		97
Consumer loans		0		0
Total	$	9,901	$	10,632

The following table presents the interest income that the Company would have earned under the original terms of its nonaccrual loans and the actual interest recorded by the Company on nonaccrual loans for the periods presented:

	Nine Months Ended September 30,
	2013			2012
	(in thousands)
Interest income that would have been recorded under original loan terms		$	482	$	823
Actual interest income recorded for the period			95		235
Reduction in interest income on nonaccrual loans		$	387	$	588

TROUBLED DEBT RESTRUCTURINGS

The Company's loan portfolio includes certain loans that have been modified in a troubled debt restructuring (TDR), where economic concessions have been granted to borrowers who are experiencing financial difficulties. These concessions typically result from the Company's loss mitigation activities and could include reduction in the interest rate below current market rates for borrowers with similar risk profiles, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. The Company defines a TDR as nonperforming if the TDR is in nonaccrual status or is 90 days or more past due and still accruing interest at the report date.

- 13 -

When the Company modifies a loan, management evaluates any possible impairment as discussed further under Impaired Loans below.

The following table presents TDRs during the period indicated, by class of loan:

Troubled Debt Restructurings by Class For the Three Months Ended September 30, 2013
(dollars in thousands)
	Number of Modifications		Recorded Investment Prior to Modification			Recorded Investment After Modification			Current Investment on September 30, 2013
Mortgage loans on real estate:
Residential 1-4 family		3		$	488		$	488		$	487

Troubled Debt Restructuings by Class For the Three Months Ended September 30, 2012
(dollars in thousands)
	Number of Modifications		Recorded Investment Prior to Modification			Recorded Investment After Modification			Current Investment on September 30, 2012
Mortgage loans on real estate:
Residential 1-4 family		1		$	93		$	87		$	71
Commercial		1			467			467			425
Total		2		$	560		$	554		$	496

Troubled Debt Restructurings by Class For the Nine Months Ended September 30, 2013
(dollars in thousands)
	Number of Modifications		Recorded Investment Prior to Modification			Recorded Investment After Modification			Current Investment on September 30, 2013
Mortgage loans on real estate:
Residential 1-4 family		6		$	1,164		$	1,164		$	1,158
Commercial		1			207			207			200
Total		7		$	1,371		$	1,371		$	1,358

Troubled Debt Restructurings by Class For the Nine Months Ended September 30, 2012
(dollars in thousands)
	Number of Modifications		Recorded Investment Prior to Modification			Recorded Investment After Modification			Current Investment on September 30, 2012
Mortgage loans on real estate:
Residential 1-4 family		1		$	93		$	87		$	72
Commercial		3			3,486			2,928			2,782
Second mortgages		1			111			145			139
Total		5		$	3,690		$	3,160		$	2,993

The seven loans restructured in the first nine months of 2013 were all given below-market rates for debt with similar risk characteristics. During the first nine months of 2012, three restructurings were given principal reductions totaling $530 thousand; one of the three loans given principal reductions was also given a below-market rate for debt with similar risk characteristics; and two loans were given below-market rates but were not given principal reductions.

- 14 -

The following table presents TDRs for the three and nine months ended September 30, 2013 for which there was a payment default where the default occurred within twelve months of restructuring.

Restructurings that Subsequently Defaulted
As of September 30, 2013
(in thousands)
	Recorded Investment in Defaulting Loans
Mortgage loans on real estate
Residential 1 - 4 family		$	79,000
Commercial			1,829,000
Total		$	1,908,000

During the three and nine months ended September 30, 2012, there were no TDRs for which there was a payment default where the default occurred within twelve months of restructuring.  A TDR is considered in default when it is 90 days or more past due or has been charged off.

The TDRs in the tables above are factored into the determination of the allowance for loan losses as of the periods indicated. These loans are included in the impaired loan analysis, as discussed below.

IMPAIRED LOANS

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming commercial loans and loans modified in a TDR. When management identifies a loan as impaired, the impairment is measured based on the present value of expected future cash flows, discounted at the loan's effective interest rate, except when the sole or remaining source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs, when foreclosure is probable, instead of the discounted cash flows. If management determines that the value of the impaired loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance.

When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is in nonaccrual status, all payments are applied to principal under the cost-recovery method. For financial statement purposes, the recorded investment in the loan is the actual principal balance reduced by payments that would otherwise have been applied to interest. When reporting information on these loans to the applicable customers, the unpaid principal balance is reported as if payments were applied to principal and interest under the original terms of the loan agreements. Therefore, the unpaid principal balance reported to the customer would be higher than the recorded investment in the loan for financial statement purposes. When the ultimate collectability of the total principal of the impaired loan is not in doubt and the loan is in nonaccrual status, contractual interest is credited to interest income when received under the cash-basis method.

- 15 -

The following table includes the recorded investment and unpaid principal balances (a portion of which may have been charged off) for impaired loans with the associated allowance amount, if applicable, as of the dates presented. Also presented are the average recorded investments in the impaired loans and the related amount of interest recognized for the periods presented. The average balances are calculated based on daily average balances.

Impaired Loans by Class (in thousands)
	As of September 30, 2013											For the nine months ended September 30, 2013
			Recorded Investment
	Unpaid Principal Balance		Without Valuation Allowance			With Valuation Allowance			Associated Allowance			Average Recorded Investment			Interest Income Recognized
Mortgage loans on real estate:
Residential 1-4 family	$	5,943		$	1,443		$	4,236		$	1,065		$	5,053		$	71
Commercial		12,563			3,472			6,156			571			10,414			317
Construction		3,305			0			2,546			149			2,880			0
Second mortgages		147			7			135			135			546			5
Equity lines of credit		0			0			0			0			193			0
Total mortgage loans on real estate	$	21,958		$	4,922		$	13,073		$	1,920		$	19,086		$	393
Commercial loans		0			0			0			0			8			0
Consumer loans		16			0			16			0			17			1
Total	$	21,974		$	4,922		$	13,089		$	1,920		$	19,111		$	394

Impaired Loans by Class (in thousands)
	As of December 31, 2012											For the year ended December 31, 2012
			Recorded Investment
	Unpaid Principal Balance		Without Valuation Allowance			With Valuation Allowance			Associated Allowance			Average Recorded Investment			Interest Income Recognized
Mortgage loans on real estate:
Residential 1-4 family	$	4,100		$	681		$	3,235		$	226		$	2,354		$	136
Commercial		12,459			3,741			5,817			180			10,151			242
Construction		3,782			3,064			0			0			3,320			(9	)
Second mortgages		695			583			47			5			542			12
Equity lines of credit		370			286			0			0			391			(2	)
Total mortgage loans on real estate	$	21,406		$	8,355		$	9,099		$	411		$	16,758		$	379
Commercial loans		117			0			97			33			104			(14	)
Consumer loans		17			17			0			0			26			1
Total	$	21,540		$	8,372		$	9,196		$	444		$	16,888		$	366

MONITORING OF LOANS AND EFFECT OF MONITORING FOR THE ALLOWANCE FOR LOAN LOSSES

Loan officers are responsible for continual portfolio analysis and prompt identification and reporting of problem loans, which includes assigning a risk grade to each applicable loan at its origination and revising such grade as the situation dictates. Loan officers maintain frequent contact with borrowers, which should enable the loan officer to identify potential problems before other personnel. In addition, meetings with loan officers and upper management are held to discuss problem loans and review risk grades. Nonetheless, in order to avoid over-reliance upon loan officers for problem loan identification, the Company's loan review system provides for review of loans and risk grades by individuals who are independent of the loan approval process. Risk grades and historical loss rates by risk grades are used as a component of the calculation of the allowance for loan losses.

- 16 -

ALLOWANCE FOR LOAN LOSSES

Management has an established methodology to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. Prior to the September 30, 2013 calculation of the allowance for loan losses, the Company segmented certain loans in the portfolio by product type according to internally established criteria. Beginning with the September 30, 2013 calculation, the Company segmented the loans in the portfolio by the categories defined by Schedule RC-C of the Federal Financial Institutions Examination Council Consolidated Reports of Condition and Income Form 041 (Call Report).  Management believes that using the Call Report categories to segment loans for this purpose results in increased efficiency and accuracy in the determination of the adequacy of the allowance for loan losses.  Loans were and continue to be segmented into the following pools: commercial, real estate-construction, real estate-mortgage, consumer and other loans. The Company also sub-segments the real estate-mortgage segment into four classes: residential 1-4 family, commercial real estate, second mortgages and equity lines of credit.  While the pools remain the same, management believes the use of the Call Report criteria to categorize loans within the pools results in loans being placed in the pool that most closely reflects each loan's risk profile.

The Company uses an internally developed risk evaluation model in the estimation of the credit risk process. The model and assumptions used to determine the allowance are independently validated and reviewed to ensure that the theoretical foundation, assumptions, data integrity, computational processes and reporting practices are appropriate and properly documented.

The use of the Call Report categories did not result in any change to the segments' risk characteristics. Each portfolio segment has risk characteristics as follows:

· Commercial: Commercial loans carry risks associated with the successful operation of a business or project, in addition to other risks associated with the ownership of a business. The repayment of these loans may be dependent upon the profitability and cash flows of the business. In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time and cannot be appraised with as much precision.

· Real estate-construction: Construction loans carry risks that the project will not be finished according to schedule, the project will not be finished according to budget and the value of the collateral may at any point in time be less than the principal amount of the loan. Construction loans also bear the risk that the general contractor, who may or may not be the loan customer, may be unable to finish the construction project as planned because of financial pressure unrelated to the project.

· Real estate-mortgage: Residential mortgage loans and equity lines of credit carry risks associated with the continued credit-worthiness of the borrower and changes in the value of the collateral. Commercial real estate loans carry risks associated with the successful operation of a business if owner occupied. If non-owner occupied, the repayment of these loans may be dependent upon the profitability and cash flow from rent receipts.

· Consumer loans: Consumer loans carry risks associated with the continued credit-worthiness of the borrowers and the value of the collateral. Consumer loans are more likely than real estate loans to be immediately adversely affected by job loss, divorce, illness or personal bankruptcy.

· Other loans: Other loans are loans to mortgage companies, loans for purchasing or carrying securities, and loans to insurance, investment and finance companies. These loans carry risks associated with the successful operation of a business. In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time, depend on interest rates or fluctuate in active trading markets.

Prior to September 30, 2013, management pooled each segment by risk grade and applied a historical loss percentage to determine the balance of the allowance account for each segment of the loan portfolio. Beginning with the calculation for September 30, 2013, the Company converted the analysis of the adequacy of the allowance for loan loss to a software program that uses migration analysis on pooled segments by risk grade or by days past due.  Loans not secured by real estate and made to individuals for household, family and other personal expenditures are segmented into pools based on days past due, while all other loans, including loans to consumers that are secured by real estate, are segmented by risk grades.  The migration analysis applied to all pools is able to track the risk grading and historical performance of individual loans throughout an eight-quarter period, which provides management with more information regarding trends (or migrations) in a particular loan segment. Management believes the additional information provided by the migration analysis results in more accurate historical loss information.

THE COMPANY'S ESTIMATION PROCESS

Loans are either individually evaluated for impairment or pooled with like loans and collectively evaluated for impairment. Also, various qualitative factors are applied to each segment of the loan portfolio. The allowance for loan losses is the accumulation of these components. Management's estimate is based on certain observable, historical data that management believes are most reflective of the underlying credit losses being estimated.

- 17 -

Management provides an allocated component of the allowance for loans that are individually evaluated for impairment. An allocated allowance is established when the discounted value of future cash flows from the impaired loan (or the collateral value or observable market price of the impaired loan) is lower than the carrying value of that loan. This allocation represents the sum of management's estimated losses on each loan.

Loans collectively evaluated for impairment are pooled, with a historical loss rate applied to each pool.  This historical loss rate at September 30, 2013 was based on a migration analysis of the portfolio over the previous eight quarters.  At December 31, 2012, the historical loss percentage was based on losses sustained in each segment of the portfolio over the previous eight quarters. See the discussion of changes in accounting methodology below for additional explanation.

Based on credit risk assessments and management's analysis of qualitative factors, additional loss factors are applied to loan balances. These additional qualitative factors include: economic conditions, trends in growth, loan concentrations, changes in certain loans, changes in underwriting, changes in management and changes in the legal and regulatory environment.

ALLOWANCE FOR LOAN LOSSES BY SEGMENT

The total allowance reflects management's estimate of loan losses inherent in the loan portfolio at the balance sheet date. The Company considers the allowance for loan losses of $7.0 million adequate to cover loan losses inherent in the loan portfolio at September 30, 2013.

The following table presents, by portfolio segment, the changes in the allowance for loan losses and the recorded investment in loans for the periods presented. 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 AND RECORDED INVESTMENT IN LOANS
(in thousands)
For the Nine Months Ended September 30, 2013	Commercial			Real Estate - Construction			Real Estate - Mortgage			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	677		$	187		$	6,179		$	204		$	77		$	7,324
Charge-offs		(120	)		(99	)		(1,037	)		(83	)		(123	)		(1,462	)
Recoveries		67			4			137			60			50			318
Provision for loan losses		(368	)		516			504			(13	)		161			800
Ending balance	$	256		$	608		$	5,783		$	168		$	165		$	6,980
Ending balance individually evaluated for impairment	$	0		$	149		$	1,771		$	0		$	0		$	1,920
Ending balance collectively evaluated for impairment		256			459			4,012			168			165			5,060
Ending balance	$	256		$	608		$	5,783		$	168		$	165		$	6,980
Loan Balances:
Ending balance individually evaluated for impairment	$	0		$	2,546		$	15,449		$	16		$	0		$	18,011
Ending balance collectively evaluated for impairment		29,880			10,078			396,475			10,244			15,479			462,156
Ending balance	$	29,880		$	12,624		$	411,924		$	10,260		$	15,479		$	480,167

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For the Year Ended December 31, 2012	Commercial			Real Estate - Construction			Real Estate - Mortgage			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	1,011		$	323		$	6,735		$	300		$	129		$	8,498
Charge-offs		(138	)		(831	)		(2,554	)		(259	)		(187	)		(3,969	)
Recoveries		67			30			162			70			66			395
Provision for loan losses		(263	)		665			1,836			93			69			2,400
Ending balance	$	677		$	187		$	6,179		$	204		$	77		$	7,324
Ending balance individually evaluated for impairment	$	33		$	0		$	411		$	0		$	0		$	444
Ending balance collectively evaluated for impairment		644			187			5,768			204			77			6,880
Ending balance	$	677		$	187		$	6,179		$	204		$	77		$	7,324
Loan Balances:
Ending balance individually evaluated for impairment	$	97		$	3,064		$	14,390		$	17		$	0		$	17,568
Ending balance collectively evaluated for impairment		25,244			8,941			384,132			13,129			22,119			453,565
Ending balance	$	25,341		$	12,005		$	398,522		$	13,146		$	22,119		$	471,133

CHANGES IN ACCOUNTING METHODOLOGY

On September 30, 2013, the Company converted the analysis of the adequacy of the allowance for loan loss from a manual input process using Excel spreadsheets to a more automated process using information downloaded from the loan subsystem to a software program. The program streamlines reserve estimation with a consistent and defensible methodology, automates a cumbersome, manual process to allow more time for analysis, and minimizes the risk of human error which ensures better and more accurate calculations. The automation is primarily used to input and aggregate information and to provide the analysis regarding migration trends.  It enhances but does not replace management's subjective analysis of historical loss rates, credit risk and qualitative factors.

The change in the calculation is in the method by which the historic loss on balances collectively evaluated for impairment is determined. Prior to September 30, 2013, management pooled each segment by risk grade and applied a historical loss percentage to determine the balance of the allowance account for each segment of the loan portfolio. Beginning with the September 30, 2013 calculation, the Company uses migration analysis on pooled segments by risk grade or by days past due.  In addition, the collectively evaluated impairment pools were based on internally defined product types under the previous method.  Beginning with the September 30, 2013, calculation, the collectively evaluated impairment pools are categorized using federal Call Report definitions.

Under the previous method, the pass loan pool actual loss experience was 0% but this experience was given an override in a very conservative manner by using the loss experience for the entire loan portfolio for the average of the past eight quarters.  This method was considered extremely conservative as it included the historical loss experience for the riskier OAEM and Substandard rated credits which were already accounted for in their own allocations.  Under the current method, which uses migration analysis, an override is no longer needed because migration analysis tracks the movement of loans through the various loan classifications in order to estimate the percentage of losses likely to be incurred in the Company's current portfolio.

The following table represents the effect on the loan loss provision for the nine months ended September 30, 2013 as a result of the changes to the methodology from that used in prior periods.

	Calculated Provision Based on Current Quarter Methodology			Calculated Provision Based on Prior Quarter Methodology			Difference
	(in thousands)
Portfolio Segment:
Commercial	$	(368	)	$	(346	)	$	(22	)
Real estate - construction		516			371			145
Real estate - mortgage		504			859			(355	)
Consumer loans		(13	)		(64	)		51
Other		161			36			125
Total	$	800		$	856		$	(56	)

- 19 -

Under the previous method, the provisions for real estate – construction and real estate – mortgage were calculated on the same pool of loans, with loss rates for that aggregated pool applied to the loan balances in those segments, even though the two segments have different risk characteristics and performance history.  Under the current method, the historical loss rate on construction loans is calculated separately from other real estate loans, providing a more precise estimate of the Company's true historical losses.

The other loans segment in the table above includes overdrafts on deposit accounts.  The new method allows management to perform a more granular analysis of overdrawn accounts.

Note 4. Share-Based Compensation

Share-based compensation arrangements include stock options, restricted stock awards, performance-based awards, stock appreciation rights and employee stock purchase plans. Accounting standards require all share-based payments to employees to be valued using a fair value method on the date of grant and to be expensed based on that fair value over the applicable vesting period.

Historically, the Company has only granted share-based compensation in the form of stock options. There were no options granted in the first nine months of 2013.

On March 9, 2008, the Company's 1998 Stock Option Plan expired. Options to purchase 154,460 shares of common stock were outstanding under the Company's 1998 Stock Option Plan at September 30, 2013. The exercise price of each option equals the market price of the Company's common stock on the date of the grant and each option's maximum term is ten years.

Stock option activity for the nine months ended September 30, 2013 is summarized below:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Options outstanding, January 1, 2013		156,960		$	22
Granted		0			0
Exercised		0			0
Canceled or expired		(2,500	)		22
Options outstanding, September 30, 2013		154,460		$	22		2.71		$	0
Options exercisable, September 30, 2013		154,460		$	22		2.71		$	0

The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on September 30, 2013. This amount changes based on changes in the market value of the Company's common stock. As of September 30, 2013, the outstanding options had no intrinsic value because the exercise prices of all outstanding options were above the market value of a share of the Company's common stock.

No options were exercised during the nine months ended September 30, 2013.

As of September 30, 2013, all outstanding stock options were fully vested and there was no unrecognized stock-based compensation expense.

- 20 -

Note 5. Pension Plan

The Company provides pension benefits for eligible participants through a non-contributory defined benefit pension plan. The plan was frozen effective September 30, 2006; therefore, no additional participants will be added to the plan. The components of net periodic pension plan cost are as follows for the periods indicated:

Three months ended September 30,	2013			2012
	Pension Benefits
Interest cost	$	63,178		$	72,889
Expected return on plan assets		(87,165	)		(82,743	)
Loss related to early retirement plan		0			291,829
Amortization of net loss		76,771			84,330
Net periodic pension plan cost	$	52,784		$	366,305
Nine months ended September 30,		2013			2012
Interest cost	$	189,144		$	216,389
Expected return on plan assets		(263,963	)		(277,743	)
Loss related to early retirement plan		0			291,829
Amortization of net loss		225,819			196,830
Net periodic pension plan cost	$	151,000		$	427,305

At September 30, 2013, management had not yet determined the amount, if any, that the Company will contribute to the plan in the year ending December 31, 2013.

Note 6. Stockholders' Equity and Earnings per Share

STOCKHOLDERS' EQUITY – OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents information on amounts reclassified out of accumulated other comprehensive income (loss), by category, during the periods indicated:

	Three Months Ended September 30,							Nine Months Ended September 30,							Affected Line Item on
	2013				2012			2013				2012			Consolidated Statement of Income
Available-for-sale securities
Realized gains (losses) on sales of securities		$	(5	)		$	620		$	(26	)		$	1,704	Gain (loss) on sale of available-for-sale securities, net
Tax effect			(2	)			211			(9	)			579	Income tax expense
		$	(3	)		$	409		$	(17	)		$	1,125	Net of tax

The following table presents the changes in accumulated other comprehensive income (loss), by category, net of tax, for the periods indicated:

	Unrealized Gains (Losses) on Securities				Unrealized Losses on Securities Transferred to Held-to-Maturity				Defined Benefit Pension Plans				Accumulated Other Comprehensive Loss
	(in thousands)
Nine Months Ended September 30, 2013
Balance at beginning of period		$	1,992			$	0			$	(2,184	)		$	0
Net change for the period			(7,235	)			(4,068	)			0				(11	)
Balance at end of period		$	(5,243	)		$	(4,068	)		$	(2,184	)		$	(11	)

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	Unrealized Gains (Losses) on Securities		Unrealized Losses on Securities Transferred to Held-to-Maturity			Defined Benefit Pension Plans				Accumulated Other Comprehensive Loss
			(in thousands)
Nine Months Ended September 30, 2012
Balance at beginning of period	$	1,525		$	0		$	(1,875	)		$	(1,875	)
Net change for the period		2,403			0		$	0				0
Balance at end of period	$	3,928		$	0			(1,875	)		$	2

The following table presents the change in each component of other comprehensive income (loss) on a pre-tax and after-tax basis for the periods indicated.

	Nine Months Ended September 30, 2013
	Pretax			Tax Expense (Benefit)			Net-of-Tax
	(in thousands)
Unrealized losses on securities
Unrealized holding losses arising during the period	$	(10,988	)	$	(3,736	)	$	(7,252	)
Less reclassification adjustment for losses recognized in income		(26	)		(9	)		(17	)
Net unrealized losses on securities		(10,962	)		(3,727	)		(7,235	)
Market adjustment on securities transferred to held-to-maturity
Unrealized loss transferred		(6,232	)		(2,119	)		(4,113	)
Amortization		68			23			45
Net effect of market adjustment on securities transferred to held-to-maturity		(6,164	)		(2,096	)		(4,068	)
Total decrease in other comprehensive loss	$	(17,126	)	$	(5,823	)	$	(11,303	)

- 22 -

	Nine Months Ended September 30, 2012
	Pretax			Tax Expense (Benefit)			Net-of-Tax
	(in thousands)
Unrealized gains on securities
Unrealized holding gains arising during the period		$	5,345		$	1,817		$	3,528
Less reclassification adjustment for gains recognized in income			1,704			579			1,125
Net unrealized gains on securities			3,641			1,238			2,403,000
Total increase in other comprehensive loss		$	3,641		$	1,238		$	2,403

EARNINGS PER COMMON SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares outstanding during the period, including the effect of dilutive potential common shares attributable to outstanding stock options.

The Company did not include an average of 155 thousand potential common shares attributable to outstanding stock options in the diluted earnings per share calculation for the first nine months of 2013 because they were antidilutive.

Note 7. Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income." The amendments in this ASU require an entity to present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income. In addition, the amendments require a cross-reference to other disclosures currently required for other reclassification items to be reclassified directly to net income in their entirety in the same reporting period. Public companies should apply these amendments for fiscal years, and interim periods within those years, beginning on or after December 15, 2012. The Company has included the required disclosures from ASU 2013-02 in its consolidated financial statements.

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In July 2013, the FASB issued ASU 2013-11, "Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists."   The amendments in this ASU provide guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, similar tax loss, or tax credit carryforward exists.  An unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. 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.  The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013.  Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted.  The adoption of the new guidance did not have a material impact on the Company's consolidated financial statements.

Note 8. Fair Value Measurements

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with the "Fair Value Measurements and Disclosures" topics of FASB ASU 2010-06 and FASB ASU 2011-04, the fair value of a financial instrument is the price that would be received in the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimate of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value can be a reasonable point within a range that is most representative of fair value under current market conditions.

In estimating the fair value of assets and liabilities, the Company relies mainly on two models. The first model, used by the Company's bond accounting company, determines the fair value of securities. Securities are priced based on an evaluation of observable market data, including benchmark yield curves, reported trades, broker/dealer quotes, and issuer spreads. Pricing is also impacted by credit information about the issuer, perceived market movements, and current news events impacting the individual sectors. For assets other than securities and for all liabilities, fair value is determined using the Company's asset/liability modeling software. The software uses current yields, anticipated yield changes, and estimated duration of assets and liabilities to calculate fair value.

In accordance with ASC 820, "Fair Value Measurements and Disclosures," the Company groups its financial assets and financial liabilities generally measured at fair value into three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

- 24 -

Level 2 – Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.

An instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS

Debt and equity securities with readily determinable fair values that are classified as "available-for-sale" are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. Securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that consider observable market data (Level 2). In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. Currently, all of the Company's available-for-sale securities are considered to be Level 2 securities.

The following table presents the balances of certain assets measured at fair value on a recurring basis as of the dates indicated:

				Fair Value Measurements at September 30, 2013 Using
				(in thousands)
Description	Balance			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Available-for-sale securities
Obligations of  U.S. Government agencies		$	15,064		$	0		$	15,064		$	0
Obligations of state and political subdivisions			47,050			0			47,050			0
Mortgage-backed securities			93,768			0			93,768			0
Money market investments			892			0			892			0
Corporate bonds			1,373			0			1,373			0
Total available-for-sale securities		$	158,147		$	0		$	158,147		$	0

- 25 -

				Fair Value Measurements at December 31, 2012 Using
				(in thousands)
Description	Balance			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Available-for-sale securities
Obligations of  U.S. Government agencies		$	37,088		$	0		$	37,088		$	0
Obligations of state and political subdivisions			43,774			0			43,774			0
Mortgage-backed securities			247,355			0			247,355			0
Money market investments			541			0			541			0
Corporate bonds			698			0			698			0
Total available-for-sale securities		$	329,456		$	0		$	329,456		$	0

ASSETS MEASURED AT FAIR VALUE ON A NONRECURRING BASIS

Under certain circumstances, adjustments are made to the fair value for assets and liabilities although they are not measured at fair value on an ongoing basis.

Impaired loans

Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected. The measurement of fair value and loss associated with impaired loans can be based on the observable market price of the loan, the fair value of the collateral securing the loan, or the present value of the loan's expected future cash flows. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable, with the vast majority of the collateral in real estate.

The value of real estate collateral is determined utilizing an income, market, or cost valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Company. In the case of loans with lower balances, the Company may obtain a real estate evaluation instead of an appraisal. Evaluations utilize many of the same techniques as appraisals, and are typically performed by independent appraisers. Once received, appraisals and evaluations are reviewed by trained staff independent of the lending function to verify consistency and reasonability. Appraisals and evaluations are based on significant unobservable inputs, including but not limited to: adjustments made to comparable properties, judgments about the condition of the subject property, the availability and suitability of comparable properties, capitalization rates, projected income of the subject or comparable properties, vacancy rates, projected depreciation rates, and the state of the local and regional economy. The Company may also elect to make additional reductions in the collateral value based on management's best judgment, which represents another source of unobservable inputs. Because of the subjective nature of collateral valuation, impaired loans are considered Level 3.

Impaired loans may be secured by collateral other than real estate. The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business' financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivable collateral are based on financial statement balances or aging reports (Level 3). If a loan is not collateral-dependent, its impairment may be measured based on the present value of expected future cash flows, discounted at the loan's effective interest rate. Because the loan is discounted at its effective rate of interest, rather than at a market rate, the loan is not considered to be held at fair value and is not included in the tables below. Collateral-dependent impaired loans allocated to the allowance for loan losses are measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as part of the provision for loan losses on the Consolidated Statements of Income.

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Other Real Estate Owned (OREO)

Loans are transferred to OREO when the collateral securing them is foreclosed on. The measurement of loss associated with OREOs is based on the fair value of the collateral compared to the unpaid loan balance and anticipated costs to sell the property. If there is a contract for the sale of a property, and management reasonably believes the transaction will be consummated in accordance with the terms of the contract, fair value is based on the sale price in that contract (Level 1). If management has recent information about the sale of identical properties, such as when selling multiple condominium units on the same property, the remaining units would be valued based on the observed market data (Level 2). Lacking either a contract or such recent data, management would obtain an appraisal or evaluation of the value of the collateral as discussed above under Impaired Loans (Level 3). After the asset has been booked, a new appraisal or evaluation is obtained when management has reason to believe the fair value of the property may have changed and no later than two years after the last appraisal or evaluation was received. Any fair value adjustments to OREOs below the original book value are recorded in the period incurred and expensed against current earnings.

The following table presents the assets carried on the consolidated balance sheets for which a nonrecurring change in fair value has been recorded. Assets are shown by class of loan and by level in the fair value hierarchy, as of the dates indicated. Certain impaired loans are valued by the present value of the loan's expected future cash flows, discounted at the interest rate of the loan rather than at a market rate. These loans are not carried on the consolidated balance sheets at fair value and, as such, are not included in the table below.

			Carrying Value at September 30, 2013 Using
			(in thousands)
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans
Mortgage loans on real estate:
Residential 1-4 family	$	3,001	$	0	$	0	$	3,001
Commercial		2,201		0		0		2,201
Construction		2,396		0		0		2,396
Total	$	7,598	$	0	$	0	$	7,598
Other real estate owned
Residential 1-4 family	$	216	$	0	$	0	$	216
Commercial		2,444		0		0		2,444
Construction		3,722		0		0		3,722
Total	$	6,382	$	0	$	0	$	6,382

- 27 -

			Carrying Value at December 31, 2012 Using
			(in thousands)
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans
Mortgage loans on real estate:
Residential 1-4 family	$	3,009	$	0	$	0	$	3,009
Commercial		2,271		0		0		2,271
Second mortgages		42		0		0		42
Total mortgage loans on real estate	$	5,322	$	0	$	0	$	5,322
Commercial loans		64		0		0		64
Total	$	5,386	$	0	$	0	$	5,386
Other real estate owned
Residential 1-4 family	$	676	$	0	$	0	$	676
Commercial		2,094		0		0		2,094
Construction		3,804		0		0		3,804
Total	$	6,574	$	0	$	0	$	6,574

The following table displays quantitative information about Level 3 Fair Value Measurements as of the date indicated:

			Quantitative Information About Level 3 Fair Value Measurements
Description	Fair Value at September 30, 2013 (in thousands)		Valuation Techniques	Unobservable Input	Range (Average)
Impaired loans
Residential 1-4 family real estate		3,001	Market comparables	Selling costs		13% - 14% (13%)
				Liquidation discount		6.50 %
Commercial real estate		2,201	Market comparables	Selling costs		5% - 14% (10%)
				Liquidation discount		10 %
Construction		2,396	Market comparables	Selling costs		10 %
				Liquidation discount		15.50 %
Other real estate owned
Residential 1-4 family		216	Market comparables	Selling costs		6% - 10% (6%)
Commercial		2,444	Market comparables	Selling costs		6% - 10% (6%)
Construction		3,722	Market comparables	Selling costs		6% - 10% (6%)

- 28 -

			Quantitative Information About Level 3 Fair Value Measurements
Description	Fair Value at December 31, 2012 (in thousands)		Valuation Techniques	Unobservable Input	Range (Average)
Impaired loans
Residential 1-4 family real estate		3,009	Market comparables	Differences in comparables		0% - 5% (5%)
				Selling costs		4.75% - 6% (6%)
Commercial real estate		2,271	Market comparables	Selling costs		0% - 6% (4%)
Second mortgages		42	Market comparables	Selling costs		6 %
Commercial loans		64	Market comparables	Differences in comparables		25 %
Other real estate owned
Residential 1-4 family		676	Market comparables	Selling costs		6% - 10% (6%)
Commercial		2,094	Market comparables	Selling costs		6% - 10% (6%)
Construction		3,804	Market comparables	Selling costs		6% - 10% (6%)

ASC 825, "Financial Instruments," requires disclosure about fair value of financial instruments for interim periods and excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company's assets.

The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:

CASH AND CASH EQUIVALENTS

The carrying amounts of cash and short-term instruments, including interest-bearing due from banks, approximate fair values.

RESTRICTED SECURITIES

The restricted security category is comprised of FHLB and Federal Reserve Bank stock. These stocks are classified as restricted securities because their ownership is restricted to certain types of entities and they lack a market. When the FHLB or Federal Reserve Bank repurchases stock, they repurchase at the stock's book value. Therefore, the carrying amounts of restricted securities approximate fair value.

LOANS RECEIVABLE

The fair value of a loan is based on its interest rate in relation to its risk profile, in comparison to what an investor could earn on a different investment with a similar risk profile. Variations in risk tolerance between lenders, and thus in risk pricing, can result in the same loan being priced differently at different institutions. A bank's experience with the type of lending (such as commercial real estate) can also impact its assessment of the riskiness of a loan. A comprehensive picture of competitors' rates in relation to borrower risk profiles is not available. Since the rate and risk profile are the primary factors in determining the fair value of a loan, both of which are unobservable in the market, the Company classifies loans as Level 3 in the fair value hierarchy. Instead, the Company uses a model which estimates market value based on the loan's interest rate (regardless of its risk level) and rates for debt of similar maturities where market data is available. Fair values for non-performing loans are estimated as described above.

- 29 -

BANK-OWNED LIFE INSURANCE

Bank-owned life insurance represents insurance policies on certain current and former officers of the Company. The cash value of the policies is estimated using information provided by the insurance carrier. The insurance carrier uses actuarial data to estimate the value of each policy, based on the age and health of the insured relative to other individuals about whom the carrier has information. Health information can be broken down into quantitative, observable inputs, such as smoking habits, blood pressure, and weight, which, along with the insured's age, can be compared to observable data the insurance carrier has available. The carrier can then estimate the cash value of each policy. Since the cash value represents the amount of cash the Company would receive when the policies are paid, the cash value closely approximates the fair value of the policies. Accordingly, bank-owned life insurance is classified as Level 2.

DEPOSIT LIABILITIES

The fair value of demand deposits, savings and certain money market deposits is the amount payable on demand at the reporting date. The fair value of certificates of deposits is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities. Information about the rates paid by other institutions for deposits of similar terms is readily available, and rates are mainly influenced by the term of the deposit itself. As a result, fair value calculations are based on observable inputs, and are classified as Level 2.

SHORT-TERM BORROWINGS

The carrying amounts of federal funds purchased, overnight repurchase agreements, and other short-term borrowings maturing within 90 days approximate their fair values. Since the contractual terms of these borrowings provide all information necessary to calculate the amounts that will be due at maturity, these liabilities are classified as Level 2.

LONG-TERM BORROWINGS

The fair values of the Company's long-term borrowings are estimated based on the current cost to repay the debt in full, discounted to current values and including any prepayment penalties that may apply. As the contractual terms of the borrowing provide all the necessary inputs for this calculation, long-term borrowings are classified as Level 2.

ACCRUED INTEREST

The calculation of accrued interest is based on readily observable information, such as the rate and term of the underlying asset or liability. Since these amounts are expected to be realized quickly (generally within 30 to 90 days), the carrying value approximates fair value and is classified as Level 2.

COMMITMENTS TO EXTEND CREDIT AND IRREVOCABLE LETTERS OF CREDIT

The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present credit-worthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date. At September 30, 2013 and December 31, 2012, the fair value of fees charged for loan commitments and irrevocable letters of credit was immaterial.

- 30 -

The estimated fair values, and related carrying or notional amounts, of the Company's financial instruments as of the dates indicated are as follows:

			Fair Value Measurements at September 30, 2013 Using (in thousands)
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents	$	66,714	$	66,714	$	0	$	0
Securities available-for-sale		158,147		0		158,147		0
Securities held-to-maturity		93,819		0		94,838		0
Restricted securities		2,378		0		2,378		0
Loans, net of allowances for loan losses		473,187		0		0		475,990
Bank owned life insurance		22,472		0		22,472		0
Accrued interest receivable		2,340		0		2,340		0
Liabilities
Deposits	$	730,824	$	0	$	734,017	$	0
Overnight repurchase agreements		37,020		0		37,020		0
Term repurchase agreements		411		0		411		0
Federal Home Loan Bank advances		25,000		0		27,814		0
Accrued interest payable		350		0		350		0

			Fair Value Measurements at December 31, 2012 Using (in thousands)
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents	$	42,317	$	42,317	$	0	$	0
Securities available-for-sale		329,456		0		329,456		0
Securities held-to-maturity		570		0		574		0
Restricted securities		2,562		0		2,562		0
Loans, net of allowances for loan losses		463,809		0		0		466,492
Bank owned life insurance		21,824		0		21,824		0
Accrued interest receivable		2,420		0		2,420		0
Liabilities
Deposits	$	753,816	$	0	$	757,923	$	0
Overnight repurchase agreements		35,946		0		35,946		0
Term repurchase agreements		1,280		0		1,282		0
Federal Home Loan Bank advances		25,000		0		28,681		0
Accrued interest payable		439		0		439		0

- 31 -

Note 9. Segment Reporting

The Company operates in a decentralized fashion in three principal business segments: The Old Point National Bank of Phoebus (the Bank), Old Point Trust & Financial Services, N. A. (Trust), and the Company as a separate segment (for purposes of this Note, the Parent). Revenues from the Bank's operations consist primarily of interest earned on loans and investment securities and service charges on deposit accounts. Trust's operating revenues consist principally of income from fiduciary activities. The Parent's revenues are mainly interest and dividends received from the Bank and Trust companies. The Company has no other segments.

The Company's reportable segments are strategic business units that offer different products and services. They are managed separately because each segment appeals to different markets and, accordingly, requires different technologies and marketing strategies.

Information about reportable segments, and reconciliation of such information to the consolidated financial statements as of and for the three and nine months ended September 30, 2013 and 2012 follows:

	Three Months Ended September 30, 2013
	Bank		Trust		Unconsolidated Parent			Eliminations			Consolidated
Revenues
Interest and dividend income	$	7,252,616	$	10,855	$	1,125,059		$	(1,125,197	)	$	7,263,333
Income from fiduciary activities		0		868,598		0			0			868,598
Other income		2,229,311		114,202		50,100			(65,376	)		2,328,237
Total operating income		9,481,927		993,655		1,175,159			(1,190,573	)		10,460,168
Expenses
Interest expense		1,144,196		0		0			(138	)		1,144,058
Provision for loan losses		300,000		0		0			0			300,000
Salaries and employee benefits		3,895,967		552,542		105,592			0			4,554,101
Other expenses		2,976,347		233,674		77,403			(65,376	)		3,222,048
Total operating expenses		8,316,510		786,216		182,995			(65,514	)		9,220,207
Income before taxes		1,165,417		207,439		992,164			(1,125,059	)		1,239,961
Income tax expense (benefit)		177,434		70,363		(45,180	)		0			202,617
Net income	$	987,983	$	137,076	$	1,037,344		$	(1,125,059	)	$	1,037,344
Total assets	$	871,935,454	$	5,585,758	$	80,160,864		$	(81,125,574	)	$	876,556,502

	Three Months Ended September 30, 2012
	Bank		Trust		Unconsolidated Parent			Eliminations			Consolidated
Revenues
Interest and dividend income	$	7,950,468	$	7,488	$	1,105,705		$	(1,105,434	)	$	7,958,227
Income from fiduciary activities		0		776,615		0			0			776,615
Other income		3,224,829		119,464		165,000			(180,276	)		3,329,017
Total operating income		11,175,297		903,567		1,270,705			(1,285,710	)		12,063,859
Expenses
Interest expense		1,414,414		0		1,585			(1,904	)		1,414,095
Provision for loan losses		750,000		0		0			0			750,000
Salaries and employee benefits		4,600,299		531,492		128,089			0			5,259,880
Other expenses		3,356,522		243,821		72,283			(180,276	)		3,492,350
Total operating expenses		10,121,235		775,313		201,957			(182,180	)		10,916,325
Income before taxes		1,054,062		128,254		1,068,748			(1,103,530	)		1,147,534
Income tax expense (benefit)		35,348		43,438		(5,440	)		0			73,346
Net income	$	1,018,714	$	84,816	$	1,074,188		$	(1,103,530	)	$	1,074,188
Total assets	$	883,610,555	$	5,335,378	$	90,524,865		$	(91,584,920	)	$	887,885,878

- 32 -

	Nine Months Ended September 30, 2013
	Bank		Trust		Unconsolidated Parent			Eliminations			Consolidated
Revenues
Interest and dividend income	$	22,339,561	$	30,065	$	3,181,900		$	(3,182,730	)	$	22,368,796
Income from fiduciary activities		0		2,634,092		0			0			2,634,092
Other income		6,647,281		358,942		150,300			(196,278	)		6,960,245
Total operating income		28,986,842		3,023,099		3,332,200			(3,379,008	)		31,963,133
Expenses
Interest expense		3,577,023		0		0			(830	)		3,576,193
Provision for loan losses		800,000		0		0			0			800,000
Salaries and employee benefits		12,334,787		1,621,208		324,616			0			14,280,611
Other expenses		9,117,323		677,292		171,778			(196,278	)		9,770,115
Total operating expenses		25,829,133		2,298,500		496,394			(197,108	)		28,426,919
Income before taxes		3,157,709		724,599		2,835,806			(3,181,900	)		3,536,214
Income tax expense (benefit)		454,543		245,865		(117,670	)		0			582,738
Net income	$	2,703,166	$	478,734	$	2,953,476		$	(3,181,900	)	$	2,953,476
Total assets	$	871,935,454	$	5,585,758	$	80,160,864		$	(81,125,574	)	$	876,556,502

	Nine Months Ended September 30, 2012
	Bank		Trust		Unconsolidated Parent			Eliminations			Consolidated
Revenues
Interest and dividend income	$	24,664,745	$	26,440	$	2,866,213		$	(2,865,361	)	$	24,692,037
Income from fiduciary activities		0		2,396,266		0			0			2,396,266
Other income		8,520,811		383,816		495,000			(541,528	)		8,858,099
Total operating income		33,185,556		2,806,522		3,361,213			(3,406,889	)		35,946,402
Expenses
Interest expense		4,424,381		0		4,719			(5,673	)		4,423,427
Provision for loan losses		1,950,000		0		0			0			1,950,000
Salaries and employee benefits		13,413,051		1,632,145		394,846			0			15,440,042
Other expenses		10,445,457		728,845		175,502			(541,528	)		10,808,276
Total operating expenses		30,232,889		2,360,990		575,067			(547,201	)		32,621,745
Income before taxes		2,952,667		445,532		2,786,146			(2,859,688	)		3,324,657
Income tax expense (benefit)		387,534		150,977		(4,550	)		0			533,961
Net income	$	2,565,133	$	294,555	$	2,790,696		$	(2,859,688	)	$	2,790,696
Total assets	$	883,610,555	$	5,335,378	$	90,524,865		$	(91,584,920	)	$	887,885,878

The accounting policies of the segments are the same as those described in the summary of significant accounting policies reported in the Company's 2012 annual report on Form 10-K. The Company evaluates performance based on profit or loss from operations before income taxes, not including nonrecurring gains or losses.

Both the Parent and the Trust companies maintain deposit accounts with the Bank, on terms substantially similar to those available to other customers. These transactions are eliminated to reach consolidated totals.

Note 10. Commitments and Contingencies

There have been no material changes in the Company's commitments and contingencies from those disclosed in the Company's 2012 annual report on Form 10-K. For a discussion of the Company's branch office expansion, see Note 1 of the Notes to the Consolidated Financial Statements included in this quarterly report on Form 10-Q.

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

The following discussion is intended to assist readers in understanding and evaluating the financial condition, changes in financial condition and the results of operations of the Company. The Company consists of the parent company and its wholly-owned subsidiaries, The Old Point National Bank of Phoebus (the Bank) and Old Point Trust & Financial Services, N. A. (Trust), collectively referred to as the Company. This discussion should be read in conjunction with the consolidated financial statements and other financial information contained elsewhere in this report.

Caution About Forward-Looking Statements

In addition to historical information, this report may contain forward-looking statements. For this purpose, any statement that is not a statement of historical fact may be deemed to be a forward-looking statement. These forward-looking statements may include, but are not limited to, statements regarding profitability including the focus on reducing time deposits, the net interest margin, strategies for managing the net interest margin and the expected impact of such efforts, liquidity, levels of cash and cash equivalents, the loan portfolio and expected trends in the quality of the loan portfolio, the allowance and provision for loan losses, the securities portfolio, interest rate sensitivity, asset quality, levels of net loan charge-offs and nonperforming assets, noninterest expense (and components of noninterest expense), the cost of expanding a current office building, noninterest income (and components of noninterest income), income taxes, expected impact of efforts to restructure the balance sheet, expected yields on the loan and securities portfolios, expected rates on interest-bearing liabilities, market risk, expected effects of the federal government's shut-down and automatic spending cuts (commonly known as sequestration), business and growth strategies, investment strategy and financial and other goals. Forward-looking statements often use words such as "believes," "expects," "plans," "may," "will," "should," "projects," "contemplates," "anticipates," "forecasts," "intends" or other words of similar meaning. These statements can also be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, and actual results could differ materially from historical results or those anticipated by such statements.

There are many factors that could have a material adverse effect on the operations and future prospects of the Company including, but not limited to, changes in interest rates, general economic conditions, the effects of the federal government shut-down and sequestration on the Company's service area and the allowance for loan losses, the quality or composition of the loan or investment portfolios, the effects of management's investment strategy and strategy to manage the net interest margin, the adequacy of the Company's credit quality review processes, the level of nonperforming assets and charge-offs, the local real estate market, volatility and disruption in national and international financial markets, government intervention in the U.S. financial system, FDIC premiums and/or assessments, demand for loan and other banking products, levels of noninterest income and expense, deposit flows, competition, adequacy of the allowance for loan losses and changes in accounting principles, policies and guidelines. The Company could also be adversely affected by monetary and fiscal policies of the U.S. Government, as well as any regulations or programs implemented pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) or other legislation and policies of the Office of the Comptroller of the Currency, U.S. Treasury and the Federal Reserve Board.

In July 2010, the President signed into law the Dodd-Frank Act, which implements far-reaching changes across the financial regulatory landscape. It is not clear what other impacts the Dodd-Frank Act, regulations promulgated thereunder and other regulatory initiatives of the Treasury and other bank regulatory agencies will have on the financial markets and the financial services industry.

These risks and uncertainties, in addition to the risks and uncertainties identified in the Company's 2012 annual report on Form 10-K, should be considered in evaluating the forward-looking statements contained herein, and readers are cautioned not to place undue reliance on such statements. Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made. In addition, past results of operations are not necessarily indicative of future results.

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General

The Company is the parent company of the Bank and Trust. The Bank is a locally managed community bank serving the Hampton Roads localities of Hampton, Newport News, Norfolk, Virginia Beach, Chesapeake, Williamsburg/James City County, York County and Isle of Wight County. The Bank currently has 18 branch offices. In the first quarter of 2013 the Bank completed its combination of two of its branches located in Williamsburg.  In the third quarter of 2013, the Bank consolidated two branches in Chesapeake and two branches in Newport News. Trust is a wealth management services provider.

Critical Accounting Policies and Estimates

During the third quarter of 2013, the Company changed its method for calculating the allowance for loan and lease losses.  This change is discussed in detail in Note 3 of the Notes to the Consolidated Financial Statements included in this quarterly report on Form 10-Q. Other than this change, as of September 30, 2013, there have been no significant changes with regard to the critical accounting policies and estimates disclosed in the Company's 2012 annual report on Form 10-K.

Earnings Summary

Net income for the third quarter of 2013 was $1.0 million or $0.21 per diluted share as compared to net income of $1.1 million or $0.22 per diluted share for the third quarter of 2012.  There were several primary differences between 2012 and 2013 that contributed to this result.  In the third quarter of 2012, income from bank-owned life insurance was significantly impacted by the receipt of $475 thousand in proceeds from the death benefit on an insured former officer, while no such proceeds were received in the third quarter of 2013.  In addition, sales of available-for-sale securities resulted in net gains for the third quarter of 2012, but sales of available-for-sale securities during the third quarter of 2013 resulted in net losses. Finally, income taxes and capital stock taxes were higher during the third quarter of 2013 than during the third quarter of 2012.

For the nine months ended September 30, 2013, net income was $3.0 million, 5.83% higher than net income for the first nine months of 2012.  When comparing the first nine months of 2013 to the same period in 2012, the reduction in interest and fees on loans and the loss on sale of available-for sale securities were more than offset by higher income from fiduciary activities, lower interest expense, lower provision for loan losses and lower noninterest expense. Continued improvement in asset quality, as evidenced by lower charge-offs in the first nine months of 2013 when compared to the first nine months of 2012, allowed management to reduce the provision for loan losses.

Net Interest Income

The principal source of earnings for the Company is net interest income. Net interest income is the difference between interest and fees generated by earning assets and interest expense paid to fund them. Changes in the volume and mix of interest-earning assets and interest-bearing liabilities, as well as their respective yields and rates, have a significant impact on the level of net interest income. The net interest margin is calculated by dividing tax-equivalent net interest income by average earning assets. Although both total interest and dividend income and total interest expense decreased during the three and nine months ended September 30, 2013, as compared to the same periods in 2012, total interest and dividend income decreased more than total interest expense, causing net interest income to decrease for the three and nine months ended September 30, 2013 compared to the three and nine months ended September 30, 2012.

Net interest income, on a fully tax-equivalent basis, was $6.3 million in the third quarter of 2013, a decrease of $344 thousand from the third quarter of 2012.  Net interest income, on a fully tax-equivalent basis, was $19.3 million for the first nine months of 2013, a decrease of $1.3 million from the same period in 2012.

The net interest margin was 3.17% in the third quarter of 2013, 16 basis points lower than the 3.33% net interest margin in the equivalent period in 2012. The year-to-date net interest margin for 2013 was 3.18%, down 29 basis points from 3.47% for the first nine months of 2012. While the average rate on liabilities continues to decrease, the rate of change continues to slow as most longer-term deposits have already re-priced. During 2013, management has focused on increasing lower-cost deposits primarily through sales efforts by employees and has allowed higher-cost time deposits to decrease through attrition. This focus can be seen by the fact that average interest-bearing transaction accounts and money market and savings deposits increased by $30.4 million and average time deposits decreased by $32.6 million when comparing the third quarter of 2013 to the third quarter of 2012. The focus on lower-cost deposits has contributed to the continued reduction in the average rate on liabilities. Management expects to continue the strategy to manage the net interest margin through the reduction in higher-cost time deposits until loan demand recovers significantly.

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In addition, the average yield on loans decreased from 5.54% for the third quarter of 2012 to 4.97% for the third quarter of 2013, and from 5.63% for the first nine months of 2012 to 5.09% for the same period in 2013, as higher-yielding loans paid off or were renewed at current, lower rates.  During the nine months ended September 30, 2013, as compared to the nine months ended September 30, 2012, the Company's earning asset portfolio continued the shift it has experienced over the past several years, with securities comprising an increasing percent of total earning assets and loans comprising a smaller percent.  Because investment securities typically yield less than loans, this shift to lower-yielding investment securities continued to negatively impact the Company's net interest margin in the nine months ended September 30, 2013.

In the third quarter of 2013, however, this trend began to slow.  Loans represented a larger percent of average earning assets in the third quarter of 2013 than in the same period of 2012, although the Company was still heavily invested in lower-yielding securities, and funds at the Federal Reserve were higher, on average, during the third quarter of 2013 as compared to the third quarter of 2012.  Management expects that, if the economy continues to improve, average loans will continue to increase and that loans will continue to increase as a percent of total earning assets, although the increases may be gradual and may not follow a consistent pattern.

Tax-equivalent interest income decreased by $614 thousand in the third quarter of 2013 and by $2.1 million for the first nine months of 2013 compared to the same periods of 2012. Average earning assets decreased $1.8 million for the third quarter of 2013 and increased $17.2 million for the first nine months of 2013 compared to the same periods in 2012. Interest expense decreased $270 thousand for the third quarter of 2013 and $847 thousand for the first nine months of 2013 as compared to the third quarter and first nine months of 2012, respectively. The decrease in interest expense is primarily a result of the 20 basis-point decrease in the average rate on interest-bearing liabilities for the first nine months of 2013 compared to the same period in 2012.

The yield on average earning assets and cost of average interest-bearing liabilities both decreased due to the Federal Open Market Committee (FOMC) lowering the Federal Funds Target Rate during 2008 from 4.25% to a range of 0.00% to 0.25%. The FOMC has kept the Federal Funds Target Rate unchanged through September 30, 2013. As higher-yielding earning assets and higher-cost interest-bearing liabilities that were opened prior to 2008 mature, they are being replaced with lower-yielding earning assets and lower-cost interest-bearing liabilities. Assuming that the FOMC keeps interest rates at current levels, management believes that the decrease of the average rate on interest-bearing liabilities will continue to slow as a high percentage of the Company's interest-bearing liabilities have already re-priced. Management also believes that the average yield on loans will continue to decline due to increased competition for loans in the Company's markets, and as loans are renewed or refinanced at lower current market rates.

- 36 -

The following table shows an analysis of average earning assets, interest-bearing liabilities and rates and yields for the periods indicated. Nonaccrual loans are included in loans outstanding.

AVERAGE BALANCE SHEETS, NET INTEREST INCOME* AND RATES*
	For the quarter ended September 30,
	2013								2012
				Interest								Interest
	Average			Income/		Yield/			Average			Income/		Yield/
	Balance			Expense		Rate**			Balance			Expense		Rate**
(dollars in thousands)
ASSETS
Loans*	$	474,753		$	5,893		4.97	%	$	469,487		$	6,508		5.54	%
Investment securities:
Taxable		200,342			949		1.89	%		263,325			1,229		1.87	%
Tax-exempt*		62,634			559		3.57	%		29,382			306		4.17	%
Total investment securities		262,976			1,508		2.29	%		292,707			1,535		2.10	%
Interest-bearing due from banks		55,152			36		0.26	%		32,203			17		0.21	%
Federal funds sold		1,760			0		0.00	%		1,581			0		0.00	%
Other investments		3,308			25		3.02	%		3,757			16		1.70	%
Total earning assets		797,949		$	7,462		3.74	%		799,735		$	8,076		4.04	%
Allowance for loan losses		(7,249	)							(7,378	)
Other nonearning assets		80,235								79,293
Total assets	$	870,935							$	871,650
LIABILITIES AND STOCKHOLDERS' EQUITY
Time and savings deposits:
Interest-bearing transaction accounts	$	11,127		$	2		0.07	%	$	11,852		$	1		0.03	%
Money market deposit accounts		201,851			52		0.10	%		181,677			80		0.18	%
Savings accounts		64,350			17		0.11	%		53,398			14		0.10	%
Time deposits, $100,000 or more		122,771			355		1.16	%		134,959			441		1.31	%
Other time deposits		153,655			402		1.05	%		174,072			529		1.22	%
Total time and savings deposits		553,754			828		0.60	%		555,958			1,065		0.77	%
Federal funds purchased, repurchase
agreements and other borrowings		28,418			7		0.10	%		25,269			11		0.17	%
Federal Home Loan Bank advances		25,000			309		4.94	%		27,391			338		4.94	%
Total interest-bearing liabilities		607,172			1,144		0.75	%		608,618			1,414		0.93	%
Demand deposits		179,656								172,308
Other liabilities		3,392								2,346
Stockholders' equity		80,715								88,378
Total liabilities and stockholders' equity	$	870,935							$	871,650
Net interest margin				$	6,318		3.17	%				$	6,662		3.33	%
*Computed on a fully tax-equivalent basis using a 34% rate
**Annualized

- 37 -

	For the nine months ended September 30,
	2013								2012
				Interest								Interest
	Average			Income/		Yield/			Average			Income/		Yield/
	Balance			Expense		Rate**			Balance			Expense		Rate**
(dollars in thousands)
ASSETS
Loans*	$	466,801		$	17,809		5.09	%	$	482,014		$	20,363		5.63	%
Investment securities:
Taxable		249,939			3,526		1.88	%		251,878			3,830		2.03	%
Tax-exempt*		49,563			1,395		3.75	%		21,771			673		4.12	%
Total investment securities		299,502			4,921		2.19	%		273,649			4,503		2.19	%
Interest-bearing due from banks		36,134			69		0.25	%		29,001			43		0.20	%
Federal funds sold		1,824			1		0.07	%		1,755			1		0.08	%
Other investments		3,430			69		2.68	%		4,100			61		1.98	%
Total earning assets		807,691		$	22,869		3.78	%		790,519		$	24,971		4.21	%
Allowance for loan losses		(7,359	)							(7,897	)
Other nonearning assets		82,821								79,620
Total assets	$	883,153							$	862,242
LIABILITIES AND STOCKHOLDERS' EQUITY
Time and savings deposits:
Interest-bearing transaction accounts	$	11,288		$	5		0.06	%	$	11,617		$	5		0.06	%
Money market deposit accounts		197,280			176		0.12	%		176,865			238		0.18	%
Savings accounts		61,390			46		0.10	%		52,476			40		0.10	%
Time deposits, $100,000 or more		128,732			1,120		1.16	%		129,353			1,271		1.31	%
Other time deposits		161,042			1,287		1.07	%		172,853			1,638		1.26	%
Total time and savings deposits		559,732			2,634		0.63	%		543,164			3,192		0.78	%
Federal funds purchased, repurchase
agreements and other borrowings		30,545			26		0.11	%		29,442			43		0.19	%
Federal Home Loan Bank advances		25,000			916		4.89	%		32,445			1,188		4.88	%
Total interest-bearing liabilities		615,277			3,576		0.77	%		605,051			4,423		0.97	%
Demand deposits		178,927								167,701
Other liabilities		3,125								2,133
Stockholders' equity		85,824								87,357
Total liabilities and stockholders' equity	$	883,153							$	862,242
Net interest margin				$	19,293		3.18	%				$	20,548		3.47	%
*Computed on a fully tax-equivalent basis using a 34% rate
**Annualized

Provision for Loan Losses

The provision for loan losses is a charge against earnings necessary to maintain the allowance for loan losses at a level consistent with management's evaluation of the portfolio. This expense is based on management's estimate of credit losses that may be sustained in the loan portfolio. Management's evaluation included credit quality trends, collateral values, the findings of internal credit quality assessments and results from external bank regulatory examinations. These factors, as well as identified impaired loans, historical losses and current economic and business conditions, were used in developing estimated loss factors for determining the loan loss provision.

The provision for loan losses was $300 thousand in the third quarter of 2013, as compared to $750 thousand in the third quarter of 2012 and was $800 thousand for the first nine months of 2013, as compared to $2.0 million for the first nine months of 2012. Management concluded that the provision was appropriate based on its analysis of the adequacy of the allowance for loan losses.  The lower provision in the third quarter of 2013, as compared to the provision for the third quarter of 2012, was due to lower charge-offs and improvements in asset quality.

- 38 -

Net loans charged off were $1.1 million for the first nine months of 2013 as compared to $3.1 million for the first nine months of 2012. On an annualized basis, net loan charge-offs were 0.32% of total loans for the first nine months of 2013 compared with 0.91% for the same period in 2012. Net loans charged off for the first nine months of 2013 were relatively low as compared to net charge-offs of the past few years. Management anticipates that net charge-offs for the fourth quarter of 2013 will be below the elevated level of net charge-offs that occurred in 2010, 2011, and 2012 due to improvements in asset quality and stabilization of the economy and housing prices. If, however, sequestration has negative consequences that are more severe than those currently expected by management, borrowers may be less likely to repay loans, net charge-offs may increase, and higher contributions to the allowance for loan losses in the form of increased provisions may be necessary. The federal government shut-down in October of 2013 had a negative effect on local economic conditions, and furloughs related to the shut-down may impact borrowers' ability to repay loans. These consequences of the October 2013 shut-down, and similar consequences of any future shut-down that may occur, may also result in increased net charge-offs and higher contributions to the allowance for loan losses in the form of increased provisions.

Nonperforming assets consist of nonaccrual loans, loans past due 90 days or more and accruing interest, restructured loans that are accruing interest and not performing according to their modified terms, and OREO. See Note 3 of the Notes to the Consolidated Financial Statements included in this quarterly report on Form 10-Q for an explanation of these categories. OREO includes foreclosed assets, which consist of real estate from foreclosures on loan collateral, and a former branch site that is no longer in use by the Bank. The majority of the loans 90 days or more past due but still accruing interest are classified as substandard. Substandard loans are a component of the allowance for loan losses. When a loan changes from "past due 90 days or more and accruing interest" status to "nonaccrual" status, the loan is reviewed for impairment. In most cases, if the loan is considered impaired, then the difference between the value of the collateral and the principal amount outstanding on the loan is charged off. If the Company is waiting on an appraisal to determine the collateral's value or is in negotiations with the borrower or other parties that may affect the value of the collateral, management allocates funds to cover the deficiency to the allowance for loan losses based on information available to management at that time. In the case of TDRs, the restructuring may be to modify to an unsecured loan (e.g., a short sale) that the borrower can afford to repay. In these circumstances, the entire balance of the loan would be specifically allocated for, unless the present value of expected future cash flows was more than the current balance on the loan. It would not be charged off if the loan documentation supports the borrower's ability to repay the modified loan.

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The following table presents information on nonperforming assets, as of the dates indicated:

NONPERFORMING ASSETS
	September 30,		December 31,		Increase
	2013		2012		(Decrease)
	(in thousands)
Nonaccrual loans
Commercial	$	0	$	97	$	(97	)
Real estate-construction		2,546		3,065		(519	)
Real estate-mortgage (1)		7,355		7,470		(115	)
Total nonaccrual loans	$	9,901	$	10,632	$	(731	)
Loans past due 90 days or more and accruing interest
Commercial	$	0	$	25	$	(25	)
Real estate-mortgage (1)		0		408		(408	)
Consumer loans		13		11		2
Other		5		3		2
Total loans past due 90 days or more and accruing interest	$	18	$	447	$	(429	)
Restructured loans
Real estate-mortgage (1)	$	10,002	$	8,810	$	1,192
Consumer loans		16		16		0
Total restructured loans	$	10,018	$	8,826	$	1,192
Less nonaccrual restructured loans (included above)		1,908		1,908		0
Less restructured loans currently in compliance (2)		8,110		6,918		1,192
Net nonperforming, accruing restructured loans	$	0	$	0	$	0
Other real estate owned
Construction, land development, and other land	$	3,722		3,804	$	(82	)
1-4 family residential properties		216		676		(460	)
Nonfarm nonresidential properties		2,444		2,094		350
Former branch site		506		0		506
	$	6,888	$	6,574	$	314
Total nonperforming assets	$	16,807	$	17,653	$	(846	)
(1) The real estate-mortgage segment includes residential 1 – 4 family, commercial real estate, second mortgages and equity lines of credit.
(2) As of September 30, 2013 and December 31, 2012, all of the Company's restructured accruing loans were performing in compliance with their modified terms.

Nonperforming assets as of September 30, 2013 were $16.8 million, $846 thousand lower than nonperforming assets as of December 31, 2012. The nonperforming assets category of nonaccrual loans decreased $731 thousand and OREO increased by $314 thousand, when comparing the balances as of September 30, 2013 to December 31, 2012, due primarily to improvement in asset quality.

The majority of the balance of nonaccrual loans at September 30, 2013 was related to a few large credit relationships. Of the $9.9 million of nonaccrual loans at September 30, 2013, $7.1 million or approximately 71.71% was comprised of three credit relationships: $2.8 million, $2.5 million, and $1.8 million. The loans that make up the nonaccrual balance have been written down to their net realizable value. As shown in the table above, the majority of the nonaccrual loans were collateralized by real estate at September 30, 2013 and December 31, 2012. The increase in troubled debts restructured between December 31, 2012 and September 30, 2013 was due to the Company's efforts to modify problem credits to assist borrowers and return the loans to performing status. The transfer of a former branch site from premises and equipment increased OREO by $506 thousand.  Without this transfer, OREO would have decreased $192 thousand as the Company works to sell these properties. The former branch site is also listed for sale.

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Management believes the Company has excellent credit quality review processes in place to identify problem loans quickly. The quality of the Company's loan portfolio has continued to improve over the past few years, with nonperforming assets generally stabilizing as troubled borrowers' finances have improved and troubled loans have been charged off or sold. Management remains cautious about the future and is well aware that if the economy does not continue to improve, or if the federal government shut-down or sequestration has a significant negative impact, nonperforming assets could increase in future periods. As was seen in prior years, the effect of a sustained increase in nonperforming assets would be lower earnings caused by larger contributions to the loan loss provision, which in turn would be driven by larger impairments in the loan portfolio and higher levels of loan charge-offs.

As of September 30, 2013, the allowance for loan losses was 41.53% of nonperforming assets and 70.37% of nonperforming loans. The allowance for loan losses as a percentage of nonperforming assets and as a percentage of nonperforming loans increased between December 31, 2012 and September 30, 2013, primarily due to management concerns about the possible negative consequences of the federal government shut-down and sequestration on local economic conditions and on borrowers' ability to repay loans.  These percentages could increase further if the effects of the shut-down and sequestration on the Company's loan portfolio require increases in the allowance for loan losses.  The definition of nonperforming loans is nonperforming assets less OREO. The allowance for loan losses was 1.45% and 1.55% of total loans on September 30, 2013 and December 31, 2012, respectively.

Allowance for Loan Losses

The allowance for loan losses is based on several components. Historical loss is one of these components. Historical loss is based on the Company's loss experience during the past eight quarters, which management believes reflects the risk related to each segment of loans in the current economic environment. The historical loss component of the allowance amounted to $2.7 million and $5.4 million as of September 30, 2013 and December 31, 2012, respectively. This decrease is primarily due to lower charge-offs for the first nine months of 2013 as compared to the level of charge-offs in certain quarters included in past historical loss periods. The Company uses a rolling eight-quarter average to calculate the historical loss component of the allowance, so higher charge-offs in the first nine months of 2011 are no longer included in the calculation as of September 30, 2013, which has caused the historical loss component to decrease. In addition, the Company began using a migration analysis to calculate the historical loss component beginning with the September 30, 2013 calculation. Management believes the additional information provided by the migration analysis results in more accurate historical loss information for the eight quarter period.

In evaluating the adequacy of the allowance, each segment of the loan portfolio is divided into several pools of loans. The Company first specifically identifies certain loans that may be impaired, and individually analyzes the estimated amount of impairment on these loans (regardless of risk rating).  The remainder of the loan portfolio is then separated into pools, based on the loan classification per the instructions for the Bank's Call Report and collectively evaluated for impairment.  Loans not secured by real estate and made to individuals for household, family and other personal expenditures are segmented into pools based on whether the loan's payments are current (including loans 1 – 29 days past due), or are 30 – 59 days past due, 60 – 89 days past due, or 90 days or more past due.  All other loans, including loans to consumers that are secured by real estate, are segmented by the Company's internally assigned risk grades: substandard, other assets especially mentioned (rated just above substandard), and pass (all other loans).

Prior to September 30, 2013, all loans not individually evaluated for impairment were segmented by risk grade.  See Note 3 of the Notes to the Consolidated Financial Statements included in this quarterly report on Form 10-Q for additional details on the changes made to the Company's methodology for calculating the allowance for the third quarter of 2013.

Historical loss rates are applied to the above pools of loans for each segment of the loan portfolio that are collectively evaluated for impairment. TDRs are always individually evaluated regardless of risk grade.

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In addition, nonperforming loans and both performing and nonperforming TDRs are analyzed for impairment under U.S. GAAP and are allocated based on this analysis. The impairment amounts determined for the Company's TDRs and nonperforming loans are included in the loan balances individually evaluated for impairment section of the allowance. Therefore, changes in TDRs and nonperforming loans affect the dollar amount of the allowance. Unless the TDR or nonperforming loan does not require a specific allocation (i.e. the present value of expected future cash flows or the collateral value is considered sufficient), increases in the impairment analysis for TDRs and nonperforming loans are reflected as an increase in the allowance for loan losses.

The majority of the Company's TDRs and nonperforming loans are collateralized by real estate. When reviewing loans for impairment, the Company obtains current appraisals when applicable. If the Company has not yet received a current appraisal on loans being reviewed for impairment, any loan balance that is in excess of the estimated appraised value is allocated in the allowance. As of September 30, 2013 and December 31, 2012, the impaired loan component of the allowance for loan losses amounted to $1.9 million and $444 thousand, respectively. As shown in the impaired loan tables in Note 3 of the Notes to the Consolidated Financial Statements included in this quarterly report on Form 10-Q, the recorded investment in impaired loans at September 30, 2013 was $18.0 million, compared to a recorded investment in impaired loans at December 31, 2012 of $17.6 million. As of September 30, 2013, the impaired loan component of the allowance increased by $1.5 million as compared to the component's balance as of December 31, 2012. The recorded investment in impaired loans increased, while at the same time, some of the loans added to the impairment calculation had loan balances that were in excess of the estimated appraised values. Therefore, the total amount of the impairment associated with those loans increased and a larger allocation was appropriate

The final component of the allowance consists of qualitative factors and includes items such as economic conditions, growth trends, loan concentrations, changes in certain loans, changes in underwriting, changes in management and legal and regulatory changes. The qualitative component of the allowance amounted to $2.4 million and $1.5 million as of September 30, 2013 and December 31, 2012, respectively. The major reasons for the increase in this component are the increase in loans and management's concern about the negative consequences of the federal government shut-down and sequestration.

As a result of management's analysis, the Company added, through the provision, $800 thousand to the allowance for loan losses in the nine months ended September 30, 2013. Management believes that the allowance has been appropriately funded for additional losses on existing loans, based on currently available information. If the federal government shut-down and/or sequestration result in increased historical loss rates, increases in impairment analyses or changes in certain qualitative factors related to the economic conditions, the current level of the allowance for loan losses may be insufficient and increases in the allowance may be needed.

Noninterest Income

For the third quarter and the first nine months of 2013, noninterest income decreased by $909 thousand and $1.7 million, respectively, when compared to the same periods in 2012. These decreases were mainly due to income from bank-owned life insurance and gains and losses on the sales of securities.  In the third quarter of 2012, income from bank-owned life insurance was significantly impacted by the receipt of $475 thousand in proceeds from the death benefit on an insured former officer, while no such proceeds were received in the third quarter of 2013.   Also in 2012, the Company restructured a portion of its investment portfolio to improve the portfolio's cash flow and increase its yields. Due to this restructuring, the Company posted income that included a net gain on sale of available-for-sale securities of $620 thousand for the third quarter of 2012 and $1.7 million for the first nine months of 2012.  During the third quarter of 2013, however, the Company sold available-for-sale securities in an effort to reduce the investment portfolio's susceptibility to interest rate risk, which resulted in a net loss on sale of securities of $5 thousand and $26 thousand for the three and nine months ended September 30, 2013.

Other areas of noninterest income increased during the three and nine months ended September 30, 2013 over the comparable periods in 2012. Noninterest income improved in the categories of income from fiduciary activities, other service charges, commissions and fees, and income from Old Point Mortgage, LLC, which is a joint venture of the Company. Income from fiduciary activities increased $92 thousand for the third quarter of 2013 and $238 thousand for the first nine months of 2013 as compared to the same periods in 2012. Accounts managed by Trust are assessed fees based on the market value of the account's assets; improvements in the equities markets led to higher asset values and thus higher fee income. In addition, Trust continues to open new accounts. Other service charges, commissions and fees grew $27 thousand for the third quarter of 2013 and $120 thousand for the first nine months of 2013 over the same periods in 2012. The majority of the increase in other service charges, commissions and fees was due to increased revenues from debit cards and merchant processing services.  Income from Old Point Mortgage, LLC increased $48 thousand in the third quarter of 2013 and $227 thousand for the first nine months of 2013 as compared to the same periods in 2012.

- 42 -

The Company continues to focus on diversifying noninterest income in response to declining interest income. Management anticipates that noninterest income will continue to increase as the Company continues its efforts in this area.

Noninterest Expense

The Company's noninterest expense decreased by $976 thousand in the third quarter of 2013 and by $2.2 million during the first nine months of 2013, as compared to the same periods in 2012. Most categories of noninterest expense decreased, with the largest decreases seen in salaries and employee benefits, FDIC insurance, legal and audit expense, advertising and loss on write-down/sale of OREO.

Salary and employee benefits decreased $706 thousand in the third quarter 2013 and $1.2 million in the first nine months of 2013 as compared to the same periods in 2012.  In 2012, the Company made early retirement offers to eligible employees and initiated a reduction in work force program to eliminate positions that had become unnecessary due to improvements in technology and efficiencies. Both the early retirement offer and the reduction in work force program provided severance packages to employees, which increased salaries and employee benefits expense in 2012.  As of September 30, 2013 the Company had a full time equivalent (FTE) employee count of 282.5, which is 27.5 positions fewer than the FTE as of September 30, 2012.

FDIC insurance cost decreased $112 thousand when comparing the third quarter of 2013 to the third quarter of 2012 and decreased $322 thousand when comparing the first nine months of 2013 to the first nine months of 2012.  Legal and audit expense decreased $19 thousand for the third quarter of 2013 and $192 thousand for the first nine months of 2013 when compared to the same periods in 2012.  Loss on write-down/sale of OREO decreased $35 thousand for the third quarter of 2013 and $468 thousand for the first nine months of 2013 as compared to the third quarter and first nine months of 2012. The decrease in the loss on write-down/sale of OREO is largely attributable to the Company's ability to sell OREO for amounts closer to their book value as real estate market values have recovered, in addition to reducing write-downs on properties still held by the Company.  Reductions in expenses for FDIC insurance, legal and audit expense and write down/sale of OREO have occurred as the Company has worked successfully to reduce and sell nonperforming assets.  Advertising expense decreased $86 thousand and $130 thousand in the three and nine months ended September 30, 2013 when compared to the same periods in 2012 as the Company continued its focus on earned publicity rather than paid advertising.

The only significant increase in noninterest expense was in the Company's capital stock tax, which increased $43 thousand and $112 thousand in the three and nine months ended September 30, 2013 as compared to the same periods in 2012.  The capital stock tax is paid to the state of Virginia instead of state income tax, and is based on the Company's capital less certain allowances.  One such allowance is based on holdings of U.S. Government agency securities.  As the composition of the Company's securities portfolio has changed between 2012 and 2013,the level of U.S. Government agency securities decreased significantly and provided a smaller deduction for the purposes of calculating the capital stock tax.

Balance Sheet Review

Assets as of September 30, 2013 were $876.6 million, a decrease of $30.9 million or 3.41%, compared to assets as of December 31, 2012. When comparing September 30, 2013 to December 31, 2012, securities available for sale decreased $171.3 million, securities held-to-maturity increased $93.2 million and interest-bearing due from banks increased $24.5 million.

During May and June of 2013, the 10-year Treasury rate increased approximately 100 basis points, following statements from the Federal Reserve that it was likely to begin slowing the pace of bond purchases under its quantitative easing program later in 2013. In the third quarter of 2013, however, Treasury rates began to decline again as the Federal Reserve exhibited signs of delaying plans to reduce purchases under its quantitative easing program, though long-term rates at September 30, 2013 remain elevated when compared to historical rates over the last two years.  Increases in Treasury rates have led to declines in the market value of the Company's available-for-sale securities portfolio in 2013.  In the second quarter of 2013, management sold approximately $40.0 million of available-for-sale securities and purchased $10.8 million of shorter term tax-exempt municipal securities which were placed in the held-to-maturity portfolio, in order to reduce the portfolio's susceptibility to interest rate risk. To the same end, in the third quarter of 2013, management transferred securities with a book value of $74.2 million and a market value of $68.0 million from available-for-sale to held-to-maturity. All securities purchased in the third quarter of 2013 were placed in the held-to-maturity portfolio.  A portion of the proceeds from the sale of securities funded net loan growth of $9.4 million between December 31, 2012 and September 30, 2013.  The remaining proceeds increased the Company's cash and cash equivalents.

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To manage its net interest margin, the Company continued to focus on reduction of higher-cost time deposits by lowering deposit rates and allowing time deposits to shrink through attrition. Time deposits decreased $38.0 million from $308.8 million on December 31, 2012 to $270.8 million at September 30, 2013.  Provided the economy continues to improve, management believes that the loan growth and the reduction in time deposits that was experienced in the second and third quarters of 2013 will continue through the end of the year and a large portion of the current excess in the cash and cash equivalents will be absorbed.

The Company's holdings of "Alt-A" type mortgage loans such as adjustable rate and nontraditional type loans were inconsequential, amounting to less than 1.00% of the Company's loan portfolio as of September 30, 2013.

The Company does not have a formal program for subprime lending. The Company is required by law to comply with the requirements of the Community Reinvestment Act (the CRA), which imposes on financial institutions an affirmative and ongoing obligation to meet the credit needs of their local communities, including low- and moderate-income borrowers. In order to comply with the CRA and meet the credit needs of its local communities, the Company finds it necessary to make certain loans with subprime characteristics.

For the purposes of this discussion, a "subprime loan" is defined as a loan to a borrower having a credit score of 660 or below. The majority of the Company's subprime loans are to customers in the Company's local market area. The following table details the Company's loans with subprime characteristics that were secured by 1-4 family first mortgages, 1-4 family open-end loans and 1-4 family junior lien loans for which the Company has recorded a credit score in its system.

Loans Secured by 1 - 4 Family First Mortgages,
1 - 4 Family Open-end and 1 - 4 Family Junior Liens
As of September 30, 2013
(dollars in thousands)
	Amount		Percent
Subprime	$	19,461		18.10	%
Non-subprime		88,080		81.90	%
	$	107,541		100.00	%
Total loans	$	480,167
Percentage of Real Estate-Secured Subprime Loans to Total Loans				4.05	%

In addition to the subprime loans secured by real estate discussed above, as of September 30, 2013, the Company had an additional $1.6 million in subprime consumer loans that were either unsecured or secured by collateral other than real estate. Together with the subprime loans secured by real estate, the Company's total subprime loans as of September 30, 2013 were $21.1 million, amounting to 4.39% of the Company's total loans at September 30, 2013.

Additionally, the Company has no investments secured by "Alt-A" type mortgage loans such as adjustable rate and nontraditional type mortgages or subprime loans.

Average assets for the first nine months of 2013 were $883.2 million compared to $862.2 million for the first nine months of 2012. Average investment securities for the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012 increased $25.9 million, due to higher balances at the beginning of 2013. During the first quarter of 2013, excess funds from decreases in loans and increases in the lower-cost deposit categories of demand deposits, interest-bearing transaction accounts, money market deposit accounts and savings accounts were invested in securities. During the second and third quarters of 2013, as loan growth began to recover and time deposits continued to decrease, management reallocated funds from securities to loans by selling certain available-for-sale securities. For this reason, average securities for the three months ended September 30, 2013 decreased when compared to the same period in 2012, while a comparison of the nine-month periods shows an increase from 2012 to 2013.

- 44 -

Capital Resources

Total stockholders' equity as of September 30, 2013 was $80.2 million, down $9.1 million or 10.24% from $89.3 million at December 31, 2012. The fluctuations in the 10-year Treasury rate discussed above under Balance Sheet Review negatively affected the accumulated other comprehensive loss component of stockholders' equity, as unrealized losses on available-for-sale securities, net of tax, are reported in this section of the balance sheet. Rising rates have led to unrealized losses on the Company's available-for-sale securities portfolio, which are reported in the other comprehensive income item of stockholders' equity. At September 30, 2013, the unrealized gain (loss) on securities component of stockholder's equity was an unrealized loss of $5.2 million, compared to an unrealized gain of $2.0 million as of December 31, 2012 and an unrealized loss of $6.2 million as of June 30, 2013. Because the Company does not intend to sell the investments and management believes it is unlikely that the Company will be required to sell the investments before recovery of their amortized cost, the Company does not consider the investments to be other-than temporarily impaired.

Under applicable banking regulations, total capital is comprised of core capital (Tier 1) and supplemental capital (Tier 2). Tier 1 capital consists of common stockholders' equity and retained earnings less goodwill. Tier 2 capital consists of certain qualifying debt and a qualifying portion of the allowance for loan losses. The following is a summary of the Company's capital ratios at September 30, 2013. As shown below, these ratios were all well above the regulatory minimum levels, and demonstrate that the Company's capital position remains strong.

	2013
	Regulatory	September 30, 2013
	Minimums
Tier 1 Leverage	4.00%	10.38%
Tier 1	4.00%	15.05%
Total Capital	8.00%	16.19%

Book value per share was $16.16 at September 30, 2013 as compared to $18.23 at September 30, 2012. Cash dividends were $298 thousand or $0.06 per share in the third quarter of 2013 and $248 thousand or $0.05 per share in the third quarter of 2012. The common stock of the Company has not been extensively traded.

Liquidity

Liquidity is the ability of the Company to meet present and future financial obligations through either the sale or maturity of existing assets or the acquisition of additional funds through liability management. Liquid assets include cash, interest-bearing deposits with banks, federal funds sold, investments in securities and loans maturing within one year.

A major source of the Company's liquidity is its large, stable deposit base. In addition, secondary liquidity sources are available through the use of borrowed funds if the need should arise, including secured advances from the FHLB. As of the end of the third quarter of 2013, the Company had $236.6 million in FHLB borrowing availability. The Company has available short-term, unsecured borrowed funds in the form of federal funds lines with correspondent banks. As of the end of the third quarter of 2013, the Company had $43.0 million available in federal funds lines to handle any short-term borrowing needs.

Management is not aware of any market or institutional trends, events or uncertainties that are expected to have a material effect on the liquidity, capital resources or operations of the Company. Nor is management aware of any current recommendations by regulatory authorities that would have a material affect on liquidity, capital resources or operations. The Company's internal sources of such liquidity are deposits, loan and investment repayments and securities available-for-sale. As of September 30, 2013, the Bank's unpledged, available-for-sale securities totaled $123.9 million. The Company's primary external source of liquidity is advances from the FHLB.

As a result of the Company's management of liquid assets, the availability of borrowed funds and the ability to generate liquidity through liability funding, management believes that the Company maintains overall liquidity sufficient to satisfy its depositors' requirements and to meet its customers' future borrowing needs.

Contractual Obligations

In the normal course of business there are various outstanding contractual obligations of the Company that will require future cash outflows. In addition, there are commitments and contingent liabilities, such as commitments to extend credit that may or may not require cash outflows.

- 45 -

The Company is expanding the building of a current branch office. See the subsequent events disclosure in Note 1 of the Notes to the Consolidated Financial Statements included in this quarterly report on Form 10-Q.

As of September 30, 2013, other than those disclosed above, there have been no material changes outside the ordinary course of business in the Company's contractual obligations disclosed in the Company's 2012 annual report on Form 10-K.

Off-Balance Sheet Arrangements

As of September 30, 2013, there were no material changes in the Company's off-balance sheet arrangements disclosed in the Company's 2012 annual report on Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

An important element of earnings performance and the maintenance of sufficient liquidity is proper management of the interest sensitivity gap. The interest sensitivity gap is the difference between interest sensitive assets and interest sensitive liabilities in a specific time interval. This gap can be managed by re-pricing assets or liabilities, which are variable rate instruments, by replacing an asset or liability at maturity or by adjusting the interest rate during the life of the asset or liability. Matching the amounts of assets and liabilities maturing in the same time interval helps to offset interest rate risk and to minimize the impact of rising or falling interest rates on net interest income.

The Company determines the overall magnitude of interest sensitivity risk and then formulates policies governing asset generation and pricing, funding sources and pricing, and off-balance sheet commitments. These decisions are based on management's expectations regarding future interest rate movements, the state of the national and regional economy, and other financial and business risk factors. The Company uses computer simulations to measure the effect of various interest rate scenarios on net interest income. This modeling reflects interest rate changes and the related impact on net interest income and net income over specified time horizons.

Based on scheduled maturities only, the Company was liability sensitive as of September 30, 2013. It should be noted, however, that non-maturing deposit liabilities, which consist of interest checking, money market, and savings accounts, are less interest sensitive than other market driven deposits. At September 30, 2013, non-maturing deposit liabilities totaled $460.0 million or 62.95% of total deposit liabilities.

In a rising rate environment, changes in these deposit rates have historically lagged behind the changes in earning asset rates, thus mitigating the impact from the liability sensitivity position. The asset/liability model allows the Company to reflect the fact that non-maturing deposits are less rate sensitive than other deposits by using a decay rate. The decay rate is a type of artificial maturity that simulates maturities for non-maturing deposits over the number of months that more closely reflects historic data. Using the decay rate, the model reveals that the Company is asset sensitive.

When the Company is asset sensitive, net interest income should improve if interest rates rise since assets will re-price faster than liabilities. Conversely, if interest rates fall, net interest income should decline, depending on the optionality (prepayment speeds) of the assets. When the Company is liability sensitive, net interest income should fall if rates rise and rise if rates fall.

The most likely scenario represents the rate environment as management forecasts it to occur. Management uses a "static" test to measure the effects of changes in interest rates on net interest income. This test assumes that management takes no steps to adjust the balance sheet to respond to the rate change by re-pricing assets/liabilities, as discussed in the first paragraph of this section.

Under the rate environment forecasted by management, rate changes in 50 to 100 basis point increments are applied to assess the impact on the Company's earnings at September 30, 2013. The rate change model assumes that these changes will occur gradually over the course of a year. The model reveals that a 50 basis point ramped decrease in rates would cause an approximate 0.07% annual decrease in net interest income. The model reveals that a 50 basis point ramped rise in rates would cause an approximate 0.66% annual increase in net interest income and that a 100 basis point ramped rise in rates would cause an approximate 0.99% increase in net interest income.

- 46 -

Item 4. Controls and Procedures.

Disclosure Controls and Procedures. Management evaluated, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective as of the end of the period covered by this report to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

In designing and evaluating its disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Internal Control over Financial Reporting. Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). No changes in the Company's internal control over financial reporting occurred during the fiscal quarter ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. Because of its inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

There are no pending legal proceedings to which the Company, or any of its subsidiaries, is a party or to which the property of the Company or any of its subsidiaries is subject that, in the opinion of management, may materially impact the financial condition of the Company.

Item 1A. Risk Factors.

There have been no material changes in the risk factors faced by the Company from those disclosed in the Company's 2012 annual report on Form 10-K.

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

Pursuant to the Company's stock option plans, participants may exercise stock options by surrendering shares of the Company's common stock that the participants already own. Shares surrendered by participants of these plans are repurchased at current market value pursuant to the terms of the applicable stock options. During the quarter ended September 30, 2013, the Company did not repurchase any shares related to the exercise of stock options.

During the quarter ended September 30, 2013, the Company did not repurchase any shares pursuant to the Company's stock repurchase program.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

- 47 -

Item 5. Other Information.

The Company has made no changes to the procedures by which security holders may recommend nominees to its board of directors.

Item 6. Exhibits.

Exhibit No. Description

3.1 Articles of Incorporation of Old Point Financial Corporation, as amended effective June 22, 2000 (incorporated by reference to Exhibit 3.1 to Form 10-K filed March 12, 2009)

3.2 Bylaws of Old Point Financial Corporation, as amended and restated March 8, 2011 (incorporated by reference to Exhibit 3.2 to Form 8-K filed March 10, 2011)

31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101 The following materials from Old Point Financial Corporation's quarterly report on Form 10-Q for the quarter ended September 30, 2013, formatted in XBRL (Extensible Business Reporting Language), filed herewith: (i) Consolidated Balance Sheets (unaudited for September 30, 2013), (ii) Consolidated Statements of Income (unaudited), (iii) Consolidated Statements of Comprehensive Income (unaudited), (iv) Consolidated Statements of Changes in Stockholders' Equity (unaudited), (v) Consolidated Statements of Cash Flows (unaudited), and (vi) Notes to Consolidated Financial Statements (unaudited)

SIGNATURES

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

OLD POINT FINANCIAL CORPORATION

November 13, 2013/s/Robert F. Shuford, Sr.

Robert F. Shuford, Sr.

Chairman, President & Chief Executive Officer

(Principal Executive Officer)

November 13, 2013/s/Laurie D. Grabow

Laurie D. Grabow

Chief Financial Officer & Senior Vice President/Finance

(Principal Financial & Accounting Officer)

- 48 -

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Old Point Financial Corporation (the "Company") on Form 10-Q for the quarter ended September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned Chief Executive Officer and Chief Financial Officer of the Company hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that based on their knowledge and belief:

(1)    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in the Report.

/s/Robert F. Shuford, Sr.                        

Robert F. Shuford, Sr.

Chairman, President & Chief Executive Officer

November 13, 2013

/s/Laurie D. Grabow                         

Laurie D. Grabow

Chief Financial Officer & Senior Vice President/Finance

November 13, 2013

EX-31.1

Exhibit 31.1

     CERTIFICATIONS

I, Robert F. Shuford, Sr., certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Old Point Financial Corporation;

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:  November 13, 2013

/s/Robert F. Shuford, Sr.                        

Robert F. Shuford, Sr.

Chairman, President & Chief Executive Officer

EX-31.2

Exhibit 31.2

     CERTIFICATIONS

I, Laurie D. Grabow, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Old Point Financial Corporation;

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:  November 13, 2013

/s/Laurie D. Grabow                        

Laurie D. Grabow

Chief Financial Officer & Senior Vice President/Finance

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Segment Reporting

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Segment Reporting

Note 9. Segment Reporting

The Company operates in a decentralized fashion in three principal business segments: The Old Point National Bank of Phoebus (the Bank), Old Point Trust & Financial Services, N. A. (Trust), and the Company as a separate segment (for purposes of this Note, the Parent). Revenues from the Bank’s operations consist primarily of interest earned on loans and investment securities and service charges on deposit accounts. Trust’s operating revenues consist principally of income from fiduciary activities. The Parent’s revenues are mainly interest and dividends received from the Bank and Trust companies. The Company has no other segments.

The Company’s reportable segments are strategic business units that offer different products and services. They are managed separately because each segment appeals to different markets and, accordingly, requires different technologies and marketing strategies.

Information about reportable segments, and reconciliation of such information to the consolidated financial statements as of and for the three and six months ended June 30, 2013 and 2012 follows:

	Three Months Ended June 30, 2013
	Bank		Trust		Unconsolidated Parent			Eliminations			Consolidated
Revenues
Interest and dividend income	$	7,466,917	$	9,933	$	1,095,279		$	(1,095,582	)	$	7,476,547
Income from fiduciary activities		0		865,689		0			0			865,689
Other income		2,299,848		133,972		50,100			(65,376	)		2,418,544
Total operating income		9,766,765		1,009,594		1,145,379			(1,160,958	)		10,760,780
Expenses
Interest expense		1,177,919		0		0			(303	)		1,177,616
Provision for loan losses		300,000		0		0			0			300,000
Salaries and employee benefits		4,144,898		552,616		108,070			0			4,805,584
Other expenses		3,018,514		226,099		63,954			(65,376	)		3,243,191
Total operating expenses		8,641,331		778,715		172,024			(65,679	)		9,526,391
Income before taxes		1,125,434		230,879		973,355			(1,095,279	)		1,234,389
Income tax expense (benefit)		182,701		78,333		(41,460	)		0			219,574
Net income	$	942,733	$	152,546	$	1,014,815		$	(1,095,279	)	$	1,014,815
Total assets	$	862,066,454	$	5,502,315	$	82,499,916		$	(83,187,334	)	$	866,881,351

	Three Months Ended June 30, 2012
	Bank		Trust		Unconsolidated Parent			Eliminations			Consolidated
Revenues
Interest and dividend income	$	8,301,983	$	9,368	$	668,104		$	(667,837	)	$	8,311,618
Income from fiduciary activities		0		793,005		0			0			793,005
Other income		2,943,305		160,014		165,000			(180,476	)		3,087,843
Total operating income		11,245,288		962,387		833,104			(848,313	)		12,192,466
Expenses
Interest expense		1,498,747		0		1,567			(1,908	)		1,498,406
Provision for loan losses		1,000,000		0		0			0			1,000,000
Salaries and employee benefits		4,524,216		563,640		132,029			0			5,219,885
Other expenses		3,602,522		239,708		65,011			(180,476	)		3,726,765
Total operating expenses		10,625,485		803,348		198,607			(182,384	)		11,445,056
Income before taxes		619,803		159,039		634,497			(665,929	)		747,410
Income tax expense (benefit)		59,007		53,906		(3,710	)		0			109,203
Net income	$	560,796	$	105,133	$	638,207		$	(665,929	)	$	638,207
Total assets	$	868,035,982	$	5,229,142	$	87,516,934		$	(88,463,223	)	$	872,318,835

	Six Months Ended June 30, 2013
	Bank		Trust		Unconsolidated Parent			Eliminations			Consolidated
Revenues
Interest and dividend income	$	15,086,945	$	19,210	$	2,056,841		$	(2,057,533	)	$	15,105,463
Income from fiduciary activities		0		1,765,494		0			0			1,765,494
Other income		4,417,970		244,740		100,200			(130,902	)		4,632,008
Total operating income		19,504,915		2,029,444		2,157,041			(2,188,435	)		21,502,965
Expenses
Interest expense		2,432,827		0		0			(692	)		2,432,135
Provision for loan losses		500,000		0		0			0			500,000
Salaries and employee benefits		8,438,820		1,068,666		219,024			0			9,726,510
Other expenses		6,140,976		443,618		94,375			(130,902	)		6,548,067
Total operating expenses		17,512,623		1,512,284		313,399			(131,594	)		19,206,712
Income before taxes		1,992,292		517,160		1,843,642			(2,056,841	)		2,296,253
Income tax expense (benefit)		277,109		175,502		(72,490	)		0			380,121
Net income	$	1,715,183	$	341,658	$	1,916,132		$	(2,056,841	)	$	1,916,132
Total assets	$	862,066,454	$	5,502,315	$	82,499,916		$	(83,187,334	)	$	866,881,351

	Six Months Ended June 30, 2012
	Bank		Trust		Unconsolidated Parent		Eliminations			Consolidated
Revenues
Interest and dividend income	$	16,714,277	$	18,952	$	1,760,508	$	(1,759,927	)	$	16,733,810
Income from fiduciary activities		0		1,619,651		0		0			1,619,651
Other income		5,295,982		264,352		330,000		(361,252	)		5,529,082
Total operating income		22,010,259		1,902,955		2,090,508		(2,121,179	)		23,882,543
Expenses
Interest expense		3,009,967		0		3,134		(3,769	)		3,009,332
Provision for loan losses		1,200,000		0		0		0			1,200,000
Salaries and employee benefits		8,812,752		1,100,653		266,757		0			10,180,162
Other expenses		7,088,935		485,024		103,219		(361,252	)		7,315,926
Total operating expenses		20,111,654		1,585,677		373,110		(365,021	)		21,705,420
Income before taxes		1,898,605		317,278		1,717,398		(1,756,158	)		2,177,123
Income tax expense (benefit)		352,186		107,539		890		0			460,615
Net income	$	1,546,419	$	209,739	$	1,716,508	$	(1,756,158	)	$	1,716,508
Total assets	$	868,035,982	$	5,229,142	$	87,516,934	$	(88,463,223	)	$	872,318,835

The accounting policies of the segments are the same as those described in the summary of significant accounting policies reported in the Company’s 2012 annual report on Form 10-K. The Company evaluates performance based on profit or loss from operations before income taxes, not including nonrecurring gains or losses.

Both the Parent and the Trust companies maintain deposit accounts with the Bank, on terms substantially similar to those available to other customers. These transactions are eliminated to reach consolidated totals.

XML

Consolidated Statements of Income (unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Interest and Dividend Income:
Interest and fees on loans	$ 5,883,652	$ 6,494,629	$ 17,782,921	$ 20,313,095
Interest on due from banks	35,694	16,871	68,501	43,151
Interest on federal funds sold	161	401	912	1,164
Interest on securities:
Taxable	949,535	1,229,293	3,526,071	3,830,193
Tax-exempt	369,008	201,758	920,990	443,967
Dividends and interest on all other securities	25,283	15,275	69,401	60,467
Total interest and dividend income	7,263,333	7,958,227	22,368,796	24,692,037
Interest Expense:
Interest on savings deposits	71,252	95,052	227,107	283,291
Interest on time deposits	757,102	971,078	2,406,837	2,910,056
Interest on federal funds purchased, securities sold under agreements to repurchase and other borrowings	7,120	10,415	26,561	42,438
Interest on Federal Home Loan Bank advances	308,584	337,550	915,688	1,187,642
Total interest expense	1,144,058	1,414,095	3,576,193	4,423,427
Net interest income	6,119,275	6,544,132	18,792,603	20,268,610
Provision for loan losses	300,000	750,000	800,000	1,950,000
Net interest income, after provision for loan losses	5,819,275	5,794,132	17,992,603	18,318,610
Noninterest Income:
Income from fiduciary activities	868,598	776,615	2,634,092	2,396,266
Service charges on deposit accounts	1,081,896	1,050,152	3,114,761	3,153,461
Other service charges, commissions and fees	880,544	853,989	2,651,134	2,531,050
Income from bank-owned life insurance	215,307	693,745	647,133	1,142,626
Income from Old Point Mortgage	99,150	51,168	403,474	176,466
Gain (loss) on sale of available-for-sale securities, net	(5,185)	619,936	(25,717)	1,703,805
Other operating income	56,525	60,027	169,460	150,691
Total noninterest income	3,196,835	4,105,632	9,594,337	11,254,365
Noninterest Expense:
Salaries and employee benefits	4,554,101	5,259,880	14,280,611	15,440,042
Occupancy and equipment	1,098,172	1,110,635	3,289,055	3,273,568
Data processing	412,555	448,854	1,247,015	1,222,757
FDIC insurance	172,382	284,042	529,357	851,194
Customer development	186,030	189,037	597,508	595,925
Legal and audit expense	155,900	174,672	390,561	582,784
Other outside service fees	112,795	135,881	321,683	429,248
Employee professional development	142,651	125,844	455,432	455,828
Postage and courier expense	119,773	118,179	362,804	361,490
Advertising	52,863	138,733	300,233	430,345
Stationery and supplies	111,188	116,733	326,911	334,572
Bad checks and other losses	107,525	103,070	246,745	240,517
Capital stock tax	104,808	61,404	296,999	185,114
Loss on write-down/sale of foreclosed assets	65,234	99,960	268,910	736,594
Other operating expense	380,172	385,306	1,136,902	1,108,340
Total noninterest expense	7,776,149	8,752,230	24,050,726	26,248,318
Income before income taxes	1,239,961	1,147,534	3,536,214	3,324,657
Income tax expense	202,617	73,346	582,738	533,961
Net income	$ 1,037,344	$ 1,074,188	$ 2,953,476	$ 2,790,696
Basic Earnings per Share:
Average shares outstanding (in shares)	4,959,009	4,959,009	4,959,009	4,959,009
Net income per share of common stock (in dollars per share)	$ 0.21	$ 0.22	$ 0.60	$ 0.56
Diluted Earnings per Share:
Average shares outstanding (in shares)	4,959,009	4,959,009	4,959,009	4,959,009
Net income per share of common stock (in dollars per share)	$ 0.21	$ 0.22	$ 0.60	$ 0.56

XML

Securities

9 Months Ended

Sep. 30, 2013

Securities [Abstract]

Securities

Note 2. Securities

Amortized costs and fair values of securities held-to-maturity as of the dates indicated are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2013
Obligations of  U.S. Government agencies	$	570	$	3	$	(3	)	$	570
Obligations of state and political subdivisions		10,843		9		(19	)		10,833
Total	$	11,413	$	12	$	(22	)	$	11,403
December 31, 2012
Obligations of  U.S. Government agencies	$	570	$	4	$	0		$	574

Amortized costs and fair values of securities available-for-sale as of the dates indicated are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2013
Obligations of  U.S. Government agencies	$	25,372	$	551	$	(118	)	$	25,805
Obligations of state and political subdivisions		50,997		160		(2,393	)		48,764
Mortgage-backed securities		189,456		0		(7,613	)		181,843
Money market investments		801		0		0			801
Corporate bonds		1,399		0		(29	)		1,370
Total	$	268,025	$	711	$	(10,153	)	$	258,583
December 31, 2012
Obligations of  U.S. Government agencies	$	35,787	$	1,314	$	(13	)	$	37,088
Obligations of state and political subdivisions		43,276		712		(214	)		43,774
Mortgage-backed securities		246,132		1,966		(743	)		247,355
Money market investments		541		0		0			541
Corporate bonds and other securities		700		0		(2	)		698
Total	$	326,436	$	3,992	$	(972	)	$	329,456

OTHER-THAN-TEMPORARILY IMPAIRED SECURITIES

Management assesses whether the Company intends to sell or it is more-likely-than-not that the Company will be required to sell a security before recovery of its amortized cost basis less any current-period credit losses. For debt securities that are considered other-than-temporarily impaired and that the Company does not intend to sell and will not be required to sell prior to recovery of the amortized cost basis, the Company separates the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security’s amortized cost basis and the present value of its expected future cash flows. The remaining difference between the security’s fair value and the present value of future expected cash flows is due to factors that are not credit related and is recognized in other comprehensive income.

The present value of expected future cash flows is determined using the best-estimate cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best-estimate cash flows vary depending on the type of security. The asset-backed securities cash flow estimates are based on bond specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds, and structural support, including subordination and guarantees.

The Company has a process in place to identify debt securities that could potentially have a credit or interest-rate related impairment that is other-than-temporary. This process involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts, and cash flow projections as indicators of credit issues. On a quarterly basis, management reviews all securities to determine whether an other-than-temporary decline in value exists and whether losses should be recognized. Management considers relevant facts and circumstances in evaluating whether a credit or interest rate-related impairment of a security is other-than-temporary. Relevant facts and circumstances considered include: (a) the extent and length of time the fair value has been below cost; (b) the reasons for the decline in value; (c) the financial position and access to capital of the issuer, including the current and future impact of any specific events; and (d) for fixed maturity securities, the Company’s intent to sell a security or whether it is more-likely-than-not the Company will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity and for equity securities, the Company’s ability and intent to hold the security for a period of time that allows for the recovery in value.

The Company has not recorded impairment charges through income on securities for the three or six months ended June 30, 2013 or the year ended December 31, 2012.

TEMPORARILY IMPAIRED SECURITIES

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses that are deemed to be temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of the dates indicated. The Company had no held-to-maturity securities with unrealized losses at December 31, 2012.

	June 30, 2013
	Less Than Twelve Months				More Than Twelve Months				Total
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Number of Securities
	(in thousands)
Securities Available-for-Sale
Debt securities:
Obligations of U.S. Government agencies	$	118	$	4,890	$	0	$	0	$	118	$	4,890		1
Obligations of state and political subdivisions		2,393		37,905		0		0		2,393		37,905		69
Mortgage-backed securities		7,613		181,843		0		0		7,613		181,843		19
Corporate bonds		29		1,370		0		0		29		1,370		11
Total securities available-for-sale	$	10,153	$	226,008	$	0	$	0	$	10,153	$	226,008		100
Securities Held-to-Maturity
Obligations of U.S. Government agencies	$	3	$	97	$	0	$	0	$	3	$	97		1
Obligations of state and political subdivisions		19		857		0		0		19		857		1
Total securities held-to-maturity	$	22	$	954	$	0	$	0	$	22	$	954		2

	December 31, 2012
	Less Than Twelve Months				More Than Twelve Months				Total
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Number of Securities
	(in thousands)
Securities Available-for-Sale
Debt securities:
Obligations of U. S. Government agencies	$	13	$	5,103	$	0	$	0	$	13	$	5,103		1
Obligations of state and political subdivisions		214		9,535		0		0		214		9,535		24
Mortgage-backed securities		743		104,066		0		0		743		104,066		9
Corporate bonds and other securities		2		700		0		0		2		700		2
Total securities available-for-sale	$	972	$	119,404	$	0	$	0	$	972	$	119,404		36

Certain investments within the Company’s portfolio had unrealized losses at June 30, 2013 and December 31, 2012, as shown in the tables above. The unrealized losses were caused by increases in market interest rates. Because the Company does not intend to sell the investments and management believes it is unlikely that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider the investments to be other-than-temporarily impaired at June 30, 2013 or December 31, 2012.

Restricted Securities

The restricted security category is comprised of stock in the Federal Home Loan Bank of Atlanta (FHLB) and the Federal Reserve Bank (FRB). These stocks are classified as restricted securities because their ownership is restricted to certain types of entities and the securities lack a market. Therefore, FHLB and FRB stock is carried at cost and evaluated for impairment. When evaluating these stocks for impairment, their value is determined based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. Restricted stock is viewed as a long-term investment and management believes that the Company has the ability and the intent to hold this stock until its value is recovered.

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Measurements [Abstract]

Assets measured at fair value on a recurring basis

The following table presents the balances of certain assets measured at fair value on a recurring basis as of the dates indicated:

			Fair Value Measurements at June 30, 2013 Using
			(in thousands)
Description	Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available-for-sale securities
Obligations of  U.S. Government agencies	$	25,805	$	0	$	25,805	$	0
Obligations of state and political subdivisions		48,764		0		48,764		0
Mortgage-backed securities		181,843		0		181,843		0
Money market investments		801		0		801		0
Corporate bonds		1,370		0		1,370		0
Total available-for-sale securities	$	258,583	$	0	$	258,583	$	0

			Fair Value Measurements at December 31, 2012 Using
			(in thousands)
Description	Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available-for-sale securities
Obligations of  U.S. Government agencies		37,088		0		37,088		0
Obligations of state and political subdivisions		43,774		0		43,774		0
Mortgage-backed securities		247,355		0		247,355		0
Money market investments		541		0		541		0
Corporate bonds		698		0		698		0
Total available-for-sale securities	$	329,456	$	0	$	329,456	$	0

Assets measured at fair value on a nonrecurring basis

The following table presents the assets carried on the consolidated balance sheets for which a nonrecurring change in fair value has been recorded. Assets are shown by class of loan and by level in the fair value hierarchy, as of the dates indicated. Certain impaired loans are valued by the present value of the loan’s expected future cash flows, discounted at the interest rate of the loan rather than at a market rate. These loans are not carried on the consolidated balance sheets at fair value and, as such, are not included in the table below.

			Carrying Value at June 30, 2013 Using
			(in thousands)
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans
Mortgage loans on real estate:
Residential 1-4 family	$	3,006	$	0	$	0	$	3,006
Commercial		2,776		0		0		2,776
Construction		2,520		0		0		2,520
Second mortgages		88		0		0		88
Total	$	8,390	$	0	$	0	$	8,390
Foreclosed assets
Residential 1-4 family	$	521	$	0	$	0	$	521
Commercial		2,286		0		0		2,286
Construction		3,752		0		0		3,752
Total	$	6,559	$	0	$	0	$	6,559

			Carrying Value at December 31, 2012 Using
			(in thousands)
Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans
Mortgage loans on real estate:
Residential 1-4 family	$	3,009	$	0	$	0	$	3,009
Commercial		2,271		0		0		2,271
Second mortgages		42		0		0		42
Total mortgage loans on real estate	$	5,322	$	0	$	0	$	5,322
Commercial loans		64		0		0		64
Total	$	5,386	$	0	$	0	$	5,386
Foreclosed assets
Residential 1-4 family	$	676	$	0	$	0	$	676
Commercial		2,094		0		0		2,094
Construction		3,804		0		0		3,804
Total	$	6,574	$	0	$	0	$	6,574

Fair Value Inputs, Assets, Quantitative Information

The following table displays quantitative information about Level 3 Fair Value Measurements as of the date indicated (dollars in thousands):

			Quantitative Information About Level 3 Fair Value Measurements
Description	Fair Value at June 30, 2013 (in thousands)		Valuation Techniques	Unobservable Input	Range (Average)
Impaired loans
Residential 1-4 family real estate		3,006	Market comparables	Selling costs		5% - 6% (5%)
				Liquidation discount		1.25%
Commercial real estate		2,776	Market comparables	Selling costs		6% - 20% (10%)
				Age of appraisal		46%
Construction		2,520	Market comparables	Selling costs		20%
				Liquidation discount		1.25%
Second mortgages		88	Market comparables	Selling costs		6%
				Liquidation discount		1.25%
Foreclosed assets
Residential 1-4 family		521	Market comparables	Selling costs		6% - 10% (6%)
Commercial		2,286	Market comparables	Selling costs		6% - 10% (6%)
Construction		3,752	Market comparables	Selling costs		6% - 10% (6%)

			Quantitative Information About Level 3 Fair Value Measurements
Description	Fair Value at December 31, 2012 (in thousands)		Valuation Techniques	Unobservable Input	Range (Average)
Impaired loans
Residential 1-4 family real estate		3,009	Market comparables	Differences in comparables		0% - 5% (5%)
				Selling costs		4.75% - 6% (6%)
Commercial real estate		2,271	Market comparables	Selling costs		0% - 6% (4%)
Second mortgages		42	Market comparables	Selling costs		6%
Commercial loans		64	Market comparables	Differences in comparables		25%
Foreclosed assets
Residential 1-4 family		676	Market comparables	Selling costs		6% - 10% (6%)
Commercial		2,094	Market comparables	Selling costs		6% - 10% (6%)
Construction		3,804	Market comparables	Selling costs		6% - 10% (6%)

Estimated fair values and related carrying or notional amounts of financial instruments

The estimated fair values, and related carrying or notional amounts, of the Company's financial instruments as of the dates indicated are as follows:

			Fair Value Measurements at June 30, 2013 Using
			(in thousands)
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents	$	55,171	$	55,171	$	0	$	0
Securities available-for-sale		258,583		0		258,583		0
Securities held-to-maturity		11,413		0		11,403		0
Restricted securities		2,378		0		2,378		0
Loans, net of allowances for loan losses		462,212		0		0		467,676
Bank owned life insurance		22,257		0		22,257		0
Accrued interest receivable		2,593		0		2,593		0
Liabilities
Deposits	$	730,368	$	0	$	734,412	$	0
Overnight repurchase agreements		25,642		0		25,642		0
Term repurchase agreements		411		0		411		0
Federal Home Loan Bank advances		25,000		0		27,992		0
Accrued interest payable		366		0		366		0

			Fair Value Measurements at December 31, 2012 Using
			(in thousands)
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents	$	42,317	$	42,317	$	0	$	0
Securities available-for-sale		329,456		0		329,456		0
Securities held-to-maturity		570		0		574		0
Restricted securities		2,562		0		2,562		0
Loans, net of allowances for loan losses		463,809		0		0		466,492
Bank owned life insurance		21,824		0		21,824		0
Accrued interest receivable		2,420		0		2,420		0
Liabilities
Deposits	$	753,816	$	0	$	757,923	$	0
Overnight repurchase agreements		35,946		0		35,946		0
Term repurchase agreements		1,280		0		1,282		0
Federal Home Loan Bank advances		25,000		0		28,681		0
Accrued interest payable		439		0		439		0

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2013

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 10. Commitments and Contingencies

There have been no material changes in the Company’s commitments and contingencies from those disclosed in the Company’s 2012 annual report on Form 10-K. For a discussion of the Company’s branch office expansion, see Note 1 of the Notes to the Consolidated Financial Statements included in this quarterly report on Form 10-Q.

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Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Financial assets [Abstract]
Securities available-for-sale	$ 158,147	$ 329,456
Securities held-to-maturity	94,838
Carrying Value [Member]
Financial assets [Abstract]
Cash and Cash Equivalents	66,714	42,317
Securities available-for-sale	158,147	329,456
Securities held-to-maturity	93,819	570
Restricted securities	2,378	2,562
Loans, net of allowances for loan losses	473,187	463,809
Bank owned life insurance	22,472	21,824
Accrued Interest Receivable	2,340	2,420
Financial liabilities [Abstract]
Deposits	730,824	753,816
Federal Funds Purchased	0	0
Overnight repurchase agreements	37,020	35,946
Term repurchase agreements	411	1,280
Federal Home Loan Bank advances	25,000	25,000
Accrued interest payable	350	439
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Financial assets [Abstract]
Cash and Cash Equivalents	66,714	42,317
Securities available-for-sale	0	0
Securities held-to-maturity	0	0
Restricted securities	0	0
Loans, net of allowances for loan losses	0	0
Bank owned life insurance	0	0
Accrued Interest Receivable	0	0
Financial liabilities [Abstract]
Deposits	0	0
Federal Funds Purchased	0	0
Overnight repurchase agreements	0	0
Term repurchase agreements	0	0
Federal Home Loan Bank advances	0	0
Accrued interest payable	0	0
Significant Other Observable Inputs (Level 2) [Member]
Financial assets [Abstract]
Cash and Cash Equivalents	0	0
Securities available-for-sale	158,147	329,456
Securities held-to-maturity	94,838	574
Restricted securities	2,378	2,562
Loans, net of allowances for loan losses	0	0
Bank owned life insurance	22,472	21,824
Accrued Interest Receivable	2,340	2,420
Financial liabilities [Abstract]
Deposits	734,017	757,923
Federal Funds Purchased	0	0
Overnight repurchase agreements	37,020	35,946
Term repurchase agreements	411	1,282
Federal Home Loan Bank advances	27,814	28,681
Accrued interest payable	350	439
Significant Unobservable Inputs (Level 3) [Member]
Financial assets [Abstract]
Cash and Cash Equivalents	0	0
Securities available-for-sale	0	0
Securities held-to-maturity	0	0
Restricted securities	0	0
Loans, net of allowances for loan losses	475,990	466,492
Bank owned life insurance	0	0
Accrued Interest Receivable	0	0
Financial liabilities [Abstract]
Deposits	0	0
Federal Funds Purchased	0	0
Overnight repurchase agreements	0	0
Term repurchase agreements	0	0
Federal Home Loan Bank advances	0	0
Accrued interest payable	0	0
Impaired Loans, Residential 1-4 Family Real Estate [Member] | Market Comparables [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	3,001	3,009
Impaired Loans, Residential 1-4 Family Real Estate [Member] | Market Comparables [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	13.00%	4.75%
Liquidation Discount	6.50%	0.00%
Impaired Loans, Residential 1-4 Family Real Estate [Member] | Market Comparables [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	14.00%	6.00%
Liquidation Discount	6.50%	5.00%
Impaired Loans, Residential 1-4 Family Real Estate [Member] | Market Comparables [Member] | Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	13.00%	6.00%
Liquidation Discount	6.50%	5.00%
Impaired Loans, Commercial Real Estate [Member] | Market Comparables [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	2,201	2,271
Impaired Loans, Commercial Real Estate [Member] | Market Comparables [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	5.00%	0.00%
Liquidation Discount	10.00%
Impaired Loans, Commercial Real Estate [Member] | Market Comparables [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	14.00%	6.00%
Liquidation Discount	10.00%
Impaired Loans, Commercial Real Estate [Member] | Market Comparables [Member] | Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	10.00%	4.00%
Liquidation Discount	10.00%
Impaired Loans, Construction Loans [Member] | Market Comparables [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	2,396
Impaired Loans, Construction Loans [Member] | Market Comparables [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	10.00%
Liquidation Discount	15.50%
Impaired Loans, Construction Loans [Member] | Market Comparables [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	10.00%
Liquidation Discount	15.50%
Impaired Loans, Construction Loans [Member] | Market Comparables [Member] | Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	10.00%
Liquidation Discount	15.50%
Impaired Loans, Second Mortgages [Member] | Market Comparables [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	0	42
Impaired Loans, Second Mortgages [Member] | Market Comparables [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	0.00%
Liquidation Discount	0.00%
Impaired Loans, Second Mortgages [Member] | Market Comparables [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	0.00%
Liquidation Discount	0.00%
Impaired Loans, Second Mortgages [Member] | Market Comparables [Member] | Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	0.00%
Liquidation Discount	0.00%
Impaired Loans, Commercial Loans [Member] | Market Comparables [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value		64
Foreclosed Assets, Residential 1-4 Family [Member] | Market Comparables [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	216	676
Foreclosed Assets, Residential 1-4 Family [Member] | Market Comparables [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	6.00%	6.00%
Foreclosed Assets, Residential 1-4 Family [Member] | Market Comparables [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	10.00%	10.00%
Foreclosed Assets, Residential 1-4 Family [Member] | Market Comparables [Member] | Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	6.00%	6.00%
Foreclosed Assets, Commercial [Member] | Market Comparables [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	2,444	2,094
Foreclosed Assets, Commercial [Member] | Market Comparables [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	6.00%	6.00%
Foreclosed Assets, Commercial [Member] | Market Comparables [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	10.00%	10.00%
Foreclosed Assets, Commercial [Member] | Market Comparables [Member] | Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	6.00%	6.00%
Foreclosed Assets, Construction [Member] | Market Comparables [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	$ 3,722	$ 3,804
Foreclosed Assets, Construction [Member] | Market Comparables [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	6.00%	6.00%
Foreclosed Assets, Construction [Member] | Market Comparables [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	10.00%	10.00%
Foreclosed Assets, Construction [Member] | Market Comparables [Member] | Average [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Selling costs (in hundredths)	6.00%	6.00%

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Securities (Details) (USD $)	9 Months Ended
	Sep. 30, 2013 Segment	Sep. 30, 2012	Dec. 31, 2012 Segment
Amortized cost and fair value of securities held-to-maturity [Abstract]
Amortized Cost	$ 93,819,000
Gross Unrealized Gains	1,740,000
Gross Unrealized Losses	(721,000)
Fair Value	94,838,000
Amortized cost and fair value of securities available-for-sale [Abstract]
Amortized Cost	166,091,000		326,436,000
Gross Unrealized Gains	326,000		3,992,000
Gross Unrealized Losses	(8,270,000)		(972,000)
Fair Value	158,147,000		329,456,000
Securities transferred from available-for-sale to held-to-maturity	68,015,458	0
Unrealized Gain or Loss on AFS to HTM Transfers	(6,231,880)	0
Securities transferred from available-for-sale to held-to-maturity, amortized cost	74,247,338
Amortization of Unrealized Gain or Loss on Securities Transferred from AFS to HTM	68,166	0
Securities Available-for-Sale, Gross Unrealized Losses [Abstract]
Less Than Twelve Months	7,516,000		972,000
More Than Twelve Months	754,000		0
Total	8,270,000		972,000
Securities Available-for-Sale, Fair Value [Abstract]
Less than Twelve Months	130,802,000		119,404,000
More Than Twelve Months	11,324,000		0
Total	142,126,000		119,404,000
Securities Held-to-Maturity, Gross Unrealized Loss [Abstract]
Less Than Twelve Months	721,000
More Than Twelve Months	0
Total	721,000
Securities Held-to-Maturity, Fair Value [Abstract]
Less than Twelve Months	20,730,000
More Than Twelve Months	0
Total	20,730,000
Available-for-sale securities with continuous unrealized loss position, number of securities [Abstract]
Cause	caused by increases in market interest rates.
Number of Securities	106		36
Held-to-maturity securities with continuous unrealized loss position, number of securities [Abstract]
Number of Securities	43
Obligations of U.S. Government agencies [Member]
Amortized cost and fair value of securities available-for-sale [Abstract]
Amortized Cost	15,193,000		35,787,000
Gross Unrealized Gains	249,000		1,314,000
Gross Unrealized Losses	(378,000)		(13,000)
Fair Value	15,064,000		37,088,000
Securities Available-for-Sale, Gross Unrealized Losses [Abstract]
Less Than Twelve Months	378,000		13,000
More Than Twelve Months	0		0
Total	378,000		13,000
Securities Available-for-Sale, Fair Value [Abstract]
Less than Twelve Months	4,454,000		5,103,000
More Than Twelve Months	0		0
Total	4,454,000		5,103,000
Securities Held-to-Maturity, Gross Unrealized Loss [Abstract]
Less Than Twelve Months	5,000
More Than Twelve Months	0
Total	5,000
Securities Held-to-Maturity, Fair Value [Abstract]
Less than Twelve Months	95,000
More Than Twelve Months	0
Total	95,000
Available-for-sale securities with continuous unrealized loss position, number of securities [Abstract]
Number of Securities	1		1
Held-to-maturity securities with continuous unrealized loss position, number of securities [Abstract]
Number of Securities	1
Obligations of states and political subdivisions [Member]
Amortized cost and fair value of securities available-for-sale [Abstract]
Amortized Cost	51,362,000		43,276,000
Gross Unrealized Gains	77,000		712,000
Gross Unrealized Losses	(4,389,000)		(214,000)
Fair Value	47,050,000		43,774,000
Securities Available-for-Sale, Gross Unrealized Losses [Abstract]
Less Than Twelve Months	4,251,000		214,000
More Than Twelve Months	138,000		0
Total	4,389,000		214,000
Securities Available-for-Sale, Fair Value [Abstract]
Less than Twelve Months	40,686,000		9,535,000
More Than Twelve Months	1,944,000		0
Total	42,630,000		9,535,000
Securities Held-to-Maturity, Gross Unrealized Loss [Abstract]
Less Than Twelve Months	716,000
More Than Twelve Months	0
Total	716,000
Securities Held-to-Maturity, Fair Value [Abstract]
Less than Twelve Months	20,635,000
More Than Twelve Months	0
Total	20,635,000
Available-for-sale securities with continuous unrealized loss position, number of securities [Abstract]
Number of Securities	83		24
Held-to-maturity securities with continuous unrealized loss position, number of securities [Abstract]
Number of Securities	42
Mortgage-backed securities [Member]
Amortized cost and fair value of securities available-for-sale [Abstract]
Amortized Cost	97,245,000		246,132,000
Gross Unrealized Gains	0		1,966,000
Gross Unrealized Losses	(3,477,000)		(743,000)
Fair Value	93,768,000		247,355,000
Securities Available-for-Sale, Gross Unrealized Losses [Abstract]
Less Than Twelve Months	2,863,000		743,000
More Than Twelve Months	614,000		0
Total	3,477,000		743,000
Securities Available-for-Sale, Fair Value [Abstract]
Less than Twelve Months	84,487,000		104,066,000
More Than Twelve Months	9,282,000		0
Total	93,769,000		104,066,000
Available-for-sale securities with continuous unrealized loss position, number of securities [Abstract]
Number of Securities	12		9
Money market investments [Member]
Amortized cost and fair value of securities available-for-sale [Abstract]
Amortized Cost	892,000		541,000
Gross Unrealized Gains	0		0
Gross Unrealized Losses	0		0
Fair Value	892,000		541,000
Corporate bond and other securities [Member]
Securities Available-for-Sale, Gross Unrealized Losses [Abstract]
Less Than Twelve Months	24,000		2,000
More Than Twelve Months	2,000		0
Total	26,000		2,000
Securities Available-for-Sale, Fair Value [Abstract]
Less than Twelve Months	1,175,000		700,000
More Than Twelve Months	98,000		0
Total	1,273,000		700,000
Available-for-sale securities with continuous unrealized loss position, number of securities [Abstract]
Number of Securities	10		2
Corporate Bonds [Member]
Amortized cost and fair value of securities available-for-sale [Abstract]
Amortized Cost	1,399,000		700,000
Gross Unrealized Gains	0		0
Gross Unrealized Losses	(26,000)		(2,000)
Fair Value	1,373,000		698,000
Obligations of U.S. Government agencies [Member]
Amortized cost and fair value of securities held-to-maturity [Abstract]
Amortized Cost	570,000		570,000
Gross Unrealized Gains	2,000		4,000
Gross Unrealized Losses	(5,000)		0
Fair Value	567,000		574,000
Obligations of states and political subdivisions [Member]
Amortized cost and fair value of securities held-to-maturity [Abstract]
Amortized Cost	25,669,000
Gross Unrealized Gains	3,000
Gross Unrealized Losses	(716,000)
Fair Value	24,956,000
Collateralized Mortgage Backed Securities [Member]
Amortized cost and fair value of securities held-to-maturity [Abstract]
Amortized Cost	67,580,000
Gross Unrealized Gains	1,735,000
Gross Unrealized Losses	0
Fair Value	$ 69,315,000

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General (Details) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Sep. 30, 2012	Oct. 16, 2012	Apr. 19, 2012
Subsequent Event [Line Items]
Contractor contract fees				$ 12,200,000	$ 2,100,000
Contractor fees paid	9,300,000	9,300,000
Number of branches consolidated	4
Un-depreciated value of furniture and equipment to be disposed	6,000	6,000
Un-depreciated value of furniture and equipment to be redeployed	8,000	8,000
Real Estate Transferred to Other Real Estate	379,000	506,296	0
New General Contractor Contract [Member]
Subsequent Event [Line Items]
Subsequent Event, Description		The Company is expanding the building of a current branch office.
Contract, Date		Apr. 19, 2012
Lower range of the expected cost of the project for next one to two years		13,000,000
Higher range of the expected cost of the project over the next one or two years		$ 15,000,000

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Share-Based Compensation (Details) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013
Share-Based Compensation [Abstract]
Options maximum term period		10 years
Shares [Roll Forward]
Options outstanding, beginning of period (in shares)		156,960
Granted (in shares)	0
Exercised (in shares)	0
Canceled or expired (in shares)	(2,500)
Options outstanding, end of period (in shares)	154,460	154,460
Options exercisable, end of period (in shares)	154,460	154,460
Weighted Average Exercise Price [Roll Forward]
Options outstanding, beginning of period (in dollars per share)		$ 21.63
Granted (in dollars per share)	$ 0
Exercised (in dollars per share)	$ 0
Canceled or expired (in dollars per share)	$ 21.94
Options outstanding, end of period (in dollars per share)	$ 21.63	$ 21.63
Options exercisable, end of period (in dollars per share)	$ 21.63	$ 21.63
Weighted Average Remaining Contractual Life (in years) [Abstract]
Options outstanding, end of period	2 years 8 months 16 days
Options exercisable, end of period	2 years 8 months 16 days
Aggregate Intrinsic Value [Abstract]
Options outstanding, end of period	$ 0	$ 0
Options exercisable, end of period	0	0
Unrecognized compensation expense related to nonvested options	$ 0	$ 0

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Loans and the Allowance for Loan Losses, Troubled Debt Restructuring (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013 Contract	Sep. 30, 2012 Contract	Sep. 30, 2013 Contract	Sep. 30, 2012 Contract
Financing Receivable, Modifications [Line Items]
Loans restructured and given below market rates			7	2
Principal forgiveness on all loans			$ 0	$ 530
Loans restructured given principal reductions			0	2
Loans restructured given principal reductions and below market rate			0	1
Recorded investment in defaulting TDRs			1,908	0
Residential 1-4 Family [Member]
Financing Receivable, Modifications [Line Items]
Recorded investment in defaulting TDRs			79	0
Commercial [Member]
Financing Receivable, Modifications [Line Items]
Recorded investment in defaulting TDRs			1,829	0
Total Mortgage Loans on Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications	3	2	7	5
Recorded Investment Prior to Modification	488	560	1,371	3,690
Recorded Investment After Modification	488	554	1,371	3,160
Current Investment	487	496	1,358	2,993
Recorded investment in defaulting TDRs			1,908	0
Total Mortgage Loans on Real Estate [Member] | Residential 1-4 Family [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications	3	1	6	1
Recorded Investment Prior to Modification	488	93	1,164	93
Recorded Investment After Modification	488	87	1,164	87
Current Investment	487	71	1,158	72
Total Mortgage Loans on Real Estate [Member] | Commercial [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications	0	1	1	3
Recorded Investment Prior to Modification	0	467	207	3,486
Recorded Investment After Modification	0	467	207	2,928
Current Investment	0	425	200	2,782
Total Mortgage Loans on Real Estate [Member] | Second Mortgage [Member]
Financing Receivable, Modifications [Line Items]
Number of Modifications		0		1
Recorded Investment Prior to Modification		0		111
Recorded Investment After Modification		0		145
Current Investment		$ 0		$ 139

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Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Reconciliation of assets and revenues from segment to consolidated

Information about reportable segments, and reconciliation of such information to the consolidated financial statements as of and for the three and six months ended June 30, 2013 and 2012 follows:

	Three Months Ended June 30, 2013
	Bank		Trust		Unconsolidated Parent			Eliminations			Consolidated
Revenues
Interest and dividend income	$	7,466,917	$	9,933	$	1,095,279		$	(1,095,582	)	$	7,476,547
Income from fiduciary activities		0		865,689		0			0			865,689
Other income		2,299,848		133,972		50,100			(65,376	)		2,418,544
Total operating income		9,766,765		1,009,594		1,145,379			(1,160,958	)		10,760,780
Expenses
Interest expense		1,177,919		0		0			(303	)		1,177,616
Provision for loan losses		300,000		0		0			0			300,000
Salaries and employee benefits		4,144,898		552,616		108,070			0			4,805,584
Other expenses		3,018,514		226,099		63,954			(65,376	)		3,243,191
Total operating expenses		8,641,331		778,715		172,024			(65,679	)		9,526,391
Income before taxes		1,125,434		230,879		973,355			(1,095,279	)		1,234,389
Income tax expense (benefit)		182,701		78,333		(41,460	)		0			219,574
Net income	$	942,733	$	152,546	$	1,014,815		$	(1,095,279	)	$	1,014,815
Total assets	$	862,066,454	$	5,502,315	$	82,499,916		$	(83,187,334	)	$	866,881,351

	Three Months Ended June 30, 2012
	Bank		Trust		Unconsolidated Parent			Eliminations			Consolidated
Revenues
Interest and dividend income	$	8,301,983	$	9,368	$	668,104		$	(667,837	)	$	8,311,618
Income from fiduciary activities		0		793,005		0			0			793,005
Other income		2,943,305		160,014		165,000			(180,476	)		3,087,843
Total operating income		11,245,288		962,387		833,104			(848,313	)		12,192,466
Expenses
Interest expense		1,498,747		0		1,567			(1,908	)		1,498,406
Provision for loan losses		1,000,000		0		0			0			1,000,000
Salaries and employee benefits		4,524,216		563,640		132,029			0			5,219,885
Other expenses		3,602,522		239,708		65,011			(180,476	)		3,726,765
Total operating expenses		10,625,485		803,348		198,607			(182,384	)		11,445,056
Income before taxes		619,803		159,039		634,497			(665,929	)		747,410
Income tax expense (benefit)		59,007		53,906		(3,710	)		0			109,203
Net income	$	560,796	$	105,133	$	638,207		$	(665,929	)	$	638,207
Total assets	$	868,035,982	$	5,229,142	$	87,516,934		$	(88,463,223	)	$	872,318,835

	Six Months Ended June 30, 2013
	Bank		Trust		Unconsolidated Parent			Eliminations			Consolidated
Revenues
Interest and dividend income	$	15,086,945	$	19,210	$	2,056,841		$	(2,057,533	)	$	15,105,463
Income from fiduciary activities		0		1,765,494		0			0			1,765,494
Other income		4,417,970		244,740		100,200			(130,902	)		4,632,008
Total operating income		19,504,915		2,029,444		2,157,041			(2,188,435	)		21,502,965
Expenses
Interest expense		2,432,827		0		0			(692	)		2,432,135
Provision for loan losses		500,000		0		0			0			500,000
Salaries and employee benefits		8,438,820		1,068,666		219,024			0			9,726,510
Other expenses		6,140,976		443,618		94,375			(130,902	)		6,548,067
Total operating expenses		17,512,623		1,512,284		313,399			(131,594	)		19,206,712
Income before taxes		1,992,292		517,160		1,843,642			(2,056,841	)		2,296,253
Income tax expense (benefit)		277,109		175,502		(72,490	)		0			380,121
Net income	$	1,715,183	$	341,658	$	1,916,132		$	(2,056,841	)	$	1,916,132
Total assets	$	862,066,454	$	5,502,315	$	82,499,916		$	(83,187,334	)	$	866,881,351

	Six Months Ended June 30, 2012
	Bank		Trust		Unconsolidated Parent		Eliminations			Consolidated
Revenues
Interest and dividend income	$	16,714,277	$	18,952	$	1,760,508	$	(1,759,927	)	$	16,733,810
Income from fiduciary activities		0		1,619,651		0		0			1,619,651
Other income		5,295,982		264,352		330,000		(361,252	)		5,529,082
Total operating income		22,010,259		1,902,955		2,090,508		(2,121,179	)		23,882,543
Expenses
Interest expense		3,009,967		0		3,134		(3,769	)		3,009,332
Provision for loan losses		1,200,000		0		0		0			1,200,000
Salaries and employee benefits		8,812,752		1,100,653		266,757		0			10,180,162
Other expenses		7,088,935		485,024		103,219		(361,252	)		7,315,926
Total operating expenses		20,111,654		1,585,677		373,110		(365,021	)		21,705,420
Income before taxes		1,898,605		317,278		1,717,398		(1,756,158	)		2,177,123
Income tax expense (benefit)		352,186		107,539		890		0			460,615
Net income	$	1,546,419	$	209,739	$	1,716,508	$	(1,756,158	)	$	1,716,508
Total assets	$	868,035,982	$	5,229,142	$	87,516,934	$	(88,463,223	)	$	872,318,835

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Consolidated Statements of Changes in Stockholders' Equity (unaudited) (USD $)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance at Dec. 31, 2011	$ 24,795,045	$ 16,309,983	$ 45,109,268	$ (349,581)	$ 85,864,715
Balance (in shares) at Dec. 31, 2011	4,959,009
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	2,790,696	0	2,790,696
Other comprehensive loss, net of tax	0	0	0	2,403,011	2,403,011
Stock compensation expense	0	81,060	0	0	81,060
Cash dividends	0	0	(743,851)	0	(743,851)
Balance at Sep. 30, 2012	24,795,045	16,391,043	47,156,113	2,053,430	90,395,631
Balance (in shares) at Sep. 30, 2012	4,959,009
Balance at Dec. 31, 2012	24,795,045	16,391,845	48,304,609	(191,463)	89,300,036
Balance (in shares) at Dec. 31, 2012	4,959,009				4,959,009
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	0	0	2,953,476	0	2,953,476
Other comprehensive loss, net of tax	0	0	0	(11,303,284)	(11,303,284)
Cash dividends	0	0	(793,441)	0	(793,441)
Balance at Sep. 30, 2013	$ 24,795,045	$ 16,391,845	$ 50,464,644	$ (11,494,747)	$ 80,156,787
Balance (in shares) at Sep. 30, 2013	4,959,009				4,959,009

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Consolidated Statements of Cash Flows (unaudited) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 2,953,476	$ 2,790,696
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,471,114	1,411,040
Provision for loan losses	800,000	1,950,000
Net (gain) loss on sale of available-for-sale securities	25,717	(1,703,805)
Net amortization of securities	1,947,709	1,142,043
Net loss on disposal of premises and equipment	22,666	396
Net loss on write-down/sale of foreclosed assets	268,910	736,594
Income from bank owned life insurance	(647,133)	(1,142,626)
Stock compensation expense	0	81,060
Deferred tax (benefit) expense	(59,203)	110,235
(Increase) decrease in other assets	(777,574)	1,653,149
Increase in other liabilities	987,853	993,695
Net cash provided by operating activities	6,993,535	8,022,477
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of available-for-sale securities	(12,742,008)	(277,741,641)
Purchases of held-to-maturity securities	(25,770,691)	0
Proceeds from sales of restricted securities	183,800	889,100
Proceeds from maturities and calls of securities	35,340,464	59,843,643
Proceeds from sale of available-for-sale securities	62,131,923	147,178,925
Decrease in loans made to customers	(11,610,600)	53,071,871
Proceeds from sales of foreclosed assets	1,386,147	2,461,219
Proceeds from payout on bank-owned life insurance policy	0	1,109,296
Purchases of premises and equipment	(7,935,599)	(2,226,964)
Net cash provided by (used in) investing activities	40,983,436	(15,414,551)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in noninterest-bearing deposits	3,721,977	12,551,450
Increase in savings deposits	11,325,120	15,417,220
Increase (decrease) in time deposits	(38,039,248)	12,826,761
Decrease in federal funds purchased, repurchase agreements and other borrowings	205,345	2,062,241
Decrease in Federal Home Loan Bank advances	0	(10,000,000)
Cash dividends paid on common stock	(793,441)	(743,851)
Net cash provided by (used in) financing activities	(23,580,247)	32,113,821
Net increase in cash and cash equivalents	24,396,724	24,721,747
Cash and cash equivalents at beginning of period	42,317,246	24,854,656
Cash and cash equivalents at end of period	66,713,970	49,576,403
Cash payments for:
Interest	3,664,860	4,526,922
Income tax	550,000	600,000
SUPPLEMENTAL SCHEDULE OF NONCASH TRANSACTIONS
Unrealized gain (loss) on securities available-for-sale	(10,962,474)	3,640,925
Loans transferred to foreclosed assets	1,431,901	564,480
Former branch site transferred to foreclosed assets	506,296	0
Securities transferred from available-for-sale to held-to-maturity	68,015,458	0
Unrealized Gain or Loss on AFS to HTM Transfers	(6,231,880)	0
Amortization of Unrealized Gain or Loss on Securities Transferred from AFS to HTM	$ 68,166	$ 0

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Loans and the Allowance for Loan Losses

9 Months Ended

Sep. 30, 2013

Loans and the Allowance for Loan Losses [Abstract]

Loans and the Allowance for Loan Losses

Note 3. Loans and the Allowance for Loan Losses

The following is a summary of the balances in each class of the Company’s loan portfolio as of the dates indicated:

	June 30, 2013			December 31, 2012
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	80,553		$	77,267
Commercial		273,498			274,613
Construction		13,493			12,005
Second mortgages		12,242			14,315
Equity lines of credit		31,201			32,327
Total mortgage loans on real estate		410,987			410,527
Commercial loans		28,687			25,341
Consumer loans		10,985			13,146
Other		18,849			22,119
Total loans		469,508			471,133
Less: Allowance for loan losses		(7,296	)		(7,324	)
Loans, net of allowance and deferred fees	$	462,212		$	463,809

Overdrawn deposit accounts are reclassified as loans and included in the Other category in the table above. Overdrawn deposit accounts totaled $587 thousand and $1.6 million at June 30, 2013 and December 31, 2012, respectively.

CREDIT QUALITY INFORMATION

The Company uses internally-assigned risk grades to estimate the capability of borrowers to repay the contractual obligations of their loan agreements as scheduled or at all. The Company’s internal risk grade system is based on experiences with similarly graded loans. Credit risk grades are updated at least quarterly as additional information becomes available, at which time management analyzes the resulting scores to track loan performance.

The Company’s internally assigned risk grades are as follows:

· Pass: Loans are of acceptable risk.

· Other Assets Especially Mentioned (OAEM): Loans have potential weaknesses that deserve management’s close attention.

· Substandard: Loans reflect significant deficiencies due to several adverse trends of a financial, economic or managerial nature.

· Doubtful: Loans have all the weaknesses inherent in a substandard loan with added characteristics that make collection or liquidation in full based on currently existing facts, conditions and values highly questionable or improbable.

· Loss: Loans have been charged off because they are considered uncollectible and of such little value that their continuance as bankable assets is not warranted.

The following table presents credit quality exposures by internally assigned risk ratings as of the dates indicated:

Credit Quality Information As of June 30, 2013
(in thousands)
	Pass		OAEM		Substandard		Total
Mortgage loans on real estate:
Residential 1-4 family	$	73,496	$	1,746	$	5,311	$	80,553
Commercial		256,142		7,708		9,648		273,498
Construction		10,374		239		2,880		13,493
Second mortgages		11,895		238		109		12,242
Equity lines of credit		30,598		0		603		31,201
Total mortgage loans on real estate		382,505		9,931		18,551		410,987
Commercial loans		27,533		112		1,042		28,687
Consumer loans		10,956		0		29		10,985
Other		18,849		0		0		18,849
Total	$	439,843	$	10,043	$	19,622	$	469,508

Credit Quality Information As of December 31, 2012
(in thousands)
	Pass		OAEM		Substandard		Total
Mortgage loans on real estate:
Residential 1-4 family	$	70,961	$	1,711	$	4,595	$	77,267
Commercial		258,195		6,781		9,637		274,613
Construction		8,651		254		3,100		12,005
Second mortgages		13,488		242		585		14,315
Equity lines of credit		31,704		239		384		32,327
Total mortgage loans on real estate		382,999		9,227		18,301		410,527
Commercial loans		23,997		209		1,135		25,341
Consumer loans		13,042		0		104		13,146
Other		22,119		0		0		22,119
Total	$	442,157	$	9,436	$	19,540	$	471,133

As of June 30, 2013 and December 31, 2012 the Company did not have any loans internally classified as Loss or Doubtful.

AGE ANALYSIS OF PAST DUE LOANS BY CLASS

All classes of loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Interest and fees continue to accrue on past due loans until the date the loan is placed in nonaccrual status, if applicable. The following table includes an aging analysis of the recorded investment in past due loans as of the dates indicated. Also included in the table below are loans that are 90 days or more past due as to interest and principal and still accruing interest, because they are well-secured and in the process of collection. Loans in nonaccrual status that are also past due are included in the aging categories in the table below.

Age Analysis of Past Due Loans as of June 30, 2013
	30 - 59  Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Total Current Loans (1)		Total Loans		Recorded Investment > 90 Days Past Due and Accruing
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	1,752	$	38	$	3,306	$	5,096	$	75,457	$	80,553	$	258
Commercial		0		200		716		916		272,582		273,498		0
Construction		404		0		2,880		3,284		10,209		13,493		0
Second mortgages		46		35		20		101		12,141		12,242		20
Equity lines of credit		175		75		0		250		30,951		31,201		0
Total mortgage loans on real estate		2,377		348		6,922		9,647		401,340		410,987		278
Commercial loans		54		49		0		103		28,584		28,687		0
Consumer loans		80		40		13		133		10,852		10,985		13
Other		65		9		5		79		18,770		18,849		5
Total	$	2,576	$	446	$	6,940	$	9,962	$	459,546	$	469,508	$	296

(1) For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

Age Analysis of Past Due Loans as of December 31, 2012
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Total Current Loans (1)		Total Loans		Recorded Investment > 90 Days Past Due  and Accruing
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	1,115	$	0	$	3,783	$	4,898	$	72,369	$	77,267	$	348
Commercial		207		0		724		931		273,682		274,613		0
Construction		140		0		2,925		3,065		8,940		12,005		0
Second mortgages		113		0		544		657		13,658		14,315		60
Equity lines of credit		90		0		287		377		31,950		32,327		0
Total mortgage loans on real estate		1,665		0		8,263		9,928		400,599		410,527		408
Commercial loans		275		13		122		410		24,931		25,341		25
Consumer loans		85		22		11		118		13,028		13,146		11
Other		54		7		3		64		22,055		22,119		3
Total	$	2,079	$	42	$	8,399	$	10,520	$	460,613	$	471,133	$	447

(1) For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

NONACCRUAL LOANS

The Company generally places non-consumer loans in nonaccrual status when the full and timely collection of interest or principal becomes uncertain, part of the principal balance has been charged off and no restructuring has occurred or the loan reaches 90 days past due, unless the credit is well-secured and in the process of collection. Under regulatory rules, consumer loans, which are loans to individuals for household, family and other personal expenditures, and loans secured by 1-4 family residential properties are not required to be placed in nonaccrual status. Although consumer loans and loans secured by 1-4 family residential property are not required to be placed in nonaccrual status, the Company may place a consumer loan or loan secured by 1-4 family residential property in nonaccrual status, if necessary to avoid a material overstatement of interest income.

Generally, consumer loans not secured by real estate are placed in nonaccrual status only when part of the principal has been charged off. These loans are charged off or written down to the net realizable value of the collateral when deemed uncollectible, due to bankruptcy or other factors, or when they are past due based on loan product, industry practice, terms and other factors.

When management places a loan in nonaccrual status, the accrued unpaid interest receivable is reversed against interest income and the loan is accounted for by the cash or cost recovery method, until it qualifies for return to accrual status or is charged off. Generally, management returns a loan to accrual status if (a) all delinquent interest and principal payments become current under the terms of the loan agreement or (b) the loan is both well-secured and in the process of collection and collectability is no longer doubtful.

The following table presents loans in nonaccrual status by class of loan as of the dates indicated:

Nonaccrual Loans by Class
	June 30, 2013		December 31, 2012
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	3,363	$	3,663
Commercial		2,965		3,037
Construction		2,880		3,065
Second mortgages		35		484
Equity lines of credit		0		286
Total mortgage loans on real estate		9,243		10,535
Commercial loans		0		97
Consumer loans		0		0
Total	$	9,243	$	10,632

The following table presents the interest income that the Company would have earned under the original terms of its nonaccrual loans and the actual interest recorded by the Company on nonaccrual loans for the periods presented:

	Six Months Ended June 30,
	2013		2012
	(in thousands)
Interest income that would have been recorded under original loan terms	$	275	$	275
Actual interest income recorded for the period		51		32
Reduction in interest income on nonaccrual loans	$	224	$	243

TROUBLED DEBT RESTRUCTURINGS

The Company’s loan portfolio includes certain loans that have been modified in a troubled debt restructuring (TDR), where economic concessions have been granted to borrowers who are experiencing financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reduction in the interest rate below current market rates for borrowers with similar risk profiles, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. The Company defines a TDR as nonperforming if the TDR is in nonaccrual status or 90 days or more past due and still accruing interest at the report date.

When the Company modifies a loan, management evaluates any possible impairment as stated in the impaired loan section below.

The following table presents TDRs during the period indicated, by class of loan:

Troubled Debt Restructurings by Class For the Six Months Ended June 30, 2013
(dollars in thousands)
	Number of Modifications		Recorded Investment Prior to Modification		Recorded Investment After Modification		Current Investment on June 30, 2013
Mortgage loans on real estate:
Residential 1-4 family		3	$	676	$	676	$	673
Commercial		1		207		207		203
Total		4	$	883	$	883	$	876

Troubled Debt Restructurings by Class For the Six Months Ended June 30, 2012
(dollars in thousands)
	Number of Modifications		Recorded Investment Prior to Modification		Recorded Investment After Modification		Current Investment on June 30, 2012
Mortgage loans on real estate:
Commercial		2	$	3,019	$	2,461	$	2,373
Second mortgages		1		111		145		140
Total		3	$	3,130	$	2,606	$	2,513

The four loans restructured in the first six months of 2013 were all given below-market rates for debt with similar risk characteristics. The restructurings during the first six months of 2012 were given principal reductions, with the principal forgiveness on all loans in the table totaling $525 thousand. One loan restructured during the first six months of 2012 was also given a below-market rate for debt with similar risk characteristics.

As of June 30, 2013 and June 30, 2012, there were no TDRs for which there was a payment default where the default occurred within twelve months of restructuring.  A TDR is considered in default when it is 90 days or more past due or has been charged off.

The TDRs in the tables above are factored into the determination of the allowance for loan losses as of the periods indicated. These loans are included in the impaired loan analysis, as discussed below.

IMPAIRED LOANS

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming commercial loans and loans modified in a TDR. When management identifies a loan as impaired, the impairment is measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, except when the sole or remaining source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs, when foreclosure is probable, instead of the discounted cash flows. If management determines that the value of the impaired loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance.

When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is in nonaccrual status, all payments are applied to principal under the cost-recovery method. For financial statement purposes, the recorded investment in the loan is the actual principal balance reduced by payments that would otherwise have been applied to interest. When reporting information on these loans to the applicable customers, the unpaid principal balance is reported as if payments were applied to principal and interest under the original terms of the loan agreements. Therefore, the unpaid principal balance reported to the customer would be higher than the recorded investment in the loan for financial statement purposes. When the ultimate collectability of the total principal of the impaired loan is not in doubt and the loan is in nonaccrual status, contractual interest is credited to interest income when received under the cash-basis method.

The following table includes the recorded investment and unpaid principal balances (a portion of which may have been charged off) for impaired loans with the associated allowance amount, if applicable, as of the dates presented. Also presented are the average recorded investments in the impaired loans and the related amount of interest recognized for the periods presented. The average balances are calculated based on daily average balances.

Impaired Loans by Class (in thousands)
	As of June 30, 2013								For the six months ended June 30, 2013
			Recorded Investment
	Unpaid Principal Balance		Without Valuation Allowance		With Valuation Allowance		Associated Allowance		Average Recorded Investment		Interest Income Recognized
Mortgage loans on real estate:
Residential 1-4 family	$	4,546	$	872	$	3,415	$	237	$	4,738	$	16
Commercial		13,702		3,683		7,082		1,261		10,910		269
Construction		3,639		0		2,880		360		2,891		0
Second mortgages		183		43		136		47		745		4
Equity lines of credit		50		50		0		0		193		1
Total mortgage loans on real estate	$	22,120	$	4,648	$	13,513	$	1,905	$	19,477	$	290
Commercial loans		0		0		0		0		12		0
Consumer loans		16		16		0		0		18		1
Total	$	22,136	$	4,664	$	13,513	$	1,905	$	19,507	$	291

Impaired Loans by Class (in thousands)
	As of December 31, 2012								For the year ended December 31, 2012
			Recorded Investment
	Unpaid Principal Balance		Without Valuation Allowance		With Valuation Allowance		Associated Allowance		Average Recorded Investment		Interest Income Recognized
Mortgage loans on real estate:
Residential 1-4 family	$	4,100	$	681	$	3,235	$	226	$	2,354	$	136
Commercial		12,459		3,741		5,817		180		10,151		242
Construction		3,782		3,064		0		0		3,320		(9	)
Second mortgages		695		583		47		5		542		12
Equity lines of credit		370		286		0		0		391		(2	)
Total mortgage loans on real estate	$	21,406	$	8,355	$	9,099	$	411	$	16,758	$	379
Commercial loans		117		0		97		33		104		(14	)
Consumer loans		17		17		0		0		26		1
Total	$	21,540	$	8,372	$	9,196	$	444	$	16,888	$	366

MONITORING OF LOANS AND EFFECT OF MONITORING FOR THE ALLOWANCE FOR LOAN LOSSES

Loan officers are responsible for continual portfolio analysis and prompt identification and reporting of problem loans, which includes assigning a risk grade to each applicable loan at its origination and revising such grade as the situation dictates. Loan officers maintain frequent contact with borrowers, which should enable the loan officer to identify potential problems before other personnel. In addition, meetings with loan officers and upper management are held to discuss problem loans and review risk grades. Nonetheless, in order to avoid over-reliance upon loan officers for problem loan identification, the Company’s loan review system provides for review of loans and risk grades by individuals who are independent of the loan approval process. Risk grades and historical loss rates by risk grades are used as a component of the calculation of the allowance for loan losses.

ALLOWANCE FOR LOAN LOSSES

Management has an established methodology to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for loan losses, the Company has segmented certain loans in the portfolio by product type. Loans are segmented into the following pools: commercial, real estate-construction, real estate-mortgage, consumer and other loans. The Company also sub-segments the real estate-mortgage segment into four classes: residential 1-4 family, commercial real estate, second mortgages and equity lines of credit. The Company uses an internally developed risk evaluation model in the estimation of the credit risk process. The model and assumptions used to determine the allowance are independently validated and reviewed to ensure that the theoretical foundation, assumptions, data integrity, computational processes and reporting practices are appropriate and properly documented.

Each portfolio segment has risk characteristics as follows:

· Commercial: Commercial loans carry risks associated with the successful operation of a business or project, in addition to other risks associated with the ownership of a business. The repayment of these loans may be dependent upon the profitability and cash flows of the business. In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time and cannot be appraised with as much precision.

· Real estate-construction: Construction loans carry risks that the project will not be finished according to schedule, the project will not be finished according to budget and the value of the collateral may at any point in time be less than the principal amount of the loan. Construction loans also bear the risk that the general contractor, who may or may not be the loan customer, may be unable to finish the construction project as planned because of financial pressure unrelated to the project.

· Real estate-mortgage: Residential mortgage loans and equity lines of credit carry risks associated with the continued credit-worthiness of the borrower and changes in the value of the collateral. Commercial real estate loans carry risks associated with the successful operation of a business if owner occupied. If non-owner occupied, the repayment of these loans may be dependent upon the profitability and cash flow from rent receipts.

· Consumer loans: Consumer loans carry risks associated with the continued credit-worthiness of the borrowers and the value of the collateral. Consumer loans are more likely than real estate loans to be immediately adversely affected by job loss, divorce, illness or personal bankruptcy.

· Other loans: Other loans are loans to mortgage companies, loans for purchasing or carrying securities, and loans to insurance, investment and finance companies. These loans carry risks associated with the successful operation of a business. In addition, there is risk associated with the value of collateral other than real estate which may depreciate over time, depend on interest rates or fluctuate in active trading markets.

To determine the balance of the allowance account for each segment of the loan portfolio, management pools each segment by risk grade individually and applies a historical loss percentage. At June 30, 2013 and December 31, 2012, the historical loss percentage was based on losses sustained in each segment of the portfolio over the previous eight quarters.

Management also provides an allocated component of the allowance for loans that are classified as impaired. An allocated allowance is established when the discounted value of future cash flows from the impaired loan (or the collateral value or observable market price of the impaired loan) is lower than the carrying value of that loan.

Based on credit risk assessments and management’s analysis of qualitative factors, additional loss factors are applied to loan balances. These additional qualitative factors include: economic conditions, trends in growth, loan concentrations, changes in certain loans, changes in underwriting, changes in management and changes in the legal and regulatory environment.

THE COMPANY’S ESTIMATION PROCESS

The allowance for loan losses is the accumulation of various components that are calculated based on independent methodologies. Management’s estimate is based on certain observable, historical data that management believes are most reflective of the underlying credit losses being estimated. In addition, impaired loans are separately identified for evaluation and are measured based on the present value of expected future cash flows, the observable market price of the loans or the fair value of the collateral. Also, various qualitative factors are applied to each segment of the loan portfolio.

ALLOWANCE FOR LOAN LOSSES BY SEGMENT

The total allowance reflects management’s estimate of loan losses inherent in the loan portfolio at the balance sheet date. The Company considers the allowance for loan losses of $7.3 million adequate to cover loan losses inherent in the loan portfolio at June 30, 2013.

The following table presents, by portfolio segment, the changes in the allowance for loan losses and the recorded investment in loans for the periods presented. 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 AND RECORDED INVESTMENT IN LOANS
	(in thousands)
For the Six Months Ended June 30, 2013	Commercial			Real Estate - Construction			Real Estate - Mortgage			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	677		$	187		$	6,179		$	204		$	77		$	7,324
Charge-offs		(106	)		(100	)		(413	)		(66	)		(79	)		(764	)
Recoveries		43			3			121			34			35			236
Provision for loan losses		(339	)		429			421			(22	)		11			500
Ending balance	$	275		$	519		$	6,308		$	150		$	44		$	7,296
Ending balance individually evaluated for impairment	$	0		$	360		$	1,545		$	0		$	0		$	1,905
Ending balance collectively evaluated for impairment		275			159			4,763			150			44			5,391
Ending balance	$	275		$	519		$	6,308		$	150		$	44		$	7,296
Loan Balances:
Ending balance individually evaluated for impairment	$	0		$	2,880		$	15,281		$	16		$	0		$	18,177
Ending balance collectively evaluated for impairment		28,687			10,613			382,213			10,969			18,849			451,331
Ending balance	$	28,687		$	13,493		$	397,494		$	10,985		$	18,849		$	469,508

For the Year Ended December 31, 2012	Commercial			Real Estate - Construction			Real Estate - Mortgage			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	1,011		$	323		$	6,735		$	300		$	129		$	8,498
Charge-offs		(138	)		(831	)		(2,554	)		(259	)		(187	)		(3,969	)
Recoveries		67			30			162			70			66			395
Provision for loan losses		(263	)		665			1,836			93			69			2,400
Ending balance	$	677		$	187		$	6,179		$	204		$	77		$	7,324
Ending balance individually evaluated for impairment	$	33		$	0		$	411		$	0		$	0		$	444
Ending balance collectively evaluated for impairment		644			187			5,768			204			77			6,880
Ending balance	$	677		$	187		$	6,179		$	204		$	77		$	7,324
Loan Balances:
Ending balance individually evaluated for impairment	$	97		$	3,064		$	14,390		$	17		$	0		$	17,568
Ending balance collectively evaluated for impairment		25,244			8,941			384,132			13,129			22,119			453,565
Ending balance	$	25,341		$	12,005		$	398,522		$	13,146		$	22,119		$	471,133

CHANGES IN ACCOUNTING METHODOLOGY

There were no changes in the Company’s accounting methodology for the allowance for loan losses in the first six months of 2013.

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General

9 Months Ended

Sep. 30, 2013

General [Abstract]

General

Note 1. General

The accompanying unaudited consolidated financial statements of Old Point Financial Corporation (the Company) and its subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information. All significant intercompany balances and transactions have been eliminated. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments and reclassifications of a normal and recurring nature considered necessary to present fairly the financial positions at June 30, 2013 and December 31, 2012, the results of operations and statements of comprehensive income for the three and six months ended June 30, 2013 and 2012, and the statements of changes in stockholders’ equity and statements of cash flows for the six months ended June 30, 2013 and 2012. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year.

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 2012 annual report on Form 10-K. Certain previously reported amounts have been reclassified to conform to current period presentation.

AVAILABLE INFORMATION

The Company maintains a website on the Internet at www.oldpoint.com. The Company makes available free of charge, on or through its website, its proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission (SEC). The information available on the Company’s Internet website is not part of this Form 10-Q or any other report filed by the Company with the SEC. The public may read and copy any documents the Company files at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company’s SEC filings can also be obtained on the SEC’s website on the Internet at www.sec.gov.

SUBSEQUENT EVENTS

In accordance with ASC 855-10, “Subsequent Events,” the Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (2) nonrecognized, or those that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date.

The Company is expanding the building of a current branch office. The Company signed a contract with a general contractor on April 19, 2012. The contract entitles the contractor to $2.1 million for Phase I of the construction, which includes site work and construction of the building shell. The Company signed an amendment to the contract with the general contractor on October 16, 2012 for the remainder of the construction. The revised contract entitles the contractor to $12.2 million for the construction of the building. As of the writing of this quarterly report on Form 10-Q, $6.5 million had been disbursed to the contractor. The Company anticipates that the total project will likely cost between $13.0 million and $15.0 million and be completed in the next nine months.

Other than those discussed above, the Company did not identify any recognized or nonrecognized subsequent events that would have required adjustment to or disclosure in the financial statements.

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Loans and the Allowance for Loan Losses (Details) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 480,167,000	$ 471,133,000
Allowance for loan losses	6,979,663	7,324,310
Loans, net of allowance for loan losses	473,187,156	463,808,457
Bank overdrafts	780,000	1,600,000
Residential 1-4 Family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	81,982,000	77,267,000
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	285,811,000	274,613,000
Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	12,624,000	12,005,000
Second Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	12,976,000	14,315,000
Equity Line of Credit [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	31,155,000	32,327,000
Total Mortgage Loans on Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	424,548,000	410,527,000
Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	29,880,000	25,341,000
Consumer Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	10,260,000	13,146,000
Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 15,479,000	$ 22,119,000

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Loans and the Allowance for Loan Losses, Impaired Loans (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	$ 21,974	$ 21,540
Without Valuation Allowance	4,922	8,372
With Valuation Allowance	13,089	9,196
Associated Allowance	1,920	444
Average Recorded Investment	19,111	16,888
Interest Income Recognized	394	366
Residential 1-4 Family [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	5,943	4,100
Without Valuation Allowance	1,443	681
With Valuation Allowance	4,236	3,235
Associated Allowance	1,065	226
Average Recorded Investment	5,053	2,354
Interest Income Recognized	71	136
Commercial [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	12,563	12,459
Without Valuation Allowance	3,472	3,741
With Valuation Allowance	6,156	5,817
Associated Allowance	571	180
Average Recorded Investment	10,414	10,151
Interest Income Recognized	317	242
Construction [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	3,305	3,782
Without Valuation Allowance	0	3,064
With Valuation Allowance	2,546	0
Associated Allowance	149	0
Average Recorded Investment	2,880	3,320
Interest Income Recognized	0	(9)
Second Mortgages [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	147	695
Without Valuation Allowance	7	583
With Valuation Allowance	135	47
Associated Allowance	135	5
Average Recorded Investment	546	542
Interest Income Recognized	5	12
Equity Line of Credit [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	0	370
Without Valuation Allowance	0	286
With Valuation Allowance	0	0
Associated Allowance	0	0
Average Recorded Investment	193	391
Interest Income Recognized	0	(2)
Total Mortgage Loans on Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	21,958	21,406
Without Valuation Allowance	4,922	8,355
With Valuation Allowance	13,073	9,099
Associated Allowance	1,920	411
Average Recorded Investment	19,086	16,758
Interest Income Recognized	393	379
Commercial Loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	0	117
Without Valuation Allowance	0	0
With Valuation Allowance	0	97
Associated Allowance	0	33
Average Recorded Investment	8	104
Interest Income Recognized	0	(14)
Consumer Loans [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	16	17
Without Valuation Allowance	0	17
With Valuation Allowance	16	0
Associated Allowance	0	0
Average Recorded Investment	17	26
Interest Income Recognized	$ 1	$ 1

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Fair Value Measurements, Recurring and Nonrecurring Basis (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Available-for-sale securities [Abstract]
Fair Value	$ 158,147	$ 329,456
Recurring [Member]
Available-for-sale securities [Abstract]
Obligations of U.S. Government agencies	15,064	37,088
Obligations of state and political subdivisions	47,050	43,774
Mortgage-backed securities	93,768	247,355
Money market investments	892	541
Corporate Bonds	1,373	698
Fair Value	158,147	329,456
Nonrecurring [Member]
Mortgage loans on real estate: [Abstract]
Residential 1-4 family	3,001	3,009
Commercial	2,201	2,271
Construction	2,396
Second mortgages	0	42
Total mortgage loans on real estate	7,598	5,322
Commercial loans		64
Total		5,386
Foreclosed assets [Abstract]
Residential 1-4 family	216	676
Commercial	2,444	2,094
Construction	3,722	3,804
Total	6,382	6,574
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Recurring [Member]
Available-for-sale securities [Abstract]
Obligations of U.S. Government agencies	0	0
Obligations of state and political subdivisions	0	0
Mortgage-backed securities	0	0
Money market investments	0	0
Corporate Bonds	0	0
Fair Value	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Nonrecurring [Member]
Mortgage loans on real estate: [Abstract]
Residential 1-4 family	0	0
Commercial	0	0
Construction	0
Second mortgages	0	0
Total mortgage loans on real estate	0	0
Commercial loans		0
Total		0
Foreclosed assets [Abstract]
Residential 1-4 family	0	0
Commercial	0	0
Construction	0	0
Total	0	0
Significant Other Observable Inputs (Level 2) [Member] | Recurring [Member]
Available-for-sale securities [Abstract]
Obligations of U.S. Government agencies	15,064	37,088
Obligations of state and political subdivisions	47,050	43,774
Mortgage-backed securities	93,768	247,355
Money market investments	892	541
Corporate Bonds	1,373	698
Fair Value	158,147	329,456
Significant Other Observable Inputs (Level 2) [Member] | Nonrecurring [Member]
Mortgage loans on real estate: [Abstract]
Residential 1-4 family	0	0
Commercial	0	0
Construction	0
Second mortgages	0	0
Total mortgage loans on real estate	0	0
Commercial loans		0
Total		0
Foreclosed assets [Abstract]
Residential 1-4 family	0	0
Commercial	0	0
Construction	0	0
Total	0	0
Significant Unobservable Inputs (Level 3) [Member] | Recurring [Member]
Available-for-sale securities [Abstract]
Obligations of U.S. Government agencies	0	0
Obligations of state and political subdivisions	0	0
Mortgage-backed securities	0	0
Money market investments	0	0
Corporate Bonds	0	0
Fair Value	0	0
Significant Unobservable Inputs (Level 3) [Member] | Nonrecurring [Member]
Mortgage loans on real estate: [Abstract]
Residential 1-4 family	3,001	3,009
Commercial	2,201	2,271
Construction	2,396
Second mortgages	0	42
Total mortgage loans on real estate	7,598	5,322
Commercial loans		64
Total		5,386
Foreclosed assets [Abstract]
Residential 1-4 family	216	676
Commercial	2,444	2,094
Construction	3,722	3,804
Total	$ 6,382	$ 6,574

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Consolidated Balance Sheets (unaudited) (Parenthetical) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Assets
Securities held-to-maturity, fair value	$ 94,838,359	$ 573,500
Allowance for loan losses	6,979,663	7,324,310
Foreclosed assets, valuation allowance	$ 1,716,858	$ 1,870,285
Stockholders' equity:
Common stock, par value (in dollars per share)	$ 5	$ 5
Common stock, shares authorized (in shares)	10,000,000	10,000,000
Common stock, shares issued (in shares)	4,959,009	4,959,009
Common stock, shares outstanding (in shares)	4,959,009	4,959,009

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Stockholders' Equity and Earnings per Common Share

9 Months Ended

Sep. 30, 2013

Stockholders' Equity and Earnings Per Common Share [Abstract]

Stockholders' Equity and Earnings Per Common Share

Note 6. Stockholders’ Equity and Earnings per Share

STOCKHOLDERS’ EQUITY – OTHER COMPREHENSIVE LOSS

The following table presents information on amounts reclassified out of accumulated other comprehensive loss, by category, during the periods indicated:

	Three Months Ended June 30,					Six Months Ended June 30,					Affected Line Item on
	2013			2012		2013			2012		Consolidated Statement of Income
	(in thousands)
Available-for-sale securities
Realized gains (losses) on sales of securities	$	(21	)	$	769	$	(21	)	$	1,084	Gain (loss) on sale of available-for-sale securities, net
Tax effect		(7	)		262		(7	)		369	Income tax expense
	$	(14	)	$	507	$	(14	)	$	715	Net of tax

The following table presents the changes in accumulated other comprehensive loss, by category, net of tax, for the periods indicated:

	Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
	(in thousands)
SIX MONTHS ENDED JUNE 30, 2013
Balance at beginning of period	$	1,993		$	(2,184	)	$	(191	)
Net change for the period		(8,223	)		0			(8,223	)
Balance at end of period	$	(6,230	)	$	(2,184	)	$	(8,414	)

	Unrealized Gains (Losses) on Securities		Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
	(in thousands)
SIX MONTHS ENDED JUNE 30, 2012
Balance at beginning of period	$	1,526	$	(1,875	)	$	(349	)
Net change for the period		249		0			249
Balance at end of period	$	1,775	$	(1,875	)	$	(100	)

The following table presents the change in each component of other comprehensive income on a pre-tax and after-tax basis for the periods indicated.

	Six Months Ended June 30, 2013
	Pretax			Tax Expense (Benefit)			Net-of-Tax
	(in thousands)
Unrealized losses on securities
Unrealized holding losses arising during the period	$	(12,480	)	$	(4,243	)	$	(8,237	)
Less reclassification adjustment for losses recognized in income		(21	)		(7	)		(14	)
Net unrealized losses on securities		(12,459	)		(4,236	)		(8,223	)
Total decrease in other comprehensive loss	$	(12,459	)	$	(4,236	)	$	(8,223	)

	Six Months Ended June 30, 2012
	Pretax		Tax Expense (Benefit)		Net-of-Tax
	(in thousands)
Unrealized gains on securities
Unrealized holding gains arising during the period	$	1,461	$	497	$	964
Less reclassification adjustment for gains recognized in income		1,084		369		715
Net unrealized gains on securities		377		128		249
Total increase in other comprehensive loss	$	377	$	128	$	249

EARNINGS PER COMMON SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares outstanding during the period, including the effect of dilutive potential common shares attributable to outstanding stock options.

The Company did not include an average of 156 thousand potential common shares attributable to outstanding stock options in the diluted earnings per share calculation for the first six months of 2013 because they were antidilutive.

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Consolidated Statements of Comprehensive Income (Loss) (unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Consolidated Statements of Comprehensive Income (Loss) (unaudited) [Abstract]
Net income	$ 1,037,344	$ 1,074,188	$ 2,953,476	$ 2,790,696
Other comprehensive (loss), net of tax:
Unrealized gains (losses) on securities, net of reclassification adjustment	(3,125,290)	2,153,604	(11,348,274)	2,403,011
Amortization of unrealized losses on securities transferred to held-to-maturity, net of tax	44,990	0	44,990	0
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	(3,080,300)	2,153,604	(11,303,284)	2,403,011
Comprehensive income (loss)	$ (2,042,956)	$ 3,227,792	$ (8,349,808)	$ 5,193,707

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Consolidated Balance Sheets (unaudited) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Assets
Cash and due from banks	$ 15,527,275	$ 15,982,070
Interest-bearing due from banks	49,255,719	24,732,329
Federal funds sold	1,930,976	1,602,847
Cash and cash equivalents	66,713,970	42,317,246
Securities available-for-sale, at fair value	158,147,372	329,455,812
Securities held-to-maturity	93,819,137	570,000
Restricted securities	2,378,100	2,561,900
Loans, net of allowance for loan losses	473,187,156	463,808,457
Premises and equipment, net	38,463,873	32,528,350
Bank-owned life insurance	22,471,938	21,824,197
Foreclosed assets, net of valuation allowance	6,888,213	6,573,398
Other assets	14,486,743	7,859,344
Total assets	876,556,502	907,498,704
Deposits:
Noninterest-bearing deposits	180,462,289	176,740,312
Savings deposits	279,577,902	268,252,782
Time deposits	270,783,394	308,822,642
Total deposits	730,823,585	753,815,736
Overnight repurchase agreements	37,019,654	35,945,800
Term repurchase agreements	411,065	1,279,574
Federal Home Loan Bank advances	25,000,000	25,000,000
Accrued expenses and other liabilities	3,145,411	2,157,558
Total liabilities	796,399,715	818,198,668
Commitments and contingencies
Stockholders' equity:
Common stock, $5 par value, 10,000,000 shares authorized; 4,959,009 shares issued and outstanding	24,795,045	24,795,045
Additional paid-in capital	16,391,845	16,391,845
Retained earnings	50,464,644	48,304,609
Accumulated other comprehensive loss, net	(11,494,747)	(191,463)
Total stockholders' equity	80,156,787	89,300,036
Total liabilities and stockholders' equity	$ 876,556,502	$ 907,498,704

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Loans and the Allowance for Loan Losses, Credit Quality (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	$ 480,167	$ 471,133
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	454,741	442,157
OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	7,692	9,436
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	17,734	19,540
Residential 1-4 Family [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	81,982	77,267
Residential 1-4 Family [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	75,763	70,961
Residential 1-4 Family [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	1,175	1,711
Residential 1-4 Family [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	5,044	4,595
Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	285,811	274,613
Commercial [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	271,020	258,195
Commercial [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	6,245	6,781
Commercial [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	8,546	9,637
Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	12,624	12,005
Construction [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	9,916	8,651
Construction [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	162	254
Construction [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	2,546	3,100
Second Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	12,976	14,315
Second Mortgages [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	12,905	13,488
Second Mortgages [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	0	242
Second Mortgages [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	71	585
Equity Line of Credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	31,155	32,327
Equity Line of Credit [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	30,679	31,704
Equity Line of Credit [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	0	239
Equity Line of Credit [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	476	384
Total Mortgage Loans on Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	424,548	410,527
Total Mortgage Loans on Real Estate [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	400,283	382,999
Total Mortgage Loans on Real Estate [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	7,582	9,227
Total Mortgage Loans on Real Estate [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	16,683	18,301
Commercial Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	29,880	25,341
Commercial Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	28,750	23,997
Commercial Loans [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	110	209
Commercial Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	1,020	1,135
Consumer Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	10,260	13,146
Consumer Loans [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	10,229	13,042
Consumer Loans [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	0	0
Consumer Loans [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	31	104
Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	15,479	22,119
Other [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	15,479	22,119
Other [Member] | OAEM [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	0	0
Other [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, gross carrying amount	$ 0	$ 0

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Stockholders' Equity and Earnings per Common Share (Tables)

9 Months Ended

Sep. 30, 2013

Stockholders' Equity and Earnings Per Common Share [Abstract]

Amounts reclassified out of accumulated other comprehensive income (loss), by category

The following table presents information on amounts reclassified out of accumulated other comprehensive income (loss), by category, during the periods indicated:

	Three Months Ended September 30,							Nine Months Ended September 30,							Affected Line Item on
	2013				2012			2013				2012			Consolidated Statement of Income
Available-for-sale securities
Realized gains (losses) on sales of securities		$	(5	)		$	620		$	(26	)		$	1,704	Gain (loss) on sale of available-for-sale securities, net
Tax effect			(2	)			211			(9	)			579	Income tax expense
		$	(3	)		$	409		$	(17	)		$	1,125	Net of tax

Other Comprehensive Income

The following table presents the changes in accumulated other comprehensive income (loss), by category, net of tax, for the periods indicated:

	Unrealized Gains (Losses) on Securities				Other Comprehensive Income - AFS to HTM				Defined Benefit Pension Plans				Accumulated Other Comprehensive Loss
	(in thousands)
Nine Months Ended September 30, 2013
Balance at beginning of period		$	1,992			$	-			$	(2,184	)		$	0
Net change for the period			(7,235	)			(4,068	)			-				(11	)
Balance at end of period		$	(5,243	)		$	(4,068	)		$	(2,184	)		$	(11	)

	Unrealized Gains (Losses) on Securities		Other Comprehensive Income - AFS to HTM			Defined Benefit Pension Plans				Accumulated Other Comprehensive Loss
			(in thousands)
Nine Months Ended September 30, 2012
Balance at beginning of period	$	1,525		$	-		$	(1,875	)		$	(1,875	)
Net change for the period		2,403			-		$	-				0
Balance at end of period	$	3,928		$	-			(1,875	)		$	2

Component of other comprehensive income on a pre-tax and after-tax

The following table presents the change in each component of other comprehensive income (loss) on a pre-tax and after-tax basis for the periods indicated.

	Nine Months Ended September 30, 2013
	Pretax			Tax Expense (Benefit)			Net-of-Tax
	(in thousands)
Unrealized losses on securities
Unrealized holding losses arising during the period	$	(10,988	)	$	(3,736	)	$	(7,252	)
Less reclassification adjustment for losses recognized in income		(26	)		(9	)		(17	)
Net unrealized losses on securities		(10,962	)		(3,727	)		(7,235	)
Market adjustment on securities transferred to held-to-maturity
Unrealized loss transferred		(6,232	)		(2,119	)		(4,113	)
Amortization		68			23			45
Net effect of market adjustment on securities transferred to held-to-maturity		(6,164	)		(2,096	)		(4,068	)
Total decrease in other comprehensive loss	$	(17,126	)	$	(5,823	)	$	(11,303	)

	Nine Months Ended September 30, 2012
	Pretax			Tax Expense (Benefit)			Net-of-Tax
	(in thousands)
Unrealized gains on securities
Unrealized holding gains arising during the period		$	5,345		$	1,817		$	3,528
Less reclassification adjustment for gains recognized in income			1,704			579			1,125
Net unrealized gains on securities			3,641			1,238			2,403,000
Total increase in other comprehensive loss		$	3,641		$	1,238		$	2,403

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Segment Reporting (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013 Segment	Sep. 30, 2012	Dec. 31, 2012
Segment Reporting [Abstract]
Number of operating segments			3
Description of operating segments			The Company's reportable segments are strategic business units that offer different products and services. They are managed separately because each segment appeals to different markets and, accordingly, requires different technologies and marketing strategies.
Revenues
Interest and dividend income	$ 7,263,333	$ 7,958,227	$ 22,368,796	$ 24,692,037
Income from fiduciary activities	868,598	776,615	2,634,092	2,396,266
Other income	2,328,237	3,329,017	6,960,245	8,858,099
Total operating income	10,460,168	12,063,859	31,963,133	35,946,402
Expenses
Interest expense	1,144,058	1,414,095	3,576,193	4,423,427
Provision for loan losses	300,000	750,000	800,000	1,950,000
Salaries and employee benefits	4,554,101	5,259,880	14,280,611	15,440,042
Other expenses	3,222,048	3,492,350	9,770,115	10,808,276
Total operating expenses	9,220,207	10,916,325	28,426,919	32,621,745
Income before income taxes	1,239,961	1,147,534	3,536,214	3,324,657
Income tax expense (benefit)	202,617	73,346	582,738	533,961
Net income	1,037,344	1,074,188	2,953,476	2,790,696
Total assets	876,556,502	887,885,878	876,556,502	887,885,878	907,498,704
Bank [Member]
Revenues
Interest and dividend income	7,252,616	7,950,468	22,339,561	24,664,745
Income from fiduciary activities	0	0	0	0
Other income	2,229,311	3,224,829	6,647,281	8,520,811
Total operating income	9,481,927	11,175,297	28,986,842	33,185,556
Expenses
Interest expense	1,144,196	1,414,414	3,577,023	4,424,381
Provision for loan losses	300,000	750,000	800,000	1,950,000
Salaries and employee benefits	3,895,967	4,600,299	12,334,787	13,413,051
Other expenses	2,976,347	3,356,522	9,117,323	10,445,457
Total operating expenses	8,316,510	10,121,235	25,829,133	30,232,889
Income before income taxes	1,165,417	1,054,062	3,157,709	2,952,667
Income tax expense (benefit)	177,434	35,348	454,543	387,534
Net income	987,983	1,018,714	2,703,166	2,565,133
Total assets	871,935,454	883,610,555	871,935,454	883,610,555
Trust [Member]
Revenues
Interest and dividend income	10,855	7,488	30,065	26,440
Income from fiduciary activities	868,598	776,615	2,634,092	2,396,266
Other income	114,202	119,464	358,942	383,816
Total operating income	993,655	903,567	3,023,099	2,806,522
Expenses
Interest expense	0	0	0	0
Provision for loan losses	0	0	0	0
Salaries and employee benefits	552,542	531,492	1,621,208	1,632,145
Other expenses	233,674	243,821	677,292	728,845
Total operating expenses	786,216	775,313	2,298,500	2,360,990
Income before income taxes	207,439	128,254	724,599	445,532
Income tax expense (benefit)	70,363	43,438	245,865	150,977
Net income	137,076	84,816	478,734	294,555
Total assets	5,585,758	5,335,378	5,585,758	5,335,378
Unconsolidated Parent [Member]
Revenues
Interest and dividend income	1,125,059	1,105,705	3,181,900	2,866,213
Income from fiduciary activities	0	0	0	0
Other income	50,100	165,000	150,300	495,000
Total operating income	1,175,159	1,270,705	3,332,200	3,361,213
Expenses
Interest expense	0	1,585	0	4,719
Provision for loan losses	0	0	0	0
Salaries and employee benefits	105,592	128,089	324,616	394,846
Other expenses	77,403	72,283	171,778	175,502
Total operating expenses	182,995	201,957	496,394	575,067
Income before income taxes	992,164	1,068,748	2,835,806	2,786,146
Income tax expense (benefit)	(45,180)	(5,440)	(117,670)	(4,550)
Net income	1,037,344	1,074,188	2,953,476	2,790,696
Total assets	80,160,864	90,524,865	80,160,864	90,524,865
Eliminations [Member]
Revenues
Interest and dividend income	(1,125,197)	(1,105,434)	(3,182,730)	(2,865,361)
Income from fiduciary activities	0	0	0	0
Other income	(65,376)	(180,276)	(196,278)	(541,528)
Total operating income	(1,190,573)	(1,285,710)	(3,379,008)	(3,406,889)
Expenses
Interest expense	(138)	(1,904)	(830)	(5,673)
Provision for loan losses	0	0	0	0
Salaries and employee benefits	0	0	0	0
Other expenses	(65,376)	(180,276)	(196,278)	(541,528)
Total operating expenses	(65,514)	(182,180)	(197,108)	(547,201)
Income before income taxes	(1,125,059)	(1,103,530)	(3,181,900)	(2,859,688)
Income tax expense (benefit)	0	0	0	0
Net income	(1,125,059)	(1,103,530)	(3,181,900)	(2,859,688)
Total assets	$ (81,125,574)	$ (91,584,920)	$ (81,125,574)	$ (91,584,920)

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Pension Plan (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Components of net periodic pension cost [Abstract]
Interest cost	$ 63,178	$ 72,889	$ 189,144	$ 216,389
Expected return on plan assets	(87,165)	(82,743)	(263,963)	(277,743)
Loss related to early retirement plan	0	291,829	0	291,829
Amortization of net loss	76,771	84,330	225,819	196,830
Net Periodic Pension Plan Cost	$ 52,784	$ 366,305	$ 151,000	$ 427,305

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Stockholders' Equity and Earnings per Common Share (Details) (USD $) Share data in Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Available-for-sale securities [Abstract]
Realized gains on sales of securities			$ 26,000	$ (1,704,000)
Tax effect			9,000	(579,000)
Available-for-sale Securities			17,000	(1,125,000)
Unrealized Gains (Losses) on Securities [Abstract]
Balance at beginning of the period			1,992,000	1,525,000
Net change for the year			(7,235,000)	2,403,000
Balance at end of the period	(5,243,000)	3,928,000	(5,243,000)	3,928,000
Other Comprehensive Income -- AFS to HTM [Abstract]
Balance at beginning of period			0	0
Net change for the quarter			(4,068,000)	0
Balance at end of period	(4,068,000)	0	(4,068,000)	0
Defined Benefit Pension Plans [Abstract]
Balance at beginning of the period			(2,184,000)	(1,875,000)
Net change for the year			0	0
Balance at end of the period	(2,184,000)	(1,875,000)	(2,184,000)	(1,875,000)
Accumulated Other Comprehensive Income (Loss) [Abstract]
Balance at beginning of the period			(191,463)	(349,581)
Net change for the year	(3,080,300)	2,153,604	(11,303,284)	2,403,011
Balance at end of the period	(11,494,747)	2,053,430	(11,494,747)	2,053,430
Other comprehensive income, pretax [Abstract]
Unrealized holding losses arising during the period			(10,988,000)	5,345,000
Realized gains on sales of securities			(26,000)	1,704,000
Net unrealized losses on securities			(10,962,000)	3,641,000
Unrealized loss transferred			(6,232,000)
Amortization			68,000
Net effect of market adjustment on securities transferred to held-to-maturity			(6,164,000)
Total decrease in other comprehensive loss			(17,126,000)	3,641,000
Other comprehensive income tax expense (benefit) [Abstract]
Unrealized holding losses arising during the period			(3,736,000)	1,817,000
Less reclassification adjustment for losses recognized in income			(9,000)	579,000
Net unrealized losses on securities			(3,727,000)	1,238,000
Unrealized loss transferred tax			(2,119,000)
Amortization tax			23,000
Net effect of market adjustment on securities transferred to held-to-maturity			(2,096,000)
Total decrease in other comprehensive loss			(5,823,000)	1,238,000
Other comprehensive income, net-of-tax [Abstract]
Unrealized holding losses arising during the period			(7,252,000)	3,528,000
Less reclassification adjustment for losses recognized in income			(17,000)	1,125,000
Unrealized gains (losses) on securities, net of all adjustments			(7,235,000)	2,403,000
Unrealized loss transferred net			(4,113,000)
Amortization net of tax			45,000
Net effect of market adjustment on securities transferred to held-to-maturity			(4,068,000)
Total decrease in other comprehensive loss			(11,303,000)	2,403,000
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)			155
Gain on sale of available-for-sale securities, net [Member]
Available-for-sale securities [Abstract]
Realized gains on sales of securities	(5,000)	620,000	(26,000)	1,704,000
Other comprehensive income, pretax [Abstract]
Realized gains on sales of securities	5,000	(620,000)	26,000	(1,704,000)
Income tax expense [Member]
Available-for-sale securities [Abstract]
Tax effect	(2,000)	211,000	(9,000)	579,000
Other comprehensive income tax expense (benefit) [Abstract]
Less reclassification adjustment for losses recognized in income	2,000	(211,000)	9,000	(579,000)
Net of tax [Member]
Available-for-sale securities [Abstract]
Available-for-sale Securities	(3,000)	409,000	(17,000)	1,125,000
Other comprehensive income, net-of-tax [Abstract]
Less reclassification adjustment for losses recognized in income	$ 3,000	$ (409,000)	$ 17,000	$ (1,125,000)

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Pension Plan

9 Months Ended

Sep. 30, 2013

Pension Plan [Abstract]

Pension Plan

Note 5. Pension Plan

The Company provides pension benefits for eligible participants through a non-contributory defined benefit pension plan. The plan was frozen effective September 30, 2006; therefore, no additional participants will be added to the plan. The components of net periodic pension plan cost are as follows for the periods indicated:

Three months ended June 30,	2013			2012
	Pension Benefits
Interest cost	$	62,983		$	71,750
Expected return on plan assets		(88,399	)		(97,500	)
Amortization of net loss		74,524			56,250
Net periodic pension plan cost	$	49,108		$	30,500
Six months ended June 30,		2013			2012
	Pension Benefits
Interest cost	$	125,966		$	143,500
Expected return on plan assets		(176,798	)		(195,000	)
Amortization of net loss		149,048			112,500
Net periodic pension plan cost	$	98,216		$	61,000

At June 30, 2013, management had not yet determined the amount, if any, that the Company will contribute to the plan in the year ending December 31, 2013.

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Loans and the Allowance for Loan Losses, Past Due (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2013		Sep. 30, 2012	Dec. 31, 2012
Loans, Aging [Abstract]
30 to 59 Days Past Due	$ 2,214			$ 2,079
60 to 89 Days Past Due	1,642			42
90 or More Days Past Due	9,269			8,399
Total Past Due	13,125			10,520
Total Current Loans	467,042	[1]		460,613	[1]
Ending balance	480,167			471,133
Recorded Investment > 90 Days Past Due and Accruing	18			447
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status	9,901			10,632
Interest income that would have been recorded under original loan terms [Abstract]
Interest income that would have been recorded under original loan terms	482		823
Actual interest income recorded for the period	95		235
Reduction in interest income on non accrual loans	387		588
Residential 1-4 Family [Member]
Loans, Aging [Abstract]
30 to 59 Days Past Due	649			1,115
60 to 89 Days Past Due	174			0
90 or More Days Past Due	4,098			3,783
Total Past Due	4,921			4,898
Total Current Loans	77,061	[1]		72,369	[1]
Ending balance	81,982			77,267
Recorded Investment > 90 Days Past Due and Accruing	0			348
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status	4,350			3,663
Commercial [Member]
Loans, Aging [Abstract]
30 to 59 Days Past Due	1,263			207
60 to 89 Days Past Due	0			0
90 or More Days Past Due	2,608			724
Total Past Due	3,871			931
Total Current Loans	281,940	[1]		273,682	[1]
Ending balance	285,811			274,613
Recorded Investment > 90 Days Past Due and Accruing	0			0
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status	3,005			3,037
Construction [Member]
Loans, Aging [Abstract]
30 to 59 Days Past Due	0			140
60 to 89 Days Past Due	402			0
90 or More Days Past Due	2,545			2,925
Total Past Due	2,947			3,065
Total Current Loans	9,677	[1]		8,940	[1]
Ending balance	12,624			12,005
Recorded Investment > 90 Days Past Due and Accruing	0			0
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status	2,546			3,065
Second Mortgages [Member]
Loans, Aging [Abstract]
30 to 59 Days Past Due	29			113
60 to 89 Days Past Due	0			0
90 or More Days Past Due	0			544
Total Past Due	29			657
Total Current Loans	12,947	[1]		13,658	[1]
Ending balance	12,976			14,315
Recorded Investment > 90 Days Past Due and Accruing	0			60
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status	0			484
Equity Line of Credit [Member]
Loans, Aging [Abstract]
30 to 59 Days Past Due	121			90
60 to 89 Days Past Due	0			0
90 or More Days Past Due	0			287
Total Past Due	121			377
Total Current Loans	31,034	[1]		31,950	[1]
Ending balance	31,155			32,327
Recorded Investment > 90 Days Past Due and Accruing	0			0
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status	0			286
Total Mortgage Loans on Real Estate [Member]
Loans, Aging [Abstract]
30 to 59 Days Past Due	2,062			1,665
60 to 89 Days Past Due	576			0
90 or More Days Past Due	9,251			8,263
Total Past Due	11,889			9,928
Total Current Loans	412,659	[1]		400,599	[1]
Ending balance	424,548			410,527
Recorded Investment > 90 Days Past Due and Accruing	0			408
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status	9,901			10,535
Commercial Loans [Member]
Loans, Aging [Abstract]
30 to 59 Days Past Due	35			275
60 to 89 Days Past Due	1,025			13
90 or More Days Past Due	0			122
Total Past Due	1,060			410
Total Current Loans	28,820	[1]		24,931	[1]
Ending balance	29,880			25,341
Recorded Investment > 90 Days Past Due and Accruing	0			25
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status	0			97
Consumer Loans [Member]
Loans, Aging [Abstract]
30 to 59 Days Past Due	55			85
60 to 89 Days Past Due	24			22
90 or More Days Past Due	13			11
Total Past Due	92			118
Total Current Loans	10,168	[1]		13,028	[1]
Ending balance	10,260			13,146
Recorded Investment > 90 Days Past Due and Accruing	13			11
Loans in nonaccrual status by class of loan [Abstract]
Loans in nonaccrual status	0			0
Other [Member]
Loans, Aging [Abstract]
30 to 59 Days Past Due	62			54
60 to 89 Days Past Due	17			7
90 or More Days Past Due	5			3
Total Past Due	84			64
Total Current Loans	15,395	[1]		22,055	[1]
Ending balance	15,479			22,119
Recorded Investment > 90 Days Past Due and Accruing	$ 5			$ 3

[1] For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2013

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 8. Fair Value Measurements

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. In accordance with the “Fair Value Measurements and Disclosures” topics of FASB ASU 2010-06 and FASB ASU 2011-04, the fair value of a financial instrument is the price that would be received in the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimate of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value can be a reasonable point within a range that is most representative of fair value under current market conditions.

In estimating the fair value of assets and liabilities, the Company relies mainly on two models. The first model, used by the Company’s bond accounting company, determines the fair value of securities. Securities are priced based on an evaluation of observable market data, including benchmark yield curves, reported trades, broker/dealer quotes, and issuer spreads. Pricing is also impacted by credit information about the issuer, perceived market movements, and current news events impacting the individual sectors. For assets other than securities and for all liabilities, fair value is determined using the Company’s asset/liability modeling software. The software uses current yields, anticipated yield changes, and estimated duration of assets and liabilities to calculate fair value.

In accordance with ASC 820, “Fair Value Measurements and Disclosures,” the Company groups its financial assets and financial liabilities generally measured at fair value into three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 – Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.

An instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

ASSETS MEASURED AT FAIR VALUE ON A RECURRING BASIS

Debt and equity securities with readily determinable fair values that are classified as “available-for-sale” are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. Securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that consider observable market data (Level 2).In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. Currently, all of the Company’s available-for-sale securities are considered to be Level 2 securities.

The following table presents the balances of certain assets measured at fair value on a recurring basis as of the dates indicated:

			Fair Value Measurements at June 30, 2013 Using
			(in thousands)
Description	Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available-for-sale securities
Obligations of  U.S. Government agencies	$	25,805	$	0	$	25,805	$	0
Obligations of state and political subdivisions		48,764		0		48,764		0
Mortgage-backed securities		181,843		0		181,843		0
Money market investments		801		0		801		0
Corporate bonds		1,370		0		1,370		0
Total available-for-sale securities	$	258,583	$	0	$	258,583	$	0

			Fair Value Measurements at December 31, 2012 Using
			(in thousands)
Description	Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available-for-sale securities
Obligations of  U.S. Government agencies		37,088		0		37,088		0
Obligations of state and political subdivisions		43,774		0		43,774		0
Mortgage-backed securities		247,355		0		247,355		0
Money market investments		541		0		541		0
Corporate bonds		698		0		698		0
Total available-for-sale securities	$	329,456	$	0	$	329,456	$	0

ASSETS MEASURED AT FAIR VALUE ON A NONRECURRING BASIS

Under certain circumstances, adjustments are made to the fair value for assets and liabilities although they are not measured at fair value on an ongoing basis.

Impaired loans

Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected. The measurement of fair value and loss associated with impaired loans can be based on the observable market price of the loan, the fair value of the collateral securing the loan, or the present value of the loan’s expected future cash flows. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable, with the vast majority of the collateral in real estate.

The value of real estate collateral is determined utilizing an income, market, or cost valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Company. In the case of loans with lower balances, the Company may obtain a real estate evaluation instead of an appraisal. Evaluations utilize many of the same techniques as appraisals, and are typically performed by independent appraisers. Once received, appraisals and evaluations are reviewed by trained staff independent of the lending function to verify consistency and reasonability. Appraisals and evaluations are based on significant unobservable inputs, including but not limited to: adjustments made to comparable properties, judgments about the condition of the subject property, the availability and suitability of comparable properties, capitalization rates, projected income of the subject or comparable properties, vacancy rates, projected depreciation rates, and the state of the local and regional economy. The Company may also elect to make additional reductions in the collateral value based on management’s best judgment, which represents another source of unobservable inputs. Because of the subjective nature of collateral valuation, impaired loans are considered Level 3.

Impaired loans may be secured by collateral other than real estate. The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivable collateral are based on financial statement balances or aging reports (Level 3). If a loan is not collateral-dependent, its impairment may be measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate. Because the loan is discounted at its effective rate of interest, rather than at a market rate, the loan is not considered to be held at fair value and is not included in the tables below. Collateral-dependent impaired loans allocated to the allowance for loan losses are measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as part of the provision for loan losses on the Consolidated Statements of Income.

Foreclosed assets

Loans are transferred to foreclosed assets when the collateral securing them is foreclosed on. The measurement of loss associated with foreclosed assets is based on the fair value of the collateral compared to the unpaid loan balance and anticipated costs to sell the property. If there is a contract for the sale of a property, and management reasonably believes the transaction will be consummated in accordance with the terms of the contract, fair value is based on the sale price in that contract (Level 1). If management has recent information about the sale of identical properties, such as when selling multiple condominium units on the same property, the remaining units would be valued based on the observed market data (Level 2). Lacking either a contract or such recent data, management would obtain an appraisal or evaluation of the value of the collateral as discussed above under Impaired Loans (Level 3). After the asset has been booked, a new appraisal or evaluation is obtained when management has reason to believe the fair value of the property may have changed and no later than two years after the last appraisal or evaluation was received. Any fair value adjustments to foreclosed assets below the original book value are recorded in the period incurred and expensed against current earnings.

The following table presents the assets carried on the consolidated balance sheets for which a nonrecurring change in fair value has been recorded. Assets are shown by class of loan and by level in the fair value hierarchy, as of the dates indicated. Certain impaired loans are valued by the present value of the loan’s expected future cash flows, discounted at the interest rate of the loan rather than at a market rate. These loans are not carried on the consolidated balance sheets at fair value and, as such, are not included in the table below.

			Carrying Value at June 30, 2013 Using
			(in thousands)
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans
Mortgage loans on real estate:
Residential 1-4 family	$	3,006	$	0	$	0	$	3,006
Commercial		2,776		0		0		2,776
Construction		2,520		0		0		2,520
Second mortgages		88		0		0		88
Total	$	8,390	$	0	$	0	$	8,390
Foreclosed assets
Residential 1-4 family	$	521	$	0	$	0	$	521
Commercial		2,286		0		0		2,286
Construction		3,752		0		0		3,752
Total	$	6,559	$	0	$	0	$	6,559

			Carrying Value at December 31, 2012 Using
			(in thousands)
Description	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans
Mortgage loans on real estate:
Residential 1-4 family	$	3,009	$	0	$	0	$	3,009
Commercial		2,271		0		0		2,271
Second mortgages		42		0		0		42
Total mortgage loans on real estate	$	5,322	$	0	$	0	$	5,322
Commercial loans		64		0		0		64
Total	$	5,386	$	0	$	0	$	5,386
Foreclosed assets
Residential 1-4 family	$	676	$	0	$	0	$	676
Commercial		2,094		0		0		2,094
Construction		3,804		0		0		3,804
Total	$	6,574	$	0	$	0	$	6,574

The following table displays quantitative information about Level 3 Fair Value Measurements as of the date indicated (dollars in thousands):

			Quantitative Information About Level 3 Fair Value Measurements
Description	Fair Value at June 30, 2013 (in thousands)		Valuation Techniques	Unobservable Input	Range (Average)
Impaired loans
Residential 1-4 family real estate		3,006	Market comparables	Selling costs		5% - 6% (5%)
				Liquidation discount		1.25%
Commercial real estate		2,776	Market comparables	Selling costs		6% - 20% (10%)
				Age of appraisal		46%
Construction		2,520	Market comparables	Selling costs		20%
				Liquidation discount		1.25%
Second mortgages		88	Market comparables	Selling costs		6%
				Liquidation discount		1.25%
Foreclosed assets
Residential 1-4 family		521	Market comparables	Selling costs		6% - 10% (6%)
Commercial		2,286	Market comparables	Selling costs		6% - 10% (6%)
Construction		3,752	Market comparables	Selling costs		6% - 10% (6%)

			Quantitative Information About Level 3 Fair Value Measurements
Description	Fair Value at December 31, 2012 (in thousands)		Valuation Techniques	Unobservable Input	Range (Average)
Impaired loans
Residential 1-4 family real estate		3,009	Market comparables	Differences in comparables		0% - 5% (5%)
				Selling costs		4.75% - 6% (6%)
Commercial real estate		2,271	Market comparables	Selling costs		0% - 6% (4%)
Second mortgages		42	Market comparables	Selling costs		6%
Commercial loans		64	Market comparables	Differences in comparables		25%
Foreclosed assets
Residential 1-4 family		676	Market comparables	Selling costs		6% - 10% (6%)
Commercial		2,094	Market comparables	Selling costs		6% - 10% (6%)
Construction		3,804	Market comparables	Selling costs		6% - 10% (6%)

ASC 825, “Financial Instruments,” requires disclosure about fair value of financial instruments for interim periods and excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company’s assets.

The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:

CASH AND CASH EQUIVALENTS

The carrying amounts of cash and short-term instruments, including interest-bearing due from banks, approximate fair values.

RESTRICTED SECURITIES

The restricted security category is comprised of FHLB and Federal Reserve Bank stock. These stocks are classified as restricted securities because their ownership is restricted to certain types of entities and they lack a market. When the FHLB or Federal Reserve Bank repurchases stock, they repurchase at the stock’s book value. Therefore, the carrying amounts of restricted securities approximate fair value.

LOANS RECEIVABLE

The fair value of a loan is based on its interest rate in relation to its risk profile, in comparison to what an investor could earn on a different investment with a similar risk profile. Variations in risk tolerance between lenders, and thus in risk pricing, can result in the same loan being priced differently at different institutions. A bank’s experience with the type of lending (such as commercial real estate) can also impact its assessment of the riskiness of a loan. A comprehensive picture of competitors’ rates in relation to borrower risk profiles is not available. Since the rate and risk profile are the primary factors in determining the fair value of a loan, both of which are unobservable in the market, the Company classifies loans as Level 3 in the fair value hierarchy. Instead, the Company uses a model which estimates market value based on the loan’s interest rate (regardless of its risk level) and rates for debt of similar maturities where market data is available. Fair values for non-performing loans are estimated as described above.

BANK-OWNED LIFE INSURANCE

Bank-owned life insurance represents insurance policies on certain current and former officers of the Company. The cash value of the policies is estimated using information provided by the insurance carrier. The insurance carrier uses actuarial data to estimate the value of each policy, based on the age and health of the insured relative to other individuals about whom the carrier has information. Health information can be broken down into quantitative, observable inputs, such as smoking habits, blood pressure, and weight, which, along with the insured’s age, can be compared to observable data the insurance carrier has available. The carrier can then estimate the cash value of each policy. Since the cash value represents the amount of cash the Company would receive when the policies are paid, the cash value closely approximates the fair value of the policies. Accordingly, bank-owned life insurance is classified as Level 2.

DEPOSIT LIABILITIES

The fair value of demand deposits, savings and certain money market deposits is the amount payable on demand at the reporting date. The fair value of certificates of deposits is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities. Information about the rates paid by other institutions for deposits of similar terms is readily available, and rates are mainly influenced by the term of the deposit itself. As a result, fair value calculations are based on observable inputs, and are classified as Level 2.

SHORT-TERM BORROWINGS

The carrying amounts of federal funds purchased, overnight repurchase agreements, and other short-term borrowings maturing within 90 days approximate their fair values. Since the contractual terms of these borrowings provide all information necessary to calculate the amounts that will be due at maturity, these liabilities are classified as Level 2.

LONG-TERM BORROWINGS

The fair values of the Company's long-term borrowings are estimated based on the current cost to repay the debt in full, discounted to current values and including any prepayment penalties that may apply. As the contractual terms of the borrowing provide all the necessary inputs for this calculation, long-term borrowings are classified as Level 2.

ACCRUED INTEREST

The calculation of accrued interest is based on readily observable information, such as the rate and term of the underlying asset or liability. Since these amounts are expected to be realized quickly (generally within 30 to 90 days), the carrying value approximates fair value and is classified as Level 2.

COMMITMENTS TO EXTEND CREDIT AND IRREVOCABLE LETTERS OF CREDIT

The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present credit-worthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date. At June 30, 2013 and December 31, 2012, the fair value of fees charged for loan commitments and irrevocable letters of credit was immaterial.

The estimated fair values, and related carrying or notional amounts, of the Company's financial instruments as of the dates indicated are as follows:

			Fair Value Measurements at June 30, 2013 Using
			(in thousands)
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents	$	55,171	$	55,171	$	0	$	0
Securities available-for-sale		258,583		0		258,583		0
Securities held-to-maturity		11,413		0		11,403		0
Restricted securities		2,378		0		2,378		0
Loans, net of allowances for loan losses		462,212		0		0		467,676
Bank owned life insurance		22,257		0		22,257		0
Accrued interest receivable		2,593		0		2,593		0
Liabilities
Deposits	$	730,368	$	0	$	734,412	$	0
Overnight repurchase agreements		25,642		0		25,642		0
Term repurchase agreements		411		0		411		0
Federal Home Loan Bank advances		25,000		0		27,992		0
Accrued interest payable		366		0		366		0

			Fair Value Measurements at December 31, 2012 Using
			(in thousands)
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents	$	42,317	$	42,317	$	0	$	0
Securities available-for-sale		329,456		0		329,456		0
Securities held-to-maturity		570		0		574		0
Restricted securities		2,562		0		2,562		0
Loans, net of allowances for loan losses		463,809		0		0		466,492
Bank owned life insurance		21,824		0		21,824		0
Accrued interest receivable		2,420		0		2,420		0
Liabilities
Deposits	$	753,816	$	0	$	757,923	$	0
Overnight repurchase agreements		35,946		0		35,946		0
Term repurchase agreements		1,280		0		1,282		0
Federal Home Loan Bank advances		25,000		0		28,681		0
Accrued interest payable		439		0		439		0

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Share-Based Compensation

9 Months Ended

Sep. 30, 2013

Share-Based Compensation [Abstract]

Share-Based Compensation

Note 4. Share-Based Compensation

Share-based compensation arrangements include stock options, restricted stock awards, performance-based awards, stock appreciation rights and employee stock purchase plans. Accounting standards require all share-based payments to employees to be valued using a fair value method on the date of grant and to be expensed based on that fair value over the applicable vesting period.

Historically, the Company has only granted share-based compensation in the form of stock options. There were no options granted in the first six months of 2013.

On March 9, 2008, the Company’s 1998 Stock Option Plan expired. Options to purchase 154,460 shares of common stock were outstanding under the Company’s 1998 Stock Option Plan at June 30, 2013. The exercise price of each option equals the market price of the Company’s common stock on the date of the grant and each option’s maximum term is ten years.

Stock option activity for the six months ended June 30, 2013 is summarized below:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Options outstanding, January 1, 2013		156,960		$	21.63
Granted		0			0
Exercised		0			0
Canceled or expired		(2,500	)		21.94
Options outstanding, June 30, 2013		154,460		$	21.63		2.96	$	0
Options exercisable, June 30, 2013		154,460		$	21.63		2.96	$	0

The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on June 30, 2013. This amount changes based on changes in the market value of the Company’s common stock. As of June 30, 2013, the outstanding options had no intrinsic value because the exercise prices of all outstanding options were above the market value of a share of the Company’s common stock.

No options were exercised during the six months ended June 30, 2013.

As of June 30, 2013, all outstanding stock options were fully vested and there was no unrecognized stock-based compensation expense.

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Consolidated Statements of Changes in Stockholders' Equity (unaudited) (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Consolidated Statements of Changes in Stockholders' Equity (unaudited) [Abstract]
Cash dividends (in dollars per share)	$ 0.16	$ 0.15

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Loans and the Allowance for Loan Losses, Activity In Period (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Allowance for loan losses by segment [Roll Forward]
Beginning Balance	$ 7,324	$ 8,498
Charges-offs	(1,462)	(3,969)
Recoveries	318	395
Provision for loan losses	800	2,400
Ending balance	6,980	7,324
Ending balances individually evaluated for impairment	1,920	444
Ending balances collectively evaluated for impairment	5,060	6,880
Ending balance	6,980	7,324
Loan Balances [Abstract]
Ending balance individually evaluated for impairment	18,011	17,568
Ending balance collectively evaluated for impairment	462,156	453,565
Ending balance	480,167	471,133
Calculated provision based on prior methodology	856
Changes for allowance for loan losses	(56)
Commercial [Member]
Allowance for loan losses by segment [Roll Forward]
Beginning Balance	677	1,011
Charges-offs	(120)	(138)
Recoveries	67	67
Provision for loan losses	(368)	(263)
Ending balance	256	677
Ending balances individually evaluated for impairment	0	33
Ending balances collectively evaluated for impairment	256	644
Ending balance	256	677
Loan Balances [Abstract]
Ending balance individually evaluated for impairment	0	97
Ending balance collectively evaluated for impairment	29,880	25,244
Ending balance	29,880	25,341
Calculated provision based on prior methodology	(346)
Changes for allowance for loan losses	(22)
Real Estate - Construction [Member]
Allowance for loan losses by segment [Roll Forward]
Beginning Balance	187	323
Charges-offs	(99)	(831)
Recoveries	4	30
Provision for loan losses	516	665
Ending balance	608	187
Ending balances individually evaluated for impairment	149	0
Ending balances collectively evaluated for impairment	459	187
Ending balance	608	187
Loan Balances [Abstract]
Ending balance individually evaluated for impairment	2,546	3,064
Ending balance collectively evaluated for impairment	10,078	8,941
Ending balance	12,624	12,005
Calculated provision based on prior methodology	371
Changes for allowance for loan losses	145
Real Estate - Mortgage [Member]
Allowance for loan losses by segment [Roll Forward]
Beginning Balance	6,179	6,735
Charges-offs	(1,037)	(2,554)
Recoveries	137	162
Provision for loan losses	504	1,836
Ending balance	5,783	6,179
Ending balances individually evaluated for impairment	1,771	411
Ending balances collectively evaluated for impairment	4,012	5,768
Ending balance	5,783	6,179
Loan Balances [Abstract]
Ending balance individually evaluated for impairment	15,449	14,390
Ending balance collectively evaluated for impairment	396,475	384,132
Ending balance	411,924	398,522
Calculated provision based on prior methodology	859
Changes for allowance for loan losses	(355)
Consumer [Member]
Allowance for loan losses by segment [Roll Forward]
Beginning Balance	204	300
Charges-offs	(83)	(259)
Recoveries	60	70
Provision for loan losses	(13)	93
Ending balance	168	204
Ending balances individually evaluated for impairment	0	0
Ending balances collectively evaluated for impairment	168	204
Ending balance	168	204
Loan Balances [Abstract]
Ending balance individually evaluated for impairment	16	17
Ending balance collectively evaluated for impairment	10,244	13,129
Ending balance	10,260	13,146
Calculated provision based on prior methodology	(64)
Changes for allowance for loan losses	51
Other [Member]
Allowance for loan losses by segment [Roll Forward]
Beginning Balance	77	129
Charges-offs	(123)	(187)
Recoveries	50	66
Provision for loan losses	161	69
Ending balance	165	77
Ending balances individually evaluated for impairment	0	0
Ending balances collectively evaluated for impairment	165	77
Ending balance	165	77
Loan Balances [Abstract]
Ending balance individually evaluated for impairment	0	0
Ending balance collectively evaluated for impairment	15,479	22,119
Ending balance	15,479	22,119
Calculated provision based on prior methodology	36
Changes for allowance for loan losses	$ 125

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Securities (Tables)

9 Months Ended

Sep. 30, 2013

Securities [Abstract]

Amortized costs and fair value of securities held-to-maturity

Amortized costs and fair values of securities held-to-maturity as of the dates indicated are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2013
Obligations of  U.S. Government agencies	$	570	$	3	$	(3	)	$	570
Obligations of state and political subdivisions		10,843		9		(19	)		10,833
Total	$	11,413	$	12	$	(22	)	$	11,403
December 31, 2012
Obligations of  U.S. Government agencies	$	570	$	4	$	0		$	574

Amortized costs and fair value of securities available-for-sale

Amortized costs and fair values of securities available-for-sale as of the dates indicated are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2013
Obligations of  U.S. Government agencies	$	25,372	$	551	$	(118	)	$	25,805
Obligations of state and political subdivisions		50,997		160		(2,393	)		48,764
Mortgage-backed securities		189,456		0		(7,613	)		181,843
Money market investments		801		0		0			801
Corporate bonds		1,399		0		(29	)		1,370
Total	$	268,025	$	711	$	(10,153	)	$	258,583
December 31, 2012
Obligations of  U.S. Government agencies	$	35,787	$	1,314	$	(13	)	$	37,088
Obligations of state and political subdivisions		43,276		712		(214	)		43,774
Mortgage-backed securities		246,132		1,966		(743	)		247,355
Money market investments		541		0		0			541
Corporate bonds and other securities		700		0		(2	)		698
Total	$	326,436	$	3,992	$	(972	)	$	329,456

Available-for-sale securities and Held-to-maturity securities, continuous unrealized loss position

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses that are deemed to be temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of the dates indicated. The Company had no held-to-maturity securities with unrealized losses at December 31, 2012.

	June 30, 2013
	Less Than Twelve Months				More Than Twelve Months				Total
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Number of Securities
	(in thousands)
Securities Available-for-Sale
Debt securities:
Obligations of U.S. Government agencies	$	118	$	4,890	$	0	$	0	$	118	$	4,890		1
Obligations of state and political subdivisions		2,393		37,905		0		0		2,393		37,905		69
Mortgage-backed securities		7,613		181,843		0		0		7,613		181,843		19
Corporate bonds		29		1,370		0		0		29		1,370		11
Total securities available-for-sale	$	10,153	$	226,008	$	0	$	0	$	10,153	$	226,008		100
Securities Held-to-Maturity
Obligations of U.S. Government agencies	$	3	$	97	$	0	$	0	$	3	$	97		1
Obligations of state and political subdivisions		19		857		0		0		19		857		1
Total securities held-to-maturity	$	22	$	954	$	0	$	0	$	22	$	954		2

	December 31, 2012
	Less Than Twelve Months				More Than Twelve Months				Total
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Number of Securities
	(in thousands)
Securities Available-for-Sale
Debt securities:
Obligations of U. S. Government agencies	$	13	$	5,103	$	0	$	0	$	13	$	5,103		1
Obligations of state and political subdivisions		214		9,535		0		0		214		9,535		24
Mortgage-backed securities		743		104,066		0		0		743		104,066		9
Corporate bonds and other securities		2		700		0		0		2		700		2
Total securities available-for-sale	$	972	$	119,404	$	0	$	0	$	972	$	119,404		36

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2013

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

Note 7. Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” The amendments in this ASU require an entity to present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income. In addition, the amendments require a cross-reference to other disclosures currently required for other reclassification items to be reclassified directly to net income in their entirety in the same reporting period. Public companies should apply these amendments for fiscal years, and interim periods within those years, beginning on or after December 15, 2012. The Company has included the required disclosures from ASU 2013-02 in its consolidated financial statements.

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Pension Plan (Tables)

9 Months Ended

Sep. 30, 2013

Pension Plan [Abstract]

Components of net periodic plan cost

The components of net periodic pension plan cost are as follows for the periods indicated:

Three months ended June 30,	2013			2012
	Pension Benefits
Interest cost	$	62,983		$	71,750
Expected return on plan assets		(88,399	)		(97,500	)
Amortization of net loss		74,524			56,250
Net periodic pension plan cost	$	49,108		$	30,500
Six months ended June 30,		2013			2012
	Pension Benefits
Interest cost	$	125,966		$	143,500
Expected return on plan assets		(176,798	)		(195,000	)
Amortization of net loss		149,048			112,500
Net periodic pension plan cost	$	98,216		$	61,000

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Loans and the Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2013

Loans and the Allowance for Loan Losses [Abstract]

Outstanding Loans By Segment Type

The following is a summary of the balances in each class of the Company’s loan portfolio as of the dates indicated:

	June 30, 2013			December 31, 2012
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	80,553		$	77,267
Commercial		273,498			274,613
Construction		13,493			12,005
Second mortgages		12,242			14,315
Equity lines of credit		31,201			32,327
Total mortgage loans on real estate		410,987			410,527
Commercial loans		28,687			25,341
Consumer loans		10,985			13,146
Other		18,849			22,119
Total loans		469,508			471,133
Less: Allowance for loan losses		(7,296	)		(7,324	)
Loans, net of allowance and deferred fees	$	462,212		$	463,809

Credit Quality Information

The following table presents credit quality exposures by internally assigned risk ratings as of the dates indicated:

Credit Quality Information As of June 30, 2013
(in thousands)
	Pass		OAEM		Substandard		Total
Mortgage loans on real estate:
Residential 1-4 family	$	73,496	$	1,746	$	5,311	$	80,553
Commercial		256,142		7,708		9,648		273,498
Construction		10,374		239		2,880		13,493
Second mortgages		11,895		238		109		12,242
Equity lines of credit		30,598		0		603		31,201
Total mortgage loans on real estate		382,505		9,931		18,551		410,987
Commercial loans		27,533		112		1,042		28,687
Consumer loans		10,956		0		29		10,985
Other		18,849		0		0		18,849
Total	$	439,843	$	10,043	$	19,622	$	469,508

Credit Quality Information As of December 31, 2012
(in thousands)
	Pass		OAEM		Substandard		Total
Mortgage loans on real estate:
Residential 1-4 family	$	70,961	$	1,711	$	4,595	$	77,267
Commercial		258,195		6,781		9,637		274,613
Construction		8,651		254		3,100		12,005
Second mortgages		13,488		242		585		14,315
Equity lines of credit		31,704		239		384		32,327
Total mortgage loans on real estate		382,999		9,227		18,301		410,527
Commercial loans		23,997		209		1,135		25,341
Consumer loans		13,042		0		104		13,146
Other		22,119		0		0		22,119
Total	$	442,157	$	9,436	$	19,540	$	471,133

Past Due Loans

Loans in nonaccrual status that are also past due are included in the aging categories in the table below.

Age Analysis of Past Due Loans as of June 30, 2013
	30 - 59  Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Total Current Loans (1)		Total Loans		Recorded Investment > 90 Days Past Due and Accruing
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	1,752	$	38	$	3,306	$	5,096	$	75,457	$	80,553	$	258
Commercial		0		200		716		916		272,582		273,498		0
Construction		404		0		2,880		3,284		10,209		13,493		0
Second mortgages		46		35		20		101		12,141		12,242		20
Equity lines of credit		175		75		0		250		30,951		31,201		0
Total mortgage loans on real estate		2,377		348		6,922		9,647		401,340		410,987		278
Commercial loans		54		49		0		103		28,584		28,687		0
Consumer loans		80		40		13		133		10,852		10,985		13
Other		65		9		5		79		18,770		18,849		5
Total	$	2,576	$	446	$	6,940	$	9,962	$	459,546	$	469,508	$	296

(1) For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

Age Analysis of Past Due Loans as of December 31, 2012
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Total Current Loans (1)		Total Loans		Recorded Investment > 90 Days Past Due  and Accruing
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	1,115	$	0	$	3,783	$	4,898	$	72,369	$	77,267	$	348
Commercial		207		0		724		931		273,682		274,613		0
Construction		140		0		2,925		3,065		8,940		12,005		0
Second mortgages		113		0		544		657		13,658		14,315		60
Equity lines of credit		90		0		287		377		31,950		32,327		0
Total mortgage loans on real estate		1,665		0		8,263		9,928		400,599		410,527		408
Commercial loans		275		13		122		410		24,931		25,341		25
Consumer loans		85		22		11		118		13,028		13,146		11
Other		54		7		3		64		22,055		22,119		3
Total	$	2,079	$	42	$	8,399	$	10,520	$	460,613	$	471,133	$	447

(1) For purposes of this table, Total Current Loans includes loans that are 1 - 29 days past due.

Nonaccrual Loans

The following table presents loans in nonaccrual status by class of loan as of the dates indicated:

Nonaccrual Loans by Class
	June 30, 2013		December 31, 2012
	(in thousands)
Mortgage loans on real estate:
Residential 1-4 family	$	3,363	$	3,663
Commercial		2,965		3,037
Construction		2,880		3,065
Second mortgages		35		484
Equity lines of credit		0		286
Total mortgage loans on real estate		9,243		10,535
Commercial loans		0		97
Consumer loans		0		0
Total	$	9,243	$	10,632

Interest income that would have been recorded under original loan terms

The following table presents the interest income that the Company would have earned under the original terms of its nonaccrual loans and the actual interest recorded by the Company on nonaccrual loans for the periods presented:

	Six Months Ended June 30,
	2013		2012
	(in thousands)
Interest income that would have been recorded under original loan terms	$	275	$	275
Actual interest income recorded for the period		51		32
Reduction in interest income on nonaccrual loans	$	224	$	243

Troubled Debt Restructurings by Class

The following table presents TDRs during the period indicated, by class of loan:

Troubled Debt Restructurings by Class For the Six Months Ended June 30, 2013
(dollars in thousands)
	Number of Modifications		Recorded Investment Prior to Modification		Recorded Investment After Modification		Current Investment on June 30, 2013
Mortgage loans on real estate:
Residential 1-4 family		3	$	676	$	676	$	673
Commercial		1		207		207		203
Total		4	$	883	$	883	$	876

Troubled Debt Restructurings by Class For the Six Months Ended June 30, 2012
(dollars in thousands)
	Number of Modifications		Recorded Investment Prior to Modification		Recorded Investment After Modification		Current Investment on June 30, 2012
Mortgage loans on real estate:
Commercial		2	$	3,019	$	2,461	$	2,373
Second mortgages		1		111		145		140
Total		3	$	3,130	$	2,606	$	2,513

Restructurings that Subsequently Defaulted [Table Text Block]

The following table presents TDRs for the three and nine months ended September 30, 2013 for which there was a payment default where the default occurred within twelve months of restructuring.

Restructurings that Subsequently Defaulted
As of September 30, 2013
(in thousands)
	Recorded Investment in Defaulting Loans
Mortgage loans on real estate		$
Residential 1 - 4 family			79,000
Commercial			1,829,000
Total		$	1,908,000

During the three and nine months ended September 30, 2012, there were no TDRs for which there was a payment default where the default occurred within twelve months of restructuring.  A TDR is considered in default when it is 90 days or more past due or has been charged off.

Impaired Loans by Class

The following table includes the recorded investment and unpaid principal balances (a portion of which may have been charged off) for impaired loans with the associated allowance amount, if applicable, as of the dates presented. Also presented are the average recorded investments in the impaired loans and the related amount of interest recognized for the periods presented. The average balances are calculated based on daily average balances.

Impaired Loans by Class (in thousands)
	As of June 30, 2013								For the six months ended June 30, 2013
			Recorded Investment
	Unpaid Principal Balance		Without Valuation Allowance		With Valuation Allowance		Associated Allowance		Average Recorded Investment		Interest Income Recognized
Mortgage loans on real estate:
Residential 1-4 family	$	4,546	$	872	$	3,415	$	237	$	4,738	$	16
Commercial		13,702		3,683		7,082		1,261		10,910		269
Construction		3,639		0		2,880		360		2,891		0
Second mortgages		183		43		136		47		745		4
Equity lines of credit		50		50		0		0		193		1
Total mortgage loans on real estate	$	22,120	$	4,648	$	13,513	$	1,905	$	19,477	$	290
Commercial loans		0		0		0		0		12		0
Consumer loans		16		16		0		0		18		1
Total	$	22,136	$	4,664	$	13,513	$	1,905	$	19,507	$	291

Impaired Loans by Class (in thousands)
	As of December 31, 2012								For the year ended December 31, 2012
			Recorded Investment
	Unpaid Principal Balance		Without Valuation Allowance		With Valuation Allowance		Associated Allowance		Average Recorded Investment		Interest Income Recognized
Mortgage loans on real estate:
Residential 1-4 family	$	4,100	$	681	$	3,235	$	226	$	2,354	$	136
Commercial		12,459		3,741		5,817		180		10,151		242
Construction		3,782		3,064		0		0		3,320		(9	)
Second mortgages		695		583		47		5		542		12
Equity lines of credit		370		286		0		0		391		(2	)
Total mortgage loans on real estate	$	21,406	$	8,355	$	9,099	$	411	$	16,758	$	379
Commercial loans		117		0		97		33		104		(14	)
Consumer loans		17		17		0		0		26		1
Total	$	21,540	$	8,372	$	9,196	$	444	$	16,888	$	366

Allowance for loan losses by segment

The following table presents, by portfolio segment, the changes in the allowance for loan losses and the recorded investment in loans for the periods presented. 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 AND RECORDED INVESTMENT IN LOANS
	(in thousands)
For the Six Months Ended June 30, 2013	Commercial			Real Estate - Construction			Real Estate - Mortgage			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	677		$	187		$	6,179		$	204		$	77		$	7,324
Charge-offs		(106	)		(100	)		(413	)		(66	)		(79	)		(764	)
Recoveries		43			3			121			34			35			236
Provision for loan losses		(339	)		429			421			(22	)		11			500
Ending balance	$	275		$	519		$	6,308		$	150		$	44		$	7,296
Ending balance individually evaluated for impairment	$	0		$	360		$	1,545		$	0		$	0		$	1,905
Ending balance collectively evaluated for impairment		275			159			4,763			150			44			5,391
Ending balance	$	275		$	519		$	6,308		$	150		$	44		$	7,296
Loan Balances:
Ending balance individually evaluated for impairment	$	0		$	2,880		$	15,281		$	16		$	0		$	18,177
Ending balance collectively evaluated for impairment		28,687			10,613			382,213			10,969			18,849			451,331
Ending balance	$	28,687		$	13,493		$	397,494		$	10,985		$	18,849		$	469,508

For the Year Ended December 31, 2012	Commercial			Real Estate - Construction			Real Estate - Mortgage			Consumer			Other			Total
Allowance for Loan Losses:
Balance at the beginning of period	$	1,011		$	323		$	6,735		$	300		$	129		$	8,498
Charge-offs		(138	)		(831	)		(2,554	)		(259	)		(187	)		(3,969	)
Recoveries		67			30			162			70			66			395
Provision for loan losses		(263	)		665			1,836			93			69			2,400
Ending balance	$	677		$	187		$	6,179		$	204		$	77		$	7,324
Ending balance individually evaluated for impairment	$	33		$	0		$	411		$	0		$	0		$	444
Ending balance collectively evaluated for impairment		644			187			5,768			204			77			6,880
Ending balance	$	677		$	187		$	6,179		$	204		$	77		$	7,324
Loan Balances:
Ending balance individually evaluated for impairment	$	97		$	3,064		$	14,390		$	17		$	0		$	17,568
Ending balance collectively evaluated for impairment		25,244			8,941			384,132			13,129			22,119			453,565
Ending balance	$	25,341		$	12,005		$	398,522		$	13,146		$	22,119		$	471,133

Change in Allowance Methodology [Text Block]

The following table represents the effect on the loan loss provision for the nine months ended September 30, 2013 as a result of the changes to the methodology from that used in prior periods.

	Calculated Provision Based on Current Quarter Methodology			Calculated Provision Based on Prior Quarter Methodology			Difference
	(in thousands)
Portfolio Segment:
Commercial	$	(368	)	$	(346	)	$	(22	)
Real estate - construction		516			371			145
Real estate - mortgage		504			859			(355	)
Consumer loans		(13	)		(64	)		51
Other		161			36			125
Total	$	800		$	856		$	(56	)

Under the previous method, the provisions for real estate – construction and real estate – mortgage were calculated on the same pool of loans, with loss rates for that aggregated pool applied to the loan balances in those segments, even though the two segments have different risk characteristics and performance history.  Under the current method, the historical loss rate on construction loans is calculated separately from other real estate loans, providing a more precise estimate of the Company's true historical losses.

The other loans segment in the table above includes overdrafts on deposit accounts.  The new method allows management to perform a more granular analysis of overdrawn accounts.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Jul. 31, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	Old Point Financial Corporation
Entity Central Index Key	0000740971
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		4,959,009
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2013

XML

Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2013

Share-Based Compensation [Abstract]

Stock option plan activity

Stock option activity for the six months ended June 30, 2013 is summarized below:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Options outstanding, January 1, 2013		156,960		$	21.63
Granted		0			0
Exercised		0			0
Canceled or expired		(2,500	)		21.94
Options outstanding, June 30, 2013		154,460		$	21.63		2.96	$	0
Options exercisable, June 30, 2013		154,460		$	21.63		2.96	$	0