Fair Value Of Financial Instruments

9 Months Ended

Sep. 30, 2012

Fair Value Of Financial Instruments [Abstract]

Note 11: Fair Value of Financial Instruments

The Company discloses fair value information about financial instruments for which it is practicable to estimate fair value. Fair value estimates are made as of a specific point in time based on the characteristics of the financial instruments and relevant market information. Where available, quoted market prices are used. In other cases, fair values are based on estimates using present value or other valuation techniques. These techniques involve uncertainties and are significantly affected by the assumptions used and judgments made regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows, future expected loss experience and other factors. Changes in assumptions could significantly affect these estimates. Derived fair value estimates cannot be substantiated by comparison to independent markets and, in certain cases, could not be realized in an immediate sale of the instrument.

Fair value estimates are based on existing financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Accordingly, the aggregate fair value amounts presented do not purport to represent the underlying market value of the Company.

The following describes the methods and significant assumptions used by the Company in estimating the fair values of significant financial instruments: Cash and Cash Equivalents: For cash and cash equivalents, including cash and due from banks and other short-term investments with maturities of 90 days or less, the carrying amounts reported on the consolidated balance sheet approximate fair values.

Federal Home Loan Bank stock: For Federal Home Loan Bank stock, the carrying amounts report on the consolidated balance sheet approximate fair values.

Loans: For variable rate loans that re-price frequently and have no significant change in credit risk, fair values are based on carrying values. The fair value of other loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Deposits: The fair value of deposits with no stated maturity is equal to the carrying amount. The fair value of time deposits is based on the discounted value of contractual cash flows, applying interest rates currently being offered on wholesale funding products of similar maturities. The fair value estimates for deposits do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of alternative forms of funding ("deposit base intangibles").

Borrowings: For borrowings that mature or re-price in 90 days or less, carrying value approximates fair value. The fair value of the Company's remaining borrowings is estimated by using discounted cash flows based on current rates available for similar types of borrowing arrangements taking into account any optionality.

Accrued Interest Receivable and Payable: The carrying amounts of accrued interest receivable and payable approximate their fair values.

Off-Balance Sheet Financial Instruments: The Company's off-balance sheet instruments consist of loan commitments and standby letters of credit. Fair values for standby letters of credit and loan commitments were insignificant.

A summary of the carrying values and estimated fair values of the Company's significant financial instruments at September 30, 2012, and December 31, 2011, follows:


		Carrying		Level 1		Level 2		Level 3		Total Fair
September 30, 2012		Value		Inputs		Inputs		Inputs		Value

Cash and cash equivalents	$	10,045	$	10,045	$	--	$	--	$	10,045
Federal Home Loan Bank stock	$	18,189	$	--	$	18,189	$	--	$	18,189
Loans, net	$	800,359	$	--	$	--	$	808,914	$	808,914
Interest receivable	$	4,668	$	4,668	$	--	$	--	$	4,668

Financial liabilities:
Deposits (with no stated maturity)	$	416,328	$	--	$	416,328	$	--	$	416,328
Time deposits	$	397,299	$	--	$	404,826	$	--	$	404,826
Borrowings	$	343,833	$	--	$	351,032	$	--	$	351,032
Interest payable	$	751	$	751	$	--	$	--	$	751


		Carrying		Level 1		Level 2		Level 3		Total Fair
December 31, 2011		Value		Inputs		Inputs		Inputs		Value

Cash and cash equivalents	$	8,720	$	8,720	$	--	$	--	$	8,720
Federal Home Loan Bank stock	$	16,068	$	--	$	16,068	$	--	$	16,068
Loans, net	$	720,782	$	--	$	--	$	728,985	$	728,985
Interest receivable	$	4,385	$	4,385	$	--	$	--	$	4,385

Financial liabilities:
Deposits (with no stated maturity)	$	368,472	$	--	$	368,472	$	--	$	368,472
Time deposits	$	354,418	$	--	$	362,933	$	--	$	362,933
Borrowings	$	320,283	$	--	$	329,801	$	--	$	329,801
Interest payable	$	828	$	828	$	--	$	--	$	828

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

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Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

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Reference 6: http://www.xbrl.org/2003/role/presentationRef

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+ Details