FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

Assets measured at fair value on a recurring basis are summarized below: There were no transfers between Level 1 and Level 2 during the periods presented.

			Quoted Prices in
			Active Markets for		Significant Other		Significant
	September 30,		Identical Assets		Observable Inputs		Unobservable Inputs
(Dollars in thousands)	2013		(Level 1)		(Level 2)		(Level 3)

Assets:
Government-sponsored mortgage-backed residential	$	114,550	$	-	$	114,550	$	-
Government-sponsored collateralized mortgage obligations		77,742		-		77,742		-
Asset backed- collateralized loan obligations		32,656		-		32,656		-
State and municipal		12,666		-		12,666		-
Corporate bonds		52,569		-		52,569		-

Total	$	290,183	$	-	$	290,183	$	-

			Quoted Prices in
			Active Markets for		Significant Other		Significant
	December 31,		Identical Assets		Observable Inputs		Unobservable Inputs
(Dollars in thousands)	2012		(Level 1)		(Level 2)		(Level 3)

Assets:
U.S. Treasury and agencies	$	8,278	$	-	$	8,278	$	-
Government-sponsored mortgage-backed residential		144,889		-		144,889		-
Government-sponsored collateralized mortgage obligations		150,147		-		150,147		-
Private asset backed		5,132		-		5,132		-
State and municipal		12,718		-		12,718		-
Corporate bonds		32,967		-		32,967		-

Total	$	354,131	$	-	$	354,131	$	-

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

The table below presents a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the periods ended September 30, 2012. The level 3 assets consist of trust preferred securities which were called or sold in the fourth quarter of 2012. We did not have any Level 3 assets measured at fair value on a recurring basis at September 30, 2013.

	Fair Value Measurements		Fair Value Measurements
	Using Significant		Using Significant
	Unobservable Inputs		Unobservable Inputs
	(Level 3)		(Level 3)
	Three Months Ended		Nine Months Ended
	September 30,		September 30,
(Dollars in thousands)	2012		2012

Beginning balance	$	266	$	264
Total gains or losses:
Impairment charges on securities		-		-
Included in other comprehensive income		16		18
Purchases		-		-
Sales or calls		(1)		(1)
Settlements		-		-
Transfers in and/or out of Level 3		-		-
Ending balance	$	281	$	281

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Table Text Block]

Assets measured at fair value on a nonrecurring basis are summarized below:

			Quoted Prices in
			Active Markets for		Significant Other		Significant
	September 30,		Identical Assets		Observable Inputs		Unobservable Inputs
(Dollars in thousands)	2013		(Level 1)		(Level 2)		(Level 3)

Assets:
Impaired loans:
Commercial	$	183	$	-	$	-	$	183
Commercial Real Estate:
Land Development		1,191		-		-		1,191
Other		13,433		-		-		13,433
Residential Mortgage		422		-		-		422
Consumer and Home Equity		212		-		-		212
Real estate acquired through foreclosure:
Commercial Real Estate:
Land Development		918		-		-		918
Other		2,951		-		-		2,951
Residential Mortgage		483		-		-		483

			Quoted Prices in
			Active Markets for		Significant Other		Significant
	December 31,		Identical Assets		Observable Inputs		Unobservable Inputs
(Dollars in thousands)	2012		(Level 1)		(Level 2)		(Level 3)

Assets:
Impaired loans:
Commercial	$	231	$	-	$	-	$	231
Commercial Real Estate:
Land Development		1,775		-		-		1,775
Other		12,560		-		-		12,560
Residential Mortgage		127		-		-		127
Consumer and Home Equity		137		-		-		137
Real estate acquired through foreclosure:
Commercial Real Estate:
Land Development		2,459		-		-		2,459
Building Lots		2,220		-		-		2,220
Other		8,350		-		-		8,350
Residential Mortgage		224		-		-		224

Fair Value Inputs, Assets, Quantitative Information [Table Text Block]

The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at September 30, 2013.

	Fair		Valuation	Unobservable	Range (Weighted
(Dollars in thousands)	Value		Technique(s)	Input(s)	Average)

Impaired loans:
Commercial	$	183	Income approach	Discount or capitalization rate	1.25% (1)

Commercial Real Estate:
Land Development		1,191	Income approach	Discount or capitalization rate	0.00%-25.00% (23.23%)

Other		12,435	Income approach	Discount or capitalization rate	1.25%-9.00% (8.73%)
		998	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-10.00% (2.29%)

Residential Mortgage		422	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-3.87% (1.07%)

Consumer and Home Equity		212	Sales comparison approach	Adjustment for differences between comparable sales	1.80%-2.25% (1.87%)

Real estate acquired through foreclosure:
Commercial Real Estate:
Land Development		886	Income approach	Discount or capitalization rate	8.50%-29.00% (23.97%)
		32	Sales comparison approach	Adjustment for differences between comparable sales	0.00% (1)

Other		1,009	Income approach	Discount or capitalization rate	8.70%-10.00% (9.61%)
		1,942	Sales comparison approach	Adjustment for differences between comparable sales	2.75%-20.00% (15.24%)

Residential Mortgage		483	Sales comparison approach	Adjustment for differences between comparable sales	0.00%-18.00% (0.82%)

(1) Unobservable inputs with a single discount listed include only one property.

Fair Value, by Balance Sheet Grouping [Table Text Block]

The estimated fair value of financial instruments, not previously presented, is as follows:

			September 30, 2013
(Dollars in thousands)	Carrying		Fair Value Measurements
	Value		Total		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	31,517	$	31,517	$	5,970	$	25,547	$	-
Mortgage loans held for sale		1,068		1,085		-		1,085		-
Loans, net		448,366		452,066		-		-		452,066
Accrued interest receivable		2,283		2,283		-		-		2,283
FHLB stock		4,430		N/A		N/A		N/A		N/A

Financial liabilities:
Deposits		746,878		708,766		-		708,766		-
Advances from Federal Home Loan Bank		38,424		39,445		-		39,445		-
Subordinated debentures		18,000		12,200		-		-		12,200
Accrued interest payable		4,137		4,137		-		4,137		-

			December 31, 2012
(Dollars in thousands)	Carrying		Fair Value Measurements
	Value		Total		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	63,103	$	63,103	$	6,468	$	56,635	$	-
Mortgage loans held for sale		3,887		3,967		-		3,967		-
Loans, net		492,740		493,998		-		-		493,998
Accrued interest receivable		2,690		2,690		-		-		2,690
FHLB stock		4,805		N/A		N/A		N/A		N/A

Financial liabilities:
Deposits		922,620		934,637		-		934,637		-
Advances from Federal Home Loan Bank		12,596		13,944		-		13,944		-
Subordinated debentures		18,000		12,695		-		-		12,695
Accrued interest payable		3,121		3,121		-		3,121		-

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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