FAIR VALUE (Tables)

3 Months Ended

Mar. 31, 2013

Carrying Amounts and Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values of financial instruments at March 31, 2013 were as follows:

				Fair Value Measurements at March 31, 2013 Using
	Carrying Amount			Level 1			Level 2			Level 3		Total
Financial assets
Cash and due from banks	$	71,765		$	71,765		$	-		$	-	$	71,765
Federal funds sold		4,474			4,474			-			-		4,474
Securities available for sale		275,408			-			275,268			140		275,408
Loans held for sale		490			-			-			490		490
Loans, net		688,194			-			-			693,330		693,330
Federal Home Loan Bank stock		4,181			n/a			n/a			n/a		n/a
Interest receivable		3,158			-			781			2,377		3,158

Financial liabilities
Deposits	$	(936,419	)	$	(588,538	)	$	(351,119	)	$	-	$	(939,657	)
Securities sold under agreements to repurchase		(10,539	)		-			(10,539	)		-		(10,539	)
Other borrowed funds		(15,522	)		-			(15,496	)		-		(15,496	)
Interest payable		(447	)		(6	)		(441	)		-		(447	)

The carrying amounts and estimated fair values of financial instruments at December 31, 2012 were as follows:

				Fair Value Measurements at December 31, 2012 Using
	Carrying Amount			Level 1			Level 2			Level 3		Total
Financial assets
Cash and due from banks	$	66,009		$	66,009		$	-		$	-	$	66,009
Federal funds sold		4,236			4,236			-			-		4,236
Securities available for sale		283,975			-			283,835			140		283,975
Loans held for sale		200			-			-			200		200
Loans, net		693,137			-			-			691,519		691,519
Federal Home Loan Bank stock		4,181			n/a			n/a			n/a		n/a
Interest receivable		3,403			-			827			2,576		3,403

Financial liabilities
Deposits	$	(930,583	)	$	(577,274	)	$	(356,730	)	$	-	$	(934,004	)
Securities sold under agreements to repurchase		(26,102	)		-			(26,102	)		-		(26,102	)
Other borrowed funds		(16,049	)		-			(16,022			-		(16,022	)
Interest payable		(489	)		(6	)		(483	)		-		(489	)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below:

			Fair Value Measurements at March 31, 2013 Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale
Mortgage-backed securities
U. S. agency MBS - residential	$	33,652	$	-	$	33,652	$	-
U. S. agency CMO's - residential		220,719		-		220,719		-
Total mortgage-backed securities of government sponsored agencies		254,371		-		254,371		-
U. S. government sponsored agency securities		10,180		-		10,180		-
Obligations of states and political subdivisions		7,826		-		7,686		140
Other securities		3,031		-		3,031		-
Total available for sale	$	275,408	$	-	$	275,268	$	140

			Fair Value Measurements at December 31, 2012 Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale
Mortgage-backed securities
U. S. agency MBS - residential	$	37,100	$	-	$	37,100	$	-
U. S. agency CMO's - residential		212,847		-		212,847		-
Total mortgage-backed securities of government sponsored agencies		249,947		-		249,947		-
U. S. government sponsored agency securities		22,244		-		22,244		-
Obligations of states and political subdivisions		7,860		-		7,720		140
Other securities		3,924		-		3,924		-
Total available for sale	$	283,975	$	-	$	283,835	$	140

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

Assets and liabilities measured at fair value on a non-recurring basis at March 31, 2013 are summarized below:

			Fair Value Measurements at March 31, 2013 Using
	Carrying 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:
Residential Real Estate	$	2,652	$	-	$	-	$	2,652
Commercial Real Estate
Owner Occupied		512		-		-		512
Non-owner Occupied		428		-		-		428
Commercial and Industrial		7,050		-		-		7,050
All Other		4,424		-		-		4,424
Total impaired loans		15,066	$	-	$	-	$	15,066

Other real estate owned:
Residential Real Estate	$	50	$	-	$	-	$	50
Commercial Real Estate
Non-owner Occupied		520		-		-		520
All Other		6,650		-		-		6,650
Total OREO	$	7,220	$	-	$	-	$	7,220

Assets and liabilities measured at fair value on a non-recurring basis at December 31, 2012 are summarized below:

			Fair Value Measurements at December 31, 2012 Using
	Carrying 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:
Residential Real Estate	$	2,739	$	-	$	-	$	2,739
Commercial Real Estate
Owner Occupied		512		-		-		512
Non-owner Occupied		427		-		-		427
Commercial and Industrial		8,300		-		-		8,300
All Other		4,465		-		-		4,465
Total impaired loans		16,443	$	-	$	-	$	16,443

Other real estate owned:
Residential Real Estate	$	255	$	-	$	-	$	255
Commercial Real Estate
Owner Occupied		250		-		-		250
Non-owner Occupied		1,031		-		-		1,031
All Other		6,432		-		-		6,432
Total OREO	$	7,968	$	-	$	-	$	7,968

Fair Value Inputs, Assets, Quantitative Information

The significant unobservable inputs related to assets and liabilities measured at fair value on a non-recurring basis at March 31, 2013 are summarized below:

	March 31, 2013		Valuation Techniques	Unobservable Inputs	Range (Weighted Avg)
Impaired loans:
Residential Real Estate	$	2,652	sales comparison	adjustment for differences between the comparable sales		0.8%-16.7%	(9.0%)
Commercial Real Estate
Owner Occupied		512	sales comparison	adjustment for limited salability of specialized property		40.0%-70.0%	(44.1%)
Non-owner Occupied		428	sales comparison	adjustment for limited salability of specialized property		50.5%-50.5%	(50.5%)
Commercial and Industrial		7,050	sales comparison	adjustment for limited salability of specialized property		0.0%-68.7%	(39.8%)
All Other		4,424	sales comparison	adjustment for percentage of completion of construction		10.0%-91.4%	(66.3%)
Total impaired loans		15,066

Other real estate owned:
Residential Real Estate	$	50	sales comparison	adjustment for differences between the comparable sales		62.3%-62.3%	(62.3%)
Commercial Real Estate
Non-owner Occupied		520	sales comparison	adjustment for differences between the comparable sales		1.9%-1.9%	(1.9%)
All Other		6,650	sales comparison	adjustment for estimated realizable value		4.7%-15.9%	(12.3%)
Total OREO	$	7,220

The significant unobservable inputs related to assets and liabilities measured at fair value on a non-recurring basis at December 31, 2012 are summarized below:

	December 31, 2012		Valuation Techniques	Unobservable Inputs	Range (Weighted Avg)
Impaired loans:
Residential Real Estate	$	2,739	sales comparison	adjustment for differences between the comparable sales		0.8%-76.8%	(10.5%)
Commercial Real Estate
Owner Occupied		512	sales comparison	adjustment for limited salability of specialized property		40.0%-70.0%	(44.1%)
Non-owner Occupied		427	sales comparison	adjustment for limited salability of specialized property		59.0%-59.0%	(59.0%)
Commercial and Industrial		8,300	sales comparison	adjustment for limited salability of specialized property		0.0%-70.0%	(44.3%)
All Other		4,465	sales comparison	adjustment for percentage of completion of construction		64.0%-91.4%	(64.8%)
Total impaired loans		16,443

Other real estate owned:
Residential Real Estate	$	255	sales comparison	adjustment for differences between the comparable sales		0.0%-62.3%	(44.1%)
Commercial Real Estate
Owner Occupied		250	sales comparison	adjustment for estimated realizable value		0.0%-17.9%	(7.2%)
Non-owner Occupied		1,031	sales comparison	adjustment for differences between the comparable sales		82.7%-82.7%	(82.7%)
All Other		6,432	sales comparison	adjustment for estimated realizable value		4.7%-16.6%	(12.7%)
Total OREO	$	7,968

- Definition

Tabular disclosure of assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a nonrecurring basis in periods after initial recognition (for example, impaired assets). Disclosures may include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3).

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- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 14

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 18

-Subparagraph c(2), d, e, f

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 15

-Subparagraph b-d

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 11

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13467-108611

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

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 19

-Subparagraph a, b, c(1), d(1)

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

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-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

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-URI http://asc.fasb.org/extlink&oid=6447952&loc=d3e13220-108610

Reference 9: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 32

-Subparagraph a, c(1), c(2), c(3), d

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 10

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

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-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13476-108611

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-Publisher FASB

-Name Accounting Standards Codification

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