10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2012

OR

¨ 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 000-22062

UWHARRIE CAPITAL CORP

(Exact name of registrant as specified in its charter)

NORTH CAROLINA	56-1814206
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
132 NORTH FIRST STREET ALBEMARLE, NORTH CAROLINA	28001
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone number, including area code: (704) 983-6181

N/A

(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.    x  Yes    ¨  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 (Section 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).    x  Yes    ¨  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	¨	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 7,568,978 shares of common stock outstanding as of August 10, 2012.

Table of Contents

		Page No.
Part I.	FINANCIAL INFORMATION
Item 1 -	Financial Statements (Unaudited)
	Consolidated Balance Sheets June 30, 2012 and December 31, 2011		3
	Consolidated Statements of Operations for the Three and Six Months Ended June, 2012 and 2011		4
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2012 and 2011		5
	Consolidated Statements of Changes in Shareholders’ Equity Three Months Ended June 30, 2012		6
	Consolidated Statements of Cash Flows Six Months Ended June 30, 2012 and 2011		7
	Notes to Consolidated Financial Statements		8
Item 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
Item 3 -	Quantitative and Qualitative Disclosures about Market Risk		34
Item 4 -	Controls and Procedures		35
Part II.	OTHER INFORMATION
Item 1 -	Legal Proceedings		35
Item 1A -	Risk Factors		35
Item 2 -	Unregistered Sales of Equity Securities and Use of Proceeds		36
Item 3 -	Defaults Upon Senior Securities		36
Item 4 -	Mine Safety Disclosures		36
Item 5 -	Other Information		36
Item 6 -	Exhibits		37
	Exhibit Index		40

-2-

Uwharrie Capital Corp and Subsidiaries

Consolidated Balance Sheets

Part I. FINANCIAL INFORMATION

Item 1—Financial Statements

	June 30, 2012 (Unaudited)			December 31, 2011*
	(dollars in thousands)
ASSETS
Cash and due from banks	$	7,761		$	7,487
Interest-earning deposits with banks		37,387			21,200
Securities available for sale, at fair value		98,324			88,661
Loans held for sale		1,287			1,958
Loans:
Loans held for investment		343,107			366,675
Less allowance for loan losses		(7,069	)		(6,815	)
Net loans held for investment		336,038			359,860
Premises and equipment, net		14,998			15,076
Interest receivable		1,968			2,084
Restricted stock		2,504			3,289
Bank owned life insurance		6,300			6,171
Goodwill		987			987
Other real estate owned		8,892			10,258
Prepaid assets		1,241			1,347
Other assets		7,898			8,524
Total assets	$	525,585		$	526,902
LIABILITIES
Deposits:
Demand noninterest-bearing	$	68,253		$	62,339
Interest checking and money market accounts		193,201			185,539
Savings deposits		41,269			39,273
Time deposits, $100,000 and over		55,511			58,274
Other time deposits		83,722			85,913
Total deposits		441,956			431,338
Short-term borrowed funds		18,751			20,791
Long-term debt		14,678			25,233
Interest payable		272			301
Other liabilities		3,663			3,636
Total liabilities		479,320			481,299
Off balance sheet items, commitments and contingencies (Note 8)
SHAREHOLDERS’ EQUITY
Preferred stock, no par value: 10,000,000 shares authorized;
10,000 shares of series A issued and outstanding		10,000			10,000
500 shares of series B issued and outstanding		500			500
Discount on preferred stock		(150	)		(200	)
Common stock, $1.25 par value: 20,000,000 shares authorized; issued and outstanding
7,568,978 and 7,593,929 shares, respectively		9,461			9,492
Additional paid-in capital plus stock option surplus		13,954			14,010
Unearned ESOP compensation		(810	)		(772	)
Undivided profits		11,157			10,379
Accumulated other comprehensive income		2,153			2,194
Total shareholders’ equity		46,265			45,603
Total liabilities and shareholders’ equity	$	525,585		$	526,902

(*) Derived from audited consolidated financial statements

See accompanying notes

-3-

Uwharrie Capital Corp and Subsidiaries

Consolidated Statements of Income (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(in thousands, except share and per share data)
Interest Income
Loans, including fees	$	4,941		$	5,417		$	10,148		$	10,759
Investment securities
US Treasury		140			163			287			442
US Government agencies and corporations		204			278			393			502
State and political subdivisions		89			93			180			187
Interest-earning deposits with banks and federal funds sold		40			11			72			18
Total interest income		5,414			5,962			11,080			11,908
Interest Expense
Interest checking and money market accounts		134			211			285			443
Savings deposits		53			81			105			164
Time deposits, $100,000 and over		200			288			415			566
Other time deposits		256			295			520			601
Short-term borrowed funds		81			79			155			182
Long-term debt		199			272			441			548
Total interest expense		923			1,226			1,921			2,504
Net interest income		4,491			4,736			9,159			9,404
Provision for loan losses		363			160			703			1,529
Net interest income after provision for loan losses		4,128			4,576			8,456			7,875
Noninterest Income
Service charges on deposit accounts		436			449			868			893
Other service fees and commissions		861			909			1,591			1,766
Gain (loss) on sale of securities		16			357			16			933
Gain (loss) on fixed assets and other assets		25			(5	)		296			(5	)
Income from mortgage loan sales		667			331			1,476			714
Other income		118			88			238			205
Total noninterest income		2,123			2,129			4,485			4,506
Noninterest Expense
Salaries and employee benefits		3,157			3,050			6,263			6,095
Net occupancy expense		285			282			570			583
Equipment expense		183			194			371			400
Data processing costs		223			208			434			417
Office supplies and printing		81			98			152			171
Foreclosed real estate expense		342			82			810			125
Professional fees and services		127			484			172			746
Marketing and donations		152			153			338			297
Electronic banking expense		225			227			454			428
Software amortization and maintenance		141			140			283			276
FDIC insurance		171			177			345			404
Other noninterest expense		535			571			1,196			1,163
Total noninterest expense		5,622			5,666			11,388			11,105
Income before income taxes		629			1,039			1,553			1,276
Income taxes		228			330			452			358
Net income	$	401		$	709		$	1,101		$	918
Net Income	$	401			709			1,101			918
Dividends – preferred stock		(161	)		(161	)		(323	)		(323	)
Net income available to common shareholders	$	240		$	548		$	778		$	595
Net income per common share
Basic	$	0.03		$	0.07		$	0.10		$	0.08
Diluted	$	0.03		$	0.07		$	0.10		$	0.08
Weighted average shares outstanding
Basic		7,406,282			7,474,178			7,418,696			7,476,193
Diluted		7,406,282			7,474,178			7,418,696			7,476,193

See accompanying notes

-4-

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
				(in thousands)
Net Income	$	401		$	709		$	1,101		$	918
Other comprehensive income (loss)
Unrealized gain (loss) on available for sale securities		366			1,574			(48	)		1,145
Related tax effect		(122	)		(553	)		17			(426	)
Reclassification of (gain) loss recognized in net income		(16	)		(357	)		(16	)		(933	)
Related tax effect		6			138			6			360
Total other comprehensive income (loss)		234			802			(41	)		146
Comprehensive income	$	635		$	1,511		$	1,026		$	1,064

See accompanying notes

-5-

Uwharrie Capital Corp and Subsidiaries

Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)

	Number of Common Shares Issued			Preferred Stock Series A		Preferred Stock Series B		Discount on Preferred Stock			Common Stock			Additional Paid-in Capital			Unearned ESOP Compensation			Undivided Profits			Accumulated Other Comprehensive Income (Loss)			Total
								(in thousands, except share data)
Balance, December 31, 2011		7,593,929		$	10,000	$	500	$	(200	)	$	9,492		$	14,010		$	(772	)	$	10,379		$	2,194		$	45,603
Net income		—			—		—		—			—			—			—			1,101			—			1,101
Repurchase of common stock		(24,951	)		—		—		—			(31	)		(37	)		—			—			—			(68	)
Other comprehensive loss		—			—		—		—			—			—			—			—			(41	)		(41	)
Release of ESOP shares		—			—		—		—			—			(21	)		44			—			—			23
Increase in ESOP notes receivable		—			—		—		—			—			—			(82	)		—			—			(82	)
Stock compensation expense		—			—		—		—			—			2			—			—			—			2
Record preferred stock dividend and discount accretion		—			—		—		50			—			—			—			(323	)		—			(273	)
Balance, June 30, 2012		7,568,978		$	10,000	$	500	$	(150	)	$	9,461		$	13,954		$	(810	)	$	11,157		$	2,153		$	46,265

See accompanying notes

-6-

Uwharrie Capital Corp and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

	Six Months Ended June 30,
	2012			2011
	(dollars in thousands)
Cash flows from operating activities
Net income	$	1,101		$	918
Adjustments to reconcile net income to net cash
Provided by operating activities:
Depreciation		480			405
Net amortization of security premiums/discounts		537			380
Net amortization of mortgage servicing rights		410			286
Impairment of foreclosed real estate		527			2
Provision for loan losses		703			1,529
Stock compensation		2			2
Net realized gain on sales / calls of available for sale securities		(16	)		(933	)
Income from mortgage loan sales		(1,476	)		(714	)
Proceeds from sales of loans held for sale		52,776			29,622
Origination of loans held for sale		(50,629	)		(23,353	)
(Gain) loss on sale of premises, equipment and other assets		(276	)		5
Increase in cash surrender value of life insurance		(129	)		(92	)
Loss on sales of foreclosed real estate		(20	)		—
Release of ESOP shares		23			40
Net change in interest receivable		116			341
Net change in other assets		881			(740	)
Net change in interest payable		(29	)		(20	)
Net change in other liabilities		27			38
Net cash provided by operating activities		5,008			7,716
Cash flows from investing activities
Proceeds from sales, maturities and calls of securities available for sale		15,807			32,902
Purchase of securities available for sale		(26,055	)		(24,908	)
Net change in loans		22,449			(848	)
Purchase of premises and equipment		(402	)		(534	)
Proceeds from sales of foreclosed real estate		1,529			438
Investment in other assets		(260	)		(221	)
Net decrease in restricted stock		785			380
Net cash provided by investing activities		13,853			7,209
Cash flows from financing activities
Net increase (decrease) in deposit accounts		10,618			(6,469	)
Net increase (decrease) in short-term borrowed funds		(2,040	)		2,397
Net decrease in long-term debt		(10,555	)		(14,531	)
Proceeds from issuance of new junior subordinated debt		—			4,438
Repayment of junior subordinated debt		—			(730	)
Repurchase of common stock		(68	)		—
Increase in unearned ESOP compensation		(82	)		(20	)
Dividends on preferred stock		(273	)		(273	)
Net cash used in financing activities		(2,400	)		(15,188	)
Increase (decrease) in cash and cash equivalents		16,461			(263	)
Cash and cash equivalents, beginning of period		28,687			13,624
Cash and cash equivalents, end of period	$	45,148		$	13,361
Supplemental Disclosures of Cash Flow Information
Interest paid	$	1,950		$	2,524
Income taxes paid		57			210
Supplemental Schedule of Non-Cash Activities
Net change in fair-value of securities available for sale, net of tax		(41	)		146
Loans transferred to foreclosed real estate		858			7,004
Company financed sales of other real estate owned		(188	)		—

See accompanying notes

-7-

UWHARRIE CAPITAL CORP AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 1 – Basis of Presentation

The financial statements and accompanying notes are presented on a consolidated basis including Uwharrie Capital Corp (the “Company”) and its subsidiaries, Bank of Stanly (“Stanly”), Anson Bank & Trust Co. (“Anson”), Cabarrus Bank & Trust Company (“Cabarrus”), Strategic Investment Advisors, Inc. (“SIA”), and Uwharrie Mortgage Inc. Stanly consolidates its subsidiaries, the Strategic Alliance Corporation, BOS Agency, Inc. and Gateway Mortgage, Inc., each of which is wholly-owned by Stanly.

The information contained in the consolidated financial statements is unaudited. In the opinion of management, the consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”) and material adjustments necessary for a fair presentation of results of interim periods, all of which are of a normal recurring nature, have been made. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for an entire year. Management is not aware of economic events, outside influences or changes in concentrations of business that would require additional clarification or disclosure in the consolidated financial statements.

The organization and business of the Company, accounting policies followed by the Company and other information are contained in the notes to consolidated financial statements filed as part of the Company’s 2011 Annual Report on Form 10-K. This Quarterly Report should be read in conjunction with such Annual Report.

Note 2 – Comprehensive Income

The Company reports as comprehensive income all changes in shareholders’ equity during the year from sources other than shareholders. Other comprehensive income refers to all components (revenues, expenses, gains, and losses) of comprehensive income that are excluded from net income. The Company’s only component of other comprehensive income is unrealized gains and losses, net of income tax, on investment securities available for sale.

Note 3 – Per Share Data

Basic and diluted net income per common share is computed based on the weighted average number of shares outstanding during each period after retroactively adjusting for stock dividends. Diluted net income per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the net income of the Company. For the six months ended June 30, 2012, the Company’s 122,341 stock options outstanding did not have a dilutive effect on per share results because the exercise prices exceeded the share values for each period. The Company had 123,570 stock options outstanding at June 30, 2011 and they did not have a dilutive effect.

-8-

Basic and diluted net income per common share have been computed based upon net income available to common shareholders as presented in the accompanying consolidated statements of operations divided by the weighted average number of common shares outstanding or assumed to be outstanding. The computation of basic and dilutive earnings per share is summarized below:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Weighted average number of common shares outstanding		7,568,978			7,593,929			7,568,978			7,593,929
Effect of ESOP shares		(162,696	)		(119,751	)		(150,282	)		(117,736	)
Adjusted weighted average number of common shares used in computing basic net income per common share		7,406,282			7,474,178			7,418,696			7,476,193
Effect of dilutive stock options		—			—			—			—
Weighted average number of common shares and dilutive potential common shares used in computing diluted net income per common share		7,406,282			7,474,178			7,418,696			7,476,193

Note 4 – Investment Securities

Carrying amounts and fair values of securities available for sale are summarized below:

June 30, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
			(dollars in thousands)
U.S. Treasury	$	29,876	$	1,609	$	—	$	31,485
U.S. Government agencies		17,747		804		—		18,551
GSE – Mortgage-backed securities and CMO’s		39,207		301		95		39,413
State and political subdivisions		8,200		675		—		8,875
Total securities available for sale	$	95,030	$	3,389	$	95	$	98,324
December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
			(dollars in thousands)
U.S. Treasury	$	32,073	$	1,459	$	—	$	33,532
U.S. Government agencies		19,142		855		—		19,997
GSE – Mortgage-backed securities and CMO’s		24,016		332		85		24,263
State and political subdivisions		10,071		798		—		10,869
Total securities available for sale	$	85,302	$	3,444	$	85	$	88,661

At both June 30, 2012 and December 31, 2011 the Company owned Federal Reserve stock reported at cost of $802,250 and is included in other assets. Also at both June 30, 2012 and December 31, 2011, the Company owned Federal Home Loan Bank Stock (FHLB) of $1.7 million. The investments in Federal Reserve stock and FHLB stock are required investments related to the Company’s membership in, and borrowings, with these banks. These investments are carried at cost since there is no ready market and historically redemption has been made at par value. The Company estimated that the fair value approximated cost and that these investments were not impaired at June 30, 2012.

-9-

Results from sales of securities available for sale for the three and six month period ended June 30, 2012 and June 30, 2011 are as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2012			2011		2012			2011
				(dollars in thousands)
Gross proceeds from sales	$	9,003		$	10,504	$	9,003		$	25,568
Realized gains from sales	$	128		$	357	$	128		$	933
Realized losses from sales		(112	)		—		(112	)		—
Net Realized gains	$	16		$	357	$	16		$	933

At June 30, 2012 and December 31, 2011 securities available for sale with a carrying amount of $33.5 million and $37.7 million, respectively, were pledged as collateral on public deposits and for other purposes as required or permitted by law.

The following tables show the gross unrealized losses and fair value of investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2012 and December 31, 2011. These unrealized losses on investment securities are a result of temporary fluctuations in the market prices due to a rise in interest rates, which will adjust if rates decline, and a volatile market and are in no way a reflection of the quality of the investments. At June 30, 2012, the unrealized losses related to six mortgage backed securities. At December 31, 2011, the unrealized losses related to three mortgage backed securities.

	Less than 12 Months				12 Months or More				Total
June 30, 2012	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
			(dollars in thousands)
Securities available for sale temporary impairment
GSE – Mortgage-backed securities and CMO’s	$	25,695	$	95	$	—	$	—	$	25,695	$	95
	$	25,695	$	95	$	—	$	—	$	25,695	$	95
	Less than 12 Months				12 Months or More				Total
December 31, 2011	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
			(dollars in thousands)
Securities available for sale temporary impairment
GSE – Mortgage-backed securities and CMO’s	$	9,734	$	85	$	—	$	—	$	9,734	$	85
	$	9,734	$	85	$	—	$	—	$	9,734	$	85

Declines in the fair value of the investment portfolio are believed by management to be temporary in nature. When evaluating an investment for other-than-temporary impairment losses, management considers among other things, the length of time and the extent to which the fair value has been in a loss position, the financial condition of the issuer and the intent and the ability the Company has to hold the investment until the loss position is recovered.

Any unrealized losses were largely due to increases in market interest rates over the yields available at the time of purchase. The fair value is expected to recover as the bonds approach their maturity date or market yields for such investments decline. At June 30, 2012, the Company had no intent to sell and not more likely than not to be required to sell the available for sale securities that were in a loss position prior to full recovery.

-10-

The aggregate amortized cost and fair value of the available for sale securities portfolio at June 30, 2012 by remaining contractual maturity are as follows:

	June 30, 2012
Securities available for sale	Amortized Cost		Estimated Fair Value		Book Yield (1)
U.S. Treasury
Due after one but within five years		16,337		17,183		1.90	%
Due after five but within ten years		13,539		14,302		1.93	%
		29,876		31,485		1.91	%
U.S. Government agencies
Due after one but within five years		17,747		18,551		2.32	%
		17,747		18,551		2.32	%
Mortgage-backed securities
Due after one but within five years		137		138		3.00	%
Due after five but within ten years		7,303		7,405		3.50	%
Due after ten years		31,767		31,870		2.93	%
		39,207		39,413		3.04	%
State and political subdivisions
Due after one but within five years		1,916		2,010		3.53	%
Due after five but within ten years		4,785		5,240		3.10	%
Due after ten years		1,499		1,625		4.12	%
		8,200		8,875		3.39	%
Total Securities available for sale
Due after one but within five years		36,137		37,882		2.20	%
Due after five but within ten years		25,627		26,947		2.60	%
Due after ten years		33,266		33,495		2.99	%
	$	95,030	$	98,324		2.58	%

1) Yields on securities and investments exempt from federal and/or state income taxes are stated on a fully tax- equivalent basis, assuming a 38.55% tax rate.

-11-

Note 5 – Loans Held for Investment

The composition of net loans held for investment by class as of June 30, 2012 and December 31, 2011 are as follows:

	June 30, 2012			December 31, 2011
	(dollars in thousands)
Commercial
Commercial	$	40,137		$	45,907
Real estate – commercial		107,974			114,944
Other real estate construction loans		27,274			31,601
Noncommercial
Real estate 1-4 family construction		2,756			5,543
Real estate – residential		99,332			101,847
Home equity		50,842			51,413
Consumer loans		13,798			14,710
Other loans		886			602
		342,999			366,567
Less:
Allowance for loan losses		(7,069	)		(6,815	)
Deferred loan (fees) costs, net		108			108
Loans held for investment, net	$	336,038		$	359,860

Note 6 – Allowance for Loan Losses

The following table shows the change in the allowance for loss losses by loan segment for the three and six month periods ended June 30, 2012 and 2011, respectively:

Commercial

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
				(dollars in thousands)
Balance, beginning of period	$	2,823		$	4,697		$	2,904		$	5,363
Provision (recovery) charged to operations		(138	)		381			52			814
Charge-offs		(42	)		(1,419	)		(354	)		(2,520	)
Recoveries		7			3			48			5
Net (charge-offs)		(35	)		(1,416	)		(306	)		(2,515	)
Balance at end of period	$	2,650		$	3,662		$	2,650		$	3,662

Non-Commercial

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
				(dollars in thousands)
Balance, beginning of period	$	3,951		$	4,333		$	3,911		$	3,704
Provision (recovery) charged to operations		501			(221	)		651			715
Charge-offs		(49	)		(538	)		(171	)		(876	)
Recoveries		16			38			28			69
Net (charge-offs)		(33	)		(500	)		(143	)		(807	)
Balance at end of period	$	4,419		$	3,612		$	4,419		$	3,612

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The following table shows period-end loans and reserve balances by loan segment both individually and collectively evaluated for impairment at June 30, 2012 and December 31, 2011:

June 30, 2012

	Individually Evaluated				Collectively Evaluated				Total
	Reserve		Loans		Reserve		Loans		Reserve		Loans
			(dollars in thousands)
Commercial	$	1,136	$	17,742	$	1,514	$	157,643	$	2,650	$	175,385
Non-Commercial		1,758		15,592		2,661		152,022		4,419		167,614
Total	$	2,894	$	33,334	$	4,175	$	309,665	$	7,069	$	342,999
December 31, 2011
	Individually Evaluated				Collectively Evaluated				Total
	Reserve		Loans		Reserve		Loans		Reserve		Loans
			(dollars in thousands)
Commercial	$	1,137	$	18,882	$	1,767	$	173,570	$	2,904	$	192,452
Non-Commercial		1,446		14,207		2,465		159,908		3,911		174,115
Total	$	2,583	$	33,089	$	4,232	$	333,478	$	6,815	$	366,567

Past due loan information is used by management when assessing the adequacy of the allowance for loan losses. The following table summarizes the past due information of the loan portfolio by class:

June 30, 2012
	Loans 30-89 Days Past Due		Loans 90 Days or More Past due		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 or More Days Past Due
			(dollars in thousands)
Commercial	$	254	$	172	$	426	$	39,711	$	40,137	$	—
Real estate – commercial		979		2,385		3,364		104,610		107,974		—
Other real estate construction		141		2,430		2,571		24,703		27,274		—
Real estate 1-4 family construction		—		—		—		2,756		2,756		—
Real estate – residential		2,557		2,358		4,915		94,417		99,332		—
Home equity		340		247		587		50,255		50,842		—
Consumer loans		75		98		173		13,625		13,798		—
Other loans		—		—		—		886		886		—
Total	$	4,346	$	7,690	$	12,036	$	330,963	$	342,999	$	—
December 31, 2011
	Loans 30-89 Days Past Due		Loans 90 Days or More Past due		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 or More Days Past Due
			(dollars in thousands)
Commercial	$	212	$	329	$	541	$	45,366	$	45,907	$	—
Real estate – commercial		2,396		2,742		5,138		109,806		114,944		—
Other real estate construction		358		2,084		2,442		29,159		31,601		—
Real estate construction		—		—		—		5,543		5,543		—
Real estate – residential		2,341		2,441		4,782		97,065		101,847		—
Home equity		298		255		553		50,860		51,413		—
Consumer loan		208		11		219		14,491		14,710		—
Other loans		—		—		—		602		602		—
Total	$	5,813	$	7,862	$	13,675	$	352,892	$	366,567	$	—

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Once a loan becomes 90 days past due, the loan is automatically transferred to a nonaccrual status. The exception to this policy is credit card loans that remain in accruing 90 days or more until they are paid current or charged off. Also, mortgage loans that were originated for sale but were not sold and are being held in the loan portfolio remain in an accruing status until they are foreclosed.

The composition of nonaccrual loans by class as of June 30, 2012 and December 31, 2011 is as follows:

	June 30, 2012		December 31, 2011
	(dollars in thousands)
Commercial	$	172	$	329
Real estate – commercial		2,385		2,742
Other real estate construction		2,430		2,084
Real estate 1-4 family construction		—		—
Real estate – residential		2,358		2,441
Home equity		247		255
Consumer loans		98		11
Other loans		—		—
	$	7,690	$	7,862

Management uses a risk-grading program to facilitate the evaluation of probable inherent loan losses and to measure the adequacy of the allowance for loan losses. In this program, risk grades are initially assigned by the loan officers and reviewed and monitored by the lenders and credit administration. The program has eight risk grades summarized in five categories as follows:

Pass: Loans that are pass grade credits include loans that are fundamentally sound and risk factors are reasonable and acceptable. They generally conform to policy with only minor exceptions and any major exceptions are clearly mitigated by other economic factors.

Watch: Loans that are watch credits include loans on management’s watch list where a risk concern may be anticipated in the near future.

Substandard: Loans that are considered substandard are loans that are inadequately protected by current sound net worth, paying capacity of the obligor or the value of the collateral pledged. All nonaccrual loans are graded as substandard.

Doubtful: Loans that are considered to be doubtful have all weaknesses inherent in loans classified substandard, plus the added characteristic that the weaknesses make the collection or liquidation in full on the basis of current existing facts, conditions and values highly questionable and improbable.

Loss: Loans that are considered to be a loss are considered to be uncollectible and of such little value that their continuance as bankable assets is not warranted.

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The tables below summarize risk grades of the loan portfolio by class at June 30, 2012 and December 31 2011:

June 30, 2012
	Pass		Watch		Sub-standard		Doubtful		Total
			(dollars in thousands)
Commercial	$	38,474	$	836	$	827	$	—	$	40,137
Real estate – commercial		88,910		8,700		10,364		—		107,974
Other real estate construction		21,687		499		5,088		—		27,274
Real estate 1-4 family construction		2,756		—		—		—		2,756
Real estate – residential		83,750		6,546		9,036		—		99,332
Home equity		48,907		732		1,203		—		50,842
Consumer loans		13,100		390		308		—		13,798
Other loans		886		—		—		—		886
Total	$	298,470	$	17,703	$	26,826	$	—	$	342,999
December 31, 2011
	Pass		Watch		Sub-standard		Doubtful		Total
			(dollars in thousands)
Commercial	$	42,892	$	1,670	$	1,345	$	—	$	45,907
Real estate – commercial		95,699		7,971		11,274		—		114,944
Other real estate construction		26,256		745		4,600		—		31,601
Real estate 1-4 family construction		5,538		5		—		—		5,543
Real estate – residential		89,209		4,269		8,369		—		101,847
Home equity		49,743		861		809		—		51,413
Consumer loans		13,970		332		408		—		14,710
Other loans		602		—		—		—		602
Total	$	323,909	$	15,853	$	26,805	$	—	$	366,567

Loans that are in nonaccrual status or 90 days past due and still accruing are considered to be nonperforming. The following tables show the breakdown between performing and nonperforming loans by class at June 30, 2012 and December 31, 2011:

June 30, 2012

	Performing		Non-Performing		Total
	(dollars in thousands)
Commercial	$	39,965	$	172	$	40,137
Real estate – commercial		105,589		2,385		107,974
Other real estate construction		24,844		2,430		27,274
Real estate 1-4 family construction		2,756		—		2,756
Real estate – residential		96,974		2,358		99,332
Home equity		50,595		247		50,842
Consumer loans		13,700		98		13,798
Other loans		886		—		886
Total	$	335,309	$	7,690	$	342,999

-15-

December 31, 2011

	Performing		Non- Performing		Total
	(dollars in thousands)
Commercial	$	45,578	$	329	$	45,907
Real estate – commercial		112,202		2,742		114,944
Other real estate construction		29,517		2,084		31,601
Real estate 1 – 4 family construction		5,543		—		5,543
Real estate – residential		99,406		2,441		101,847
Home equity		51,158		255		51,413
Consumer loans		14,699		11		14,710
Other loans		602		—		602
Total	$	358,705	$	7,862	$	366,567

Loans are considered impaired when, based on current information and events; it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement. If a loan is deemed impaired, a specific calculation is performed and a specific reserve is allocated, if necessary. The tables below summarize the loans deemed impaired and the amount of specific reserves allocated by class at June 30, 2012 and December 31, 2011:

June 30, 2012

	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Related Allowance
	(dollars in thousands)
Commercial	$	1,240	$	823	$	298	$	153
Real estate – commercial		14,511		8,053		4,395		817
Other real estate construction		4,175		2,718		1,455		166
Real estate 1 – 4 family construction		1,308		714		594		235
Real estate – residential		12,664		6,932		5,732		1,075
Home equity		1,262		550		712		277
Consumer loans		358		49		309		171
Other loans		—		—		—		—
Total	$	35,518	$	19,839	$	13,495	$	2,894

December 31, 2011

	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Related Allowance
	(dollars in thousands)
Commercial	$	2,099	$	889	$	1,091	$	578
Real estate – commercial		14,951		11,365		1,523		452
Other real estate construction		4,016		2,644		1,370		107
Real estate 1 – 4 family construction		1,095		501		594		202
Real estate – residential		11,877		7,231		4,646		1,001
Home equity		993		753		240		124
Consumer loans		242		49		193		119
Other loans		—		—		—		—
Total	$	35,273	$	23,432	$	9,657	$	2,583

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	Three Months ended June 30, 2012				Three Months ended June 30, 2011
	Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income
	(dollars in thousands)
Commercial	$	1,401	$	13	$	1,339	$	29
Real estate – commercial		12,575		155		16,436		93
Other real estate construction		4,087		73		8,308		27
Real estate 1 – 4 family construction		1,326		10		1,474		4
Real estate – residential		12,043		174		9,893		210
Home equity		1,163		14		1,358		10
Consumer loans		334		6		320		7
Other loans		—		—		—		—
Total	$	32,929	$	445	$	39,128	$	380
	Six Months ended June 30, 2012				Six Months ended June 30, 2011
	Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income
	(dollars in thousands)
Commercial	$	1,551	$	27	$	1,373	$	43
Real estate – commercial		12,668		340		17,731		263
Other real estate construction		4,093		125		8,990		31
Real estate 1 – 4 family construction		1,202		16		1,300		26
Real estate – residential		12,270		311		9,557		325
Home equity		1,128		24		1,260		22
Consumer loans		299		10		293		10
Other loans		—		—		—		—
Total	$	33,211	$	853	$	40,504	$	720

Note 7 – Troubled Debt Restructures

A modification of a loan constitutes a troubled debt restructuring (“TDR”) when a borrower is experiencing financial difficulty and the modification involves providing a concession to the existing loan contract. The Company offers various types of concessions when modifying loans to troubled borrowers, however, forgiveness of principal is rarely granted. Concessions offered are term extensions, capitalizing accrued interest, reducing interest rates to below current market rates or a combination of any of these. Combinations from time to time may include allowing a customer to be placed on interest-only payments. The presentations below in the “other” category are TDR’s with a combination of concessions. At the time of a TDR, additional collateral or a guarantor may be requested.

Loans modified as a TDR are typically already on nonaccrual status and partial chargeoffs may have in some cases already been taken against the outstanding loan balance. The Company classifies TDR loans as impaired loans and evaluates the need for an allowance for loan loss on a loan-by-loan basis. An allowance is based on either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price or the estimated fair value of the underlying collateral less any selling costs, if the loan is deemed to be collateral dependent.

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For the three and six months ended June 30, 2012 the following table presents a breakdown of the types of concessions made by loan class:

For the three months ended June 30, 2012

	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(dollars in thousands)
Other:
Commercial		—	$	—	$	—
Real estate – commercial		—		—		—
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		—		—		—
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
Total		—	$	—	$	—

For the six months ended June 30, 2012

	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(dollars in thousands)
Other:
Commercial		1	$	10	$	9
Real estate – commercial		2		619		616
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		1		24		24
Home equity		—		—		—
Consumer loans		1		52		48
Other loans		—		—		—
Total		5	$	705	$	697

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The following table presents loans that were modified as troubled debt restructurings within the previous twelve months ending June 30, 2012 for which there was a payment default:

	Twelve months ended June 30, 2012
	Number of Loans		Recorded Investment
	(dollars in thousands)
Below market interest rate:
Commercial		—	$	—
Real estate – commercial		—		—
Other real estate construction		—		—
Real estate 1 – 4 family construction		—		—
Real estate – residential		—		—
Home Equity loans		—		—
Consumer loans		—		—
Other loans		—		—
		—	$	—
Other:
Commercial		1	$	9
Real estate – commercial		3		709
Other real estate construction		—		—
Real estate 1 – 4 family construction		—		—
Real estate – residential		3		367
Home Equity loans		—		—
Consumer loans		1		4
Other loans		—		—
		8	$	1,089
Total		8	$	1,089

A default on a troubled debt restructure is defined as being past due 90 days or being out of compliance with the modification agreement. As mentioned, the Company considers TDRs to be impaired loans and has $554,966 in allowance for loan loss as a direct result of these TDR’s.

The following table presents the successes and failures of the types of modifications within the previous twelve months ending June 30, 2012:

June 30, 2012

	Paid In Full				Paying as restructured				Converted to nonaccrual				Foreclosure/ Default
	Number of Loans		Recorded Investments		Number of Loans		Recorded Investments		Number of Loans		Recorded Investments		Number of Loans		Recorded Investments
	(dollars in thousands)
Below market interest rate		—	$	—		—	$	—		—	$	—		—	$	—
Other Loans		—		—		10		968		1		206		—		—
Total		—	$	—		10	$	968		1	$	206		—	$	—

Note 8 - Commitments and Contingencies

The subsidiary banks are party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of their customers. These financial instruments include commitments to extend credit, lines of credit and standby letters of credit. These instruments involve elements of credit risk in excess of amounts recognized in the accompanying financial statements.

The banks’ risk of loss with the unfunded loans and lines of credit or standby letters of credit is represented by the contractual amount of these instruments. The banks use the same credit policies in making commitments under such instruments as they do for on-balance sheet instruments. The amount of collateral obtained, if any, is based on management’s credit

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evaluation of the borrower. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Credit card commitments are unsecured. At June 30, 2012, outstanding financial instruments whose contract amounts represent credit risk were approximately:

(in thousands)
Commitments to extend credit	$	68,085
Credit card commitments		8,029
Standby letters of credit		1,320
Total commitments	$	77,434

Note 9 – Fair Value Disclosures

Accounting Standards Codification (ASC) 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but clarifies and standardizes some divergent practices that have emerged since prior guidance was issued. ASC 820 creates a three-level hierarchy under which individual fair value estimates are to be ranked based on the relative reliability of the inputs used in the valuation.

ASC 820 defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, the Company considers the principal or most advantageous market in which those assets or liabilities are sold and considers assumptions that market participants would use when pricing those assets or liabilities. Fair values determined using Level 1 inputs rely on active and observable markets to price identical assets or liabilities. In situations where identical assets and liabilities are not traded in active markets, fair values may be determined based on Level 2 inputs, which exist when observable data exists for similar assets and liabilities. Fair values for assets and liabilities for which identical or similar assets and liabilities are not actively traded in observable markets are based on Level 3 inputs, which are considered to be unobservable.

Among the Company’s assets and liabilities, investment securities available for sale are reported at their fair values on a recurring basis. Certain other assets are adjusted to their fair value on a nonrecurring basis, including other real estate owned, impaired loans, loans held for sale, which are carried at the lower of cost or market; loan servicing rights, where fair value is determined using similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions; and goodwill, which is periodically tested for impairment. Deposits, short-term borrowings and long-term obligations are not reported at fair value.

Prices for US Treasury securities are readily available in the active markets in which those securities are traded, and the resulting fair values are shown in the ‘Level 1 input’ column. Prices for government agency securities, mortgage-backed securities and for state, county and municipal securities are obtained for similar securities, and the resulting fair values are shown in the ‘Level 2 input’ column. Prices for all other non-marketable investments are determined based on various assumptions that are not observable. The fair values for these investment securities are shown in the ‘Level 3 input’ column. Non-marketable investment securities, which are carried at their purchase price, include those that may only be redeemed by the issuer. The changes in securities between Level 1 and Level 2 were related to the purchase and sale of several securities and not the transfer of securities.

The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified

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as individually impaired, management measures impairment by using one of several methods including collateral value, fair value of similar debt and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the present value of the expected repayments or fair value of collateral exceed the recorded investments in such loans. At June 30, 2012, substantially all of the total impaired loans were evaluated based on the fair value of the underlying collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the impaired loan as nonrecurring Level 2. When an internal assessment of fair value based upon market data issued or management determines the fair value of the underlying collateral is further impaired below the appraised value, the Company records the impaired loan as nonrecurring Level 3.

Foreclosed assets are adjusted to fair value upon transfer of the loans to other real estate owned. Real estate acquired in settlement of loans is recorded initially at estimated fair value of the property less estimated selling costs at the date of foreclosure. The initial recorded value may be subsequently reduced by additional allowances, which are charged to earnings if the estimated fair value of the property less estimated selling costs declines below the initial recorded value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the foreclosed asset as nonrecurring Level 2. When an internal assessment of fair value based upon market data issued or management determines the fair value of the underlying collateral is further impaired below the appraised value, the Company records the impaired loan as nonrecurring Level 3.

Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate, based on secondary market prices. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.

Servicing assets are evaluated for impairment based upon the fair value. Fair value is determined based upon discounted cash flows using market-based assumptions.

The following table provides fair value information for assets and liabilities measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011:

	June 30, 2012
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Securities available for sale:
US Treasury	$	31,485	$	31,485	$	—	$	—
US Government Agencies		18,551		—		18,551		—
GSE – Mortgage-backed securities and CMO’s		39,413		—		39,413		—
State and political subdivisions		8,875		—		8,875		—
Total assets at fair value	$	98,324	$	31,485	$	66,839	$	—
Total liabilities at fair value	$	—	$	—	$	—	$	—

-21-

	December 31, 2011
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Securities available for sale:
US Treasury	$	33,532	$	33,532	$	—	$	—
US Gov’t		19,997		—		19,997		—
Mortgage-backed securities and CMO’s		24,263		—		24,263		—
State and political subdivisions		10,869		—		10,869		—
Total assets at fair value	$	88,661	$	33,532	$	55,129	$	—
Total liabilities at fair value	$	—	$	—	$	—	$	—

The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with U.S. GAAP. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. Assets measured at fair value on a nonrecurring basis are included in the table below as of June 30, 2012 and December 31, 2011:

	June 30, 2012
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Impaired loans	$	10,601	$	—	$	—	$	10,601
Loans held for sale		1,287		—		1,287		—
Other real estate owned		3,151		—		—		3,151
Total assets at fair value	$	15,039	$	—	$	1,287	$	13,752
Total liabilities at fair value	$	—	$	—	$	—	$	—
	December 31, 2011
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Impaired loans	$	7,074	$	—	$	—	$	7,074
Loans held for sale		1,958		—		1,958		—
Other real estate owned		1,464		—		—		1,464
Total assets at fair value	$	10,496	$	—	$	1,958	$	8,538
Total liabilities at fair value	$	—	$	—	$	—	$	—

Note 10 - Fair Values of Financial Instruments and Interest Rate Risk

ASC 825, “Disclosures about Fair Value of Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those that are not measured and reported at fair value on a recurring basis or non-recurring basis.

The fair value estimates presented at June 30, 2012 and December 31, 2011, are based on relevant market information and information about the financial instruments. Fair value estimates are intended to represent the price an asset could be sold at or the price a liability could be settled for. However, given there is no active market or observable market transactions for many of the Company’s financial instruments, the Company has made estimates of many of

-22-

these fair values which are subjective in nature, involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimated values. The estimated fair values disclosed in the following table do not represent market values of all assets and liabilities of the Company and should not be interpreted to represent the underlying value of the Company. The following table reflects a comparison of carrying amounts and the estimated fair value of the financial instruments as of June 30, 2012 and December 31, 2011:

June 30, 2012

	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3
	(dollars in thousands)
FINANCIAL ASSETS
Cash and cash equivalents	$	45,148	$	45,148	$	45,148	$	—	$	—
Securities available for sale		98,324		98,324		31,485		66,839		—
Loans held for investment, net		336,038		347,182		—		—		347,182
Loans held for sale		1,287		1,287		—		1,287		—
Restricted stock		2,504		2,504		2,504		—		—
Bank-owned life insurance		6,300		6,300		—		—		6,300
Mortgage servicing rights		2,335		2,629		—		—		2,629
Accrued interest receivable		1,968		1,968		—		—		1,968
FINANCIAL LIABILITIES
Deposits	$	441,956	$	441,055	$	—	$	—	$	441,055
Short-term borrowings		18,751		18,751		—		18,751		—
Long-term borrowings		3,551		3,866		—		3,866		—
Junior subordinated debt		11,127		11,275		—		—		11,275
Accrued interest payable		272		272		—		—		272

December 31, 2011

	Carrying Value		Estimated Fair Value
	(dollars in thousands)
FINANCIAL ASSETS
Cash and cash equivalents	$	28,687	$	28,687
Securities available for sale		88,661		88,661
Loans held for investment, net		359,860		374,636
Loans held for sale		1,958		1,958
Restricted stock		3,289		3,289
Bank-owned life insurance		6,171		6,171
Mortgage servicing rights		2,128		2,494
Accrued interest receivable		2,084		2,084
FINANCIAL LIABILITIES
Deposits	$	431,338	$	430,641
Short-term borrowings		20,791		20,791
Long-term borrowings		14,106		14,611
Junior subordinated debt		11,127		11,283
Accrued interest payable		301		301

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

• Cash and cash equivalents – The carrying amount of cash and cash equivalents approximate their fair values due to the short period of time until their expected realization and are recorded in Level 1.

• Securities available for sale – Securities available for sale are carried at fair value based on quoted and observable market prices and are recorded in Levels 1 and 2. Also see discussion in note 9

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• Loans – The fair value of loans is estimated based on discounted expected cash flows using the current interest rates at which similar loans would be made and carried in level 3. Loans held for sale, which represent current mortgage production forward sales not yet delivered, are valued based on secondary market prices. The fair value of loans does not consider the lack of liquidity and uncertainty in the market that would affect the valuation. Loans held for sale are recorded in Level 2.

• Restricted stock – It is not practicable to determine fair value of restricted stock which is comprised of Federal Home Loan Bank and Federal Reserve Bank stock due to restrictions placed on its transferability and it is presented at its carrying value and is recorded in Level 1 due to the redemption provisions of the Federal Home Loan Bank and the Federal Reserve Bank.

• Bank-owned life insurance – The carrying amount of bank-owned life insurance is the current cash surrender value and is recorded in level 3.

• Mortgage serving rights – Fair value is determined based upon discounted cash flows using market-based assumptions and is recorded in Level 3.

• Accrued interest receivable and payable – Both accrued interest receivable and payable are recorded in Level 3, as there are not active markets for these.

• Deposits – The fair value of deposits is estimated based on discounted cash flow analyses using offered market rates and is recorded in Level 3. The fair value of deposits does not consider any customer related intangibles.

• Borrowings – The fair value disclosed for short-term borrowings, which are composed of overnight borrowings and debt due within one year approximate the carrying value for such debt and is recorded in Level 2. The estimated fair value for long-term borrowings are estimated based on discounted cash flow analyses using offered market rates. Total borrowings are carried in Level 2. Junior subordinated debt is fair valued based on discounted cash flow analyses and is recorded in Level 3.

At June 30, 2012, the subsidiary banks had outstanding standby letters of credit and commitments to extend credit. These off-balance sheet financial instruments are generally exercisable at the market rate prevailing at the date the underlying transaction will be completed; therefore, they were deemed to have no current fair value. See Note 8.

Note 11 – Recent Accounting Pronouncements

In May 2011, the FASB issued Accounting Standards Update No. 2011-04, “Fair Value Measurement”. The purpose of the standard is to clarify and combine fair value measurements and disclosure requirements for U.S. generally accepted accounting principles, or GAAP, and international financial reporting standards, or IFRS. The new standard provides amendments and wording changes used to describe certain requirements for measuring fair value and for disclosing information about fair value measurements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2011, and should be applied prospectively to the beginning of the annual period of adoption. The adoption of this statement did not have a material impact on the consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, an update to ASC 220, “Comprehensive Income.” This update requires that all nonowner changes in stockholders’ equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Additionally, ASU 2011-05 requires entities to present, on the face of the financial statements, reclassification adjustments for items that are reclassified from other

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comprehensive income to net income in the statement or statements where the components of net income and the components of other comprehensive income are presented. The option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity was eliminated. ASU 2011-05 is effective for annual periods beginning after December 15, 2011, and did not have a significant impact on the Company’s financial statements.

In September 2011, the FASB issued ASU 2011-08, an update to ASC 350 “Intangibles – Goodwill and Other.” This update gives entities the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if an entity concludes otherwise, then it is required to perform the first step of the two-step impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. ASU 2011-08 is effective for annual and interim impairment tests beginning after December 15, 2011, and did not have a significant impact on the Company’s financial statements.

From time to time the FASB issues exposure drafts of proposed statements of financial accounting standards. Such exposure drafts are subject to comment from the public, to revisions by the FASB and to final issuance by the FASB as statements of financial accounting standards. Management considers the effect of the proposed statements on the consolidated financial statements of the Company and monitors the status of changes to and proposed effective dates of exposure drafts.

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Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q may contain certain forward-looking statements consisting of estimates with respect to the financial condition, results of operations and business of the Company that are subject to various factors which could cause actual results to differ materially from these estimates. These factors include, but are not limited to, general economic conditions, changes in interest rates, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation or regulation; and other economic, competitive, governmental, regulatory, and technological factors affecting the Company’s operations, pricing, products and services. Any use of “we” or “our” in the following discussion refers to the Company.

Comparison of Financial Condition at June 30, 2012 and December 31, 2011.

During the six months ended June 30, 2012, the Company’s total assets decreased $1.3 million, from $526.9 million to $525.6 million. During the same period, loans held for investment decreased $23.6 million to $343.1 million.

Cash and cash equivalents increased $16.5 million, during the six months ended June 30, 2012. Cash and due from banks increased $274,000, while interest-earning deposits with banks increased $16.2 million.

Investment securities increased $9.7 million to $98.3 million for the six months ended June 30, 2012. During the first six months of 2012, the Company purchased securities of $26.1 million. The increase from the new purchases was reduced by maturities and calls of $825,000, sales of $9.7 million and normal reductions stemming from principal payments on mortgage backed securities. At the beginning of the third quarter the Company purchased approximately $25 million in additional securities to improve the yield on earning assets, which was funded by reducing interest-earning deposits in banks. On June 30, 2012, the Company had net unrealized gains of $3.3 million.

Loans held for investment decreased from $366.7 million to $343.1 million, a decrease of $23.6 million. Contributing to this decrease was the sale of a government guaranteed portion of a loan of approximately $4.9 million. All areas of the loan portfolio decreased, during the second quarter; except for the consumer loan portfolio which experienced positive growth trends. Commercial real estate experienced the largest decline of $7.0 million; reflecting the sale of the aforementioned loan. Loans held for sale decreased 34.3% or $671,000 during the period. The allowance for loan losses was $7.1 million, at June 30, 2012; which represents 2.06% of the loan portfolio.

Other changes in our consolidated assets are related to premises and equipment, interest receivable, restricted stock, bank owned life insurance, other real estate owned, prepaid assets and other assets. Bank owned life insurance increased $129,000. Accrued interest receivable, prepaid assets and premises and equipment declined $116,000, $106,000 and $78,000, respectively. The Company’s restricted stock, which is required ownership in Federal Reserve Bank stock, remained at $803,000; while Federal Home Loan Bank stock decreased $785,000 to $1.7 million, respectively during the first six months of 2012. Other real estate owned decreased $1.4 million. The Company sold eight properties totaling $1.7 million and had valuation write down adjustments of $527,000. These decreases were offset by the addition of seven new foreclosed properties totaling $858,000. Other assets decreased $626,000.

Customer deposits, our primary funding source, experienced a $10.7 million increase during the six months ended June 30, 2012, increasing from $431.3 million to $442.0 million. Demand noninterest bearing checking increased $6.0 million and interest checking and money market

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accounts increased $7.7 million, while savings deposits increased $2.0 million for the period. These increases were offset by declines in time deposits over $100,000 of $2.8 million and other time deposits of $2.2 million.

Total borrowings decreased $12.6 million for the period and consist of both short-term and long-term borrowed funds, primarily from the Federal Home Loan Bank. The maturity of $10.0 million in Federal Home Loan Bank advances played a major part in the decrease. At June 30, 2012, $15.0 million of the total borrowings of $33.4 million were comprised of Federal Home Loan Bank advances.

Other liabilities increased from $3.6 million at December 31, 2011 to $3.7 million at June 30, 2012, an increase of $27,000.

At June 30, 2012, total shareholders’ equity was $46.3 million, an increase of $662,000 from December 31, 2011. Net income for the period was $1.1 million. Net income was offset by a decline in unrealized gains and losses on investment securities, net of tax of $41,000. The Company also recorded $272,500 in dividends on the series A and B preferred stock for the three month period. The Company, after receiving approval from the United States Department of Treasury and the Federal Reserve Bank repurchased common stock totaling $68,000. At June 30, 2012, the Company and its subsidiary banks exceeded all applicable regulatory capital requirements.

Comparison of Results of Operations For the Three Months Ended June 30, 2012 and 2011.

Net Income and Net Income Available to Common Shareholders

Uwharrie Capital Corp reported net income of $401,000 for the three months ended June 30, 2012, as compared to $709,000 for the three months ended June 30, 2011, a decrease of $308,000. Net income available to common shareholders was $240,000 or $0.03 per common share at June 30, 2012, compared at $548,000 or $0.07 per common share at June 30, 2011. Net income available to common shareholders is net income less any dividends on preferred stock related to the $10.0 million of capital received from the United States Department of the Treasury under the Capital Purchase Program in December 2008.

Net Interest Income

As with most financial institutions, the primary component of earnings for our banks is net interest income. Net interest income is the difference between interest income, principally from loan and investment securities portfolios, and interest expense, principally on customer deposits and borrowings. Changes in net interest income result from changes in volume, spread and margin. For this purpose, volume refers to the average dollar level of interest-earning assets and interest-bearing liabilities, spread refers to the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities, and margin refers to net interest income divided by average interest-earning assets. Margin is influenced by the level and relative mix of interest-earning assets and interest-bearing liabilities, as well as by levels of noninterest-bearing liabilities and capital.

Net interest income for the three months ended June 30, 2012 was $4.5 million, a decrease of $245,000. During the current quarter, the decline in the volume of interest-earning assets outpaced the decline in volume of interest-bearing liabilities by $349,000. The average yield on our interest–earning assets decreased 26 basis points to 4.74%, while the average rate we paid for our interest-bearing liabilities decreased 24 basis points. The Company’s assets that are interest rate sensitive adjust at the time the Federal Reserve adjusts interest rates, while interest-bearing time deposits adjust at the time of maturity. The aforementioned decreases resulted in a decrease of two basis points in our interest rate spread, from 3.84% in 2011 to 3.82% in 2012. Our net interest margin was 3.95% and 3.99% for the comparable periods in 2012 and 2011, respectively.

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The following table presents average balance sheets and a net interest income analysis for the three months ended June 30, 2012 and 2011:

Average Balance Sheet and Net Interest Income Analysis

For the Three Months Ended June 30,

(in thousands)
	Average Balance				Income/Expenses				Rate/Yield
	2012		2011		2012		2011		2012			2011
Interest-earning assets:
Taxable securities	$	73,361	$	75,929	$	345	$	441		1.89	%		2.34	%
Nontaxable securities (1)		9,665		10,478		88		93		5.97	%		5.74	%
Short-term investments		36,245		19,074		40		11		0.44	%		0.23	%
Taxable loans		338,383		372,486		4,832		5,322		5.74	%		5.75	%
Non-taxable loans (1)		12,363		9,882		109		95		5.74	%		6.30	%
Total interest-earning assets		470,017		487,849		5,414		5,962		4.74	%		5.00	%
Interest-bearing liabilities:
Interest-bearing deposits		368,782		377,331		643		875		0.70	%		0.93	%
Short-term borrowed funds		16,369		24,002		81		79		1.99	%		1.32	%
Long-term debt		17,417		23,922		199		272		4.60	%		4.57	%
Total interest bearing liabilities		402,568		425,255		923		1,226		0.92	%		1.16	%
Net interest spread	$	67,449	$	62,594	$	4,491	$	4,736		3.82	%		3.84	%
Net interest margin (1) (% of earning assets)										3.95	%		3.99	%

(1) Yields related to securities and loans exempt from income taxes are stated on a fully tax-equivalent basis, assuming a 38.55% tax rate.

Provision and Allowance for Loan Losses

The provision for loan losses was $363,000 for the three months ending June 30, 2012 compared to $160,000 for the same period in 2011. There were net loan charge-offs of $67,000 for the three months ended June 30, 2012, as compared with net loan charge-offs of $1.9 million during the same period of 2011. Refer to the Asset Quality discussion on page 31 for further information.

Noninterest Income

The Company generates most of its revenue from net interest income; however, like all financial institutions, diversification of our revenue base is of major importance in our long term success. Total noninterest income decreased $6,000 for the three month period ending June 30, 2012 as compared to the same period in 2011. The Company realized gains on the sale of investment securities during 2012 of $16,000 as compared to realized gains of $357,000 for the same period in 2011. Income from mortgage loan sales increased $336,000 from $331,000 for the quarter ended June 30, 2011 to $667,000 for the same period in 2012. Service charges on deposit accounts produced revenue of $436,000, a decrease of $13,000 for the three months ended June 30, 2012. The primary factor leading to this decrease was a decrease in NSF fees for the comparable periods. Other service fees and commissions experienced a 5.28% decrease for the comparable three month period, primarily related to a reduction in the write-down of servicing assets due to the refinancing of mortgage loans. Brokerage commissions and asset management fees increased from $467,000 for the three month period in 2011 to $482,000 for the same period in 2012.

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Noninterest Expense

Noninterest expense for the quarter ended June 30, 2012 was $5.6 million compared to $5.7 million for the same period of 2011, a decrease of $44,000. Salaries and employee benefits, the largest component of noninterest expense, increased $107,000 for the quarter ending June 30, 2012. Foreclosed real estate expense increased $260,000 while professional fees and service fees decreased $357,000 for the three months ending June 30, 2012. The major factor related to the increase in foreclosed real estate expense was write downs on properties held in other real estate owned. These write downs were attributed to updated appraisals and the lowering of list prices in the second quarter of 2012 totaling $176,000 compared to no write downs for the same period in 2011. The decrease in other professional fees and services was directly related to reimbursement of prior period legal fees totaling $93,000 that was related to a reimbursement for legal services under the Company’s employment practices liability insurance policy. Other noninterest expense decreased $36,000 for the comparable three month periods. The table below reflects the composition of other noninterest expense.

Other noninterest expense

	Three Months Ended June 30,
	2012		2011
	(in thousands)
Postage	$	47	$	44
Telephone and data lines		38		52
Loan collection expense		55		87
Shareholder relations expense		24		39
Dues and subscriptions		40		52
Other		331		297
Total	$	535	$	571

Income Tax Expense

The Company had income tax expense of $228,000 for the three months ended June 30, 2012 resulting in an effective tax rate of 36.25% compared to income tax expense of $330,000 and an effective rate of 31.76% in the 2011 period.

Comparison of Results of Operations For the Six Months Ended June 30, 2012 and 2011.

Net Income and Net Income Available to Common Shareholders

Uwharrie Capital Corp reported net income of $1.1 million for the six months ended June 30, 2012, as compared to $918,000 for the six months ended June 30, 2011, an increase of $183,000. Net income available to common shareholders was $778,000 or $0.10 per common share at June 30, 2012, compared to $595,000 or $0.08 per common share at June 30, 2011. Net income available to common shareholders is net income less any dividends on preferred stock related to the $10.0 million of capital received from the United States Department of the Treasury under the Capital Purchase Program in December 2008.

Net Interest Income

Net interest income for the six months ended June 30, 2012 was $9.2 million as compared with $9.4 million during the six months ended June 30, 2011, resulting in a decrease of $245,000. During the six months ending June 30, 2012, the decline in the volume of interest-earning assets outpaced the decline in growth of our interest-bearing liabilities by $635,000. The average yield on our interest–earning assets decreased 16 basis points to 4.84%, while the average rate we paid for our interest-bearing liabilities decreased 23 basis points. The Company’s assets that are interest rate sensitive adjust at the time the Federal Reserve adjusts

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interest rates, while interest-bearing time deposits adjust at the time of maturity. The aforementioned changes resulted in an increase of seven basis points in our interest rate spread to 3.89% for the first six months of 2012, compared to 3.82% for the first six months of 2011. Our net interest margin was 4.02% and 3.97% for the comparable six month periods in 2012 and 2011, respectively. A portion of the Company’s loan portfolio has interest rate floors and caps in place on the loans. This feature has allowed the Company to maintain a strong interest margin, while there has been a decline in rates; however, this feature could hurt the margin in a rising rate environment.

The following table presents average balance sheets and a net interest income analysis for the six months ended June 30, 2012 and 2011:

Average Balance Sheet and Net Interest Income Analysis

For the Six Months Ended June 30,

(in thousands)
	Average Balance				Income/Expenses				Rate/Yield
	2012		2011		2012		2011		2012			2011
Interest-earning assets:
Taxable securities	$	73,474	$	80,357	$	681	$	944		1.86	%		2.36	%
Nontaxable securities (1)		9,841		10,584		179		187		5.97	%		5.79	%
Short-term investments		29,018		12,514		72		18		0.50	%		0.29	%
Taxable loans		345,738		377,082		9,927		10,596		5.77	%		5.65	%
Non-taxable loans (1)		12,577		8,515		221		163		5.76	%		6.27	%
Total interest-earning assets		470,648		489,052		11,080		11,908		4.84	%		5.00	%
Interest-bearing liabilities:
Interest-bearing deposits		366,574		375,375		1,325		1,774		0.73	%		0.95	%
Short-term borrowed funds		17,354		23,428		155		182		1.80	%		1.57	%
Long-term debt		20,606		27,634		441		548		4.30	%		4.00	%
Total interest bearing liabilities		404,534		426,437		1,921		2,504		0.95	%		1.18	%
Net interest spread	$	66,114	$	62,615	$	9,159	$	9,404		3.89	%		3.82	%
Net interest margin (1) (% of earning assets)										4.02	%		3.97	%

(1) Yields related to securities and loans exempt from income taxes are stated on a fully tax-equivalent basis, assuming a 38.55% tax rate.

Provision and Allowance for Loan Losses

The provision for loan losses was $703,000 for the six months ending June 30, 2012 compared to $1.5 million for the same period in 2011. There were net loan charge-offs of $449,000 for the six months ended June 30, 2012 as compared with net loan charge-offs of $3.3 million during the same period of 2011. Refer to the Asset Quality discussion on page 31 for further information.

Noninterest Income

The Company generates most of its revenue from net interest income; however, like all financial institutions, diversification of our earnings base is of major importance in our long term success. Total noninterest income decreased $21,000 for the six month period ending June 30, 2012 as compared to the same period in 2011. Income from mortgage loan sales increased $762,000 from $714,000 for the six months ended June 30, 2011 to $1.5 million for the same period in 2012. Mortgage loan rates continued to decline during 2012 allowing customers to refinance again at even lower rates. Service charges on deposit accounts produced earnings of $868,000 for the six months ended June 30, 2012, a decrease of $25,000. The primary contributing factor is a decrease in NSF fees due in large part to changes in the regulatory governance. Other service fees and commissions experienced a 9.91% decrease for the comparable six month

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period. This is related to an acceleration in the write-down of servicing assets due to the refinancing of mortgage loans. Also, income generated from brokerage commissions and asset management fees increased $76,000. The Company realized a gain on the aforementioned government guaranteed loan in the amount of $276,000. The Company also realized gains on the sale of investments in the amount of $16,000 in the first six months of 2012, as compared to realized gains of $933,000 for the same period in 2011.

Noninterest Expense

Noninterest expense for the six months ended June 30, 2012, was $11.4 million compared to $11.1 million for the same period of 2011; an increase of $283,000. Salaries and employee benefits, the largest component of noninterest expense, increased $168,000 to $6.3 million for the period ending June 30, 2012. Net occupancy and equipment expense had a combined decrease of $42,000. Professional fees and services decreased $574,000. Foreclosed real estate expense increased $685,000. The major factor related to the increase in foreclosed real estate expense was write downs on properties held in other real estate owned. These write downs were attributed to updated appraisals and the lowering of list prices during the first six months of 2012 totaling $527,000 compared to $4,000 in write downs for the same period in 2011. The decrease in other professional fees and services was directly related to reimbursement of prior period legal fees totaling $360,000. Of this amount, $270,000 was related to a reimbursement for legal services under the Company’s employment practices liability insurance policy and $90,000 associated with a previous closed government guaranteed loan. Other noninterest expense decreased $33,000 for the comparable six month periods. The table below reflects the composition of other noninterest expense.

Other noninterest expense

	Six Months Ended
	June 30, 2012		2011
	(in thousands)
Postage	$	104	$	98
Telephone and data lines		89		93
Loan collection expense		144		146
Shareholder relations expense		78		79
Dues and subscriptions		89		102
Other		692		645
Total	$	1,196	$	1,163

Income Tax Expense

The Company had income tax expense of $452,000 for the six months ended June 30, 2012 resulting in an effective tax rate of 29.10%, compared to income tax expense of $358,000 and an effective rate of 28.06% in the 2011 period.

Asset Quality

The Company’s allowance for loan losses is established through charges to earnings in the form of a provision for loan losses. The allowance is increased by provisions charged to operations and by recoveries of amounts previously charged off and is reduced by loans charged off. Management continuously evaluates the adequacy of the allowance for loan losses. In evaluating the adequacy of the allowance, management considers the following: the growth, composition and industry diversification of the portfolio; historical loan loss experience; current delinquency levels; adverse situations that may affect a borrower’s ability to repay; estimated value of any underlying collateral; prevailing economic conditions and other relevant

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factors. The Company’s credit administration function, through a review process, periodically validates the accuracy of the initial risk grade assessment. In addition, as a given loan’s credit quality improves or deteriorates, the credit administration department has the responsibility to change the borrower’s risk grade accordingly. For loans determined to be impaired, the allowance is based on either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price or the estimated fair value of the underlying collateral less the selling costs. This evaluation is inherently subjective, as it requires material estimates, including the amounts and timing of future cash flows expected to be received on impaired loans, which may be susceptible to significant change. In addition, regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may require additions for estimated losses based upon judgments different from those of management.

Management uses a risk-grading program to facilitate the evaluation of probable inherent loan losses and the adequacy of the allowance for loan losses. In this program, risk grades are initially assigned by loan officers and reviewed and monitored by credit administration. The Company strives to maintain its loan portfolio in accordance with conservative loan underwriting policies that result in loans specifically tailored to the needs of its market area. Every effort is made to identify and minimize the credit risks associated with such lending strategies. The Company has no foreign loans and does not engage in significant lease financing or highly leveraged transactions. The Company follows a loan review program designed to evaluate the credit risk in the loan portfolio. This process includes the maintenance of an internally classified watch list that is designed to help management assess the overall quality of the loan portfolio and the adequacy of the allowance for loan losses. In establishing the appropriate classification for specific assets, management considers, among other factors, the estimated value of the underlying collateral, the borrower’s ability to repay, the borrower’s payment history and the current delinquent status. As a result of this process, certain loans are categorized as substandard, doubtful or loss, and reserves are allocated based on management’s judgment and historical experience.

The allowance for loan losses represents management’s best estimate of an appropriate amount to provide for inherent risk in the loan portfolio in the normal course of business. While management believes that it uses the best information available to establish the allowance for loan losses, future adjustments to the allowance may be necessary and results of operations could be adversely affected if circumstances differ from the assumptions used in making the determinations. Furthermore, while management believes it has established the allowance for loan losses in conformity with generally accepted accounting principles, there can be no assurance that banking regulators, in reviewing the Company’s portfolio, will not require an adjustment to the allowance for loan losses. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate or that increases will not be necessary, should the quality of any loans deteriorate as a result of the factors discussed herein. Any material increase in the allowance for loan losses may adversely affect the Company’s financial condition and results of operations.

The provision for loan losses was $703,000 for the six month period ended June 30, 2012 as compared to $1.5 million for the same period in 2011. At June 30, 2012, the levels of our impaired loans, which includes all loans in nonaccrual status and other loans deemed by management to be impaired, were $33.3 million compared to $33.1 million at December 31, 2011, an increase of $245,000. Total nonaccrual loans, which are a component of impaired loans, decreased from $7.9 million at December 31, 2011 to $7.7 million at June 30, 2012. The Company had net loan charge-offs for the first six months of 2012 of $449,000 compared to net loan charge-offs of $3.3 million for the same period in 2011.

The allowance expressed as a percentage of gross loans held for investment increased 20 basis points from 1.86% at December 31, 2011 to 2.06% at June 30, 2012. The collectively

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evaluated reserve allowance as a percentage of collectively evaluated loans was 1.27% at December 31, 2011 and 1.35% at June 30, 2012; while the individually evaluated allowance as a percentage of individually evaluated loans increased from 7.81% to 8.68%, an increase of 87 basis points.

Our allowance for loan loss model captures not only the mean loss of individual loans but also the rare event of severe loss that can occur within the loan portfolio. Specifically, the Company calculates probable losses on loans by computing a probability of loss and expected loss scenario by call codes. Together, these components created from Ordinary Least Squares (OLS) Regression of historical losses against multiple Macro-Economic factors make up the basis of the allowance model. The loans that are impaired and included in the specific reserve are excluded from these calculations. The Company also has a section within the model to account for other qualitative and/or environmental factors. During the second quarter of 2012, the Company completed an extensive review of its home equity portfolio that resulted in an additional $105,000 being added in the qualitative section of the model. Nonperforming loans, which consist of nonaccrual loans and loans past due 90 days and still accruing, to total loans increased from 2.14% at December 31, 2011, to 2.24% at June 30, 2012. Management believes the current level of the allowance for loan losses is appropriate in light of the risk inherent in the loan portfolio.

Restructured loans at June 30, 2012 totaled $6.7 million and $6.0 million at December 31, 2011 and are included in impaired loans.

The following nonperforming loan table shows the comparison of June 30, 2012 to December 31, 2011:

Nonperforming Assets

(dollars in thousands)

	June 30, 2012			December 31, 2011
Nonperforming assets:
Loans past due 90 days or more	$	—		$	—
Nonaccrual loans		7,690			7,862
Other real estate owned		8,892			10,258
Total nonperforming assets	$	16,582		$	18,120
Allowance for loan losses	$	7,069		$	6,815
Nonperforming loans to total loans		2.24	%		2.14	%
Allowance for loan losses to total loans		2.06	%		1.86	%
Nonperforming assets to total assets		3.16	%		3.44	%
Allowance for loan losses to nonperforming loans		91.91	%		86.88	%

During the first six months of 2012, the Company had a net decrease of $1.4 million in other real estate owned. The decrease was due to the sale of eight pieces of property totaling $1.7 million and valuation write downs of $527,000. These decreases were offset by the addition of seven pieces of property totaling $858,000.

-33-

Liquidity and Capital Resources

The objective of the Company’s liquidity management policy is to ensure the availability of sufficient cash flows to meet all financial commitments and to capitalize on any opportunities for expansion. Liquidity management addresses the ability to meet deposit withdrawals on demand or at contractual maturity, to repay borrowings as they mature and to fund new loans and investments as opportunities arise.

The Company’s primary sources of internally generated funds are principal and interest payments on loans, cash flows generated from operations and cash flow generated by investments. Growth in deposits is typically the primary source of funds for loan growth. The Company and its subsidiary banks have multiple funding sources, in addition to deposits that can be used to increase liquidity and provide additional financial flexibility. These sources are the subsidiary banks’ established federal funds lines with correspondent banks aggregating $23.8 million at June 30, 2012, with available credit of $23.8 million; established borrowing relationships with the Federal Home Loan Bank, with available credit of $38.8 million; access to borrowings from the Federal Reserve Bank discount window, with available credit of $16.3 million and the issuance of commercial paper. The Company has also secured long-term debt from other sources. Total debt from these sources aggregated $33.4 million at June 30, 2012, compared to $46.0 million at December 31, 2011.

Banks and bank holding companies, as regulated institutions, must meet required levels of capital. The Federal Reserve, the primary federal regulator of the Company and its subsidiary banks, has adopted minimum capital regulations or guidelines that categorize components and the level of risk associated with various types of assets.

Regulatory guidelines require a minimum of total capital to risk-adjusted assets ratio of 8 percent and a Tier 1 leverage ratio of 4 percent. Banks, are considered “well capitalized” by regulatory standards when they meet or exceed a Tier 1 risk-based capital ratio of 6 percent, a total risked-based capital ratio of 10 percent and a leverage ratio of 5 percent. Financial institutions are expected to maintain a level of capital commensurate with the risk profile assigned to their assets in accordance with those guidelines.

The Company and its subsidiary banks have each maintained capital levels exceeding minimum levels for “well capitalized” banks and bank holding companies. The Company expects to continue to exceed minimum capital requirements without altering current operations or strategy. At June 30, 2012, the Company had $11.1 million in subordinated debt and $10.0 million in preferred stock issued to the United States Department of the Treasury and has made all interest and dividend payments in a timely manner.

Accounting and Regulatory Matters

Management is not aware of any known trends, events, uncertainties or current recommendations by regulatory authorities that will have or that are reasonably likely to have a material effect on the Company’s liquidity, capital resources, or other operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company’s primary market risk is interest rate risk. Interest rate risk is the result of differing maturities or repricing intervals of interest-earning assets and interest-bearing liabilities and the fact that rates on these financial instruments do not change uniformly. These conditions may impact the earnings generated by the Company’s interest earning assets or the cost of its interest-bearing liabilities, thus directly impacting the Company’s overall earnings. The Company’s management actively monitors and manages interest rate risk. One way this is accomplished is through the development of and adherence to the Company’s asset/liability policy. This policy sets forth management’s strategy for matching the risk characteristics of the Company’s interest-earning assets and liabilities so as to mitigate the effect of changes in the rate environment. In management’s opinion, the Company’s market risk profile has not changed significantly since December 31, 2011.

-34-

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

At the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Securities Exchange Act (“Exchange Act”) Rule 13a-15.

Based upon that evaluation, the principal executive officer and principal financial officer concluded that in their opinion, the Company’s disclosure controls and procedures were effective (1) to provide reasonable assurance that information required to be disclosed by the Company in the reports filed or submitted by it under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) to provide reasonable assurance that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow for timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

Management of the Company has evaluated, with the participation of the Company’s principal executive officer and principal financial officer, changes in the Company’s internal controls over financial reporting (as defined in Rule 13a – 15(f) and 15d – 15(f) of the Exchange Act) during the second quarter of 2012. In connection with such evaluation, the Company has determined that there were no changes in the Company’s internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company reviews its disclosure controls and procedures, which may include its internal control over financial reporting, on an ongoing basis, and may from time to time make changes aimed at enhancing their effectiveness and to ensuring that the Company’s systems evolve with its business.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

Neither the Company nor its subsidiaries, nor any of their properties are subject to any material legal proceedings. From time to time, the Banks are engaged in ordinary routine litigation incidental to their business.

Item 1A. Risk Factors

Disclosure under this item is not required for smaller reporting companies.

-35-

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

The following table sets forth information with respect to shares of common stock repurchased by the Company during the three months ended June 30, 2012.

	(a) Total Number of Shares Purchased		(b) Average Price Paid  per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Program (1)		(d) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans (2)(3)
April 1, 2012 Through April 30, 2012		—	$	—		—	$	—
May 1, 2012 Through May 31, 2012		—	$	—		—	$	—
June 1, 2012 Through June 30, 2012		24,951	$	2.75		—	$	—
Total		24,951	$	2.75		—	$	—

(1) Trades of the Company’s stock occur in the Over-the-Counter market from time to time. The Company also has in place a Stock Repurchase Plan that provides liquidity to its shareholders in the event a willing buyer is not available to purchase shares that are offered for sale. The Company is under no obligation to purchase shares offered; however, it will accommodate such offers as its Stock Repurchase Plan allows. This plan was initially adopted in 1995 and is approved annually by resolution of the Board of Directors or the Executive Committee of the Board.

Pursuant to the terms of the United States Department of the Treasury’s investment in the Company’s preferred stock under the Capital Purchase Program (“CPP”), the Company must obtain the prior consent of the United States Department of the Treasury to repurchase its common stock under the Stock Purchase Plan or to pay a cash dividend.

(2) On June 26, 2012 the Board of Directors of Uwharrie Capital Corp, after receiving approval from the United States Department of Treasury and the Federal Reserve Bank, it’s primary regulator, approved the repurchase of 24,951 shares of common stock totaling $68,000.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

-36-

Item 6. Exhibits

Exhibit Number	Description of Exhibit
3.1	Registrant’s Articles of Incorporation (1)
3.2	Registrant’s By-laws (6)
3.2	Articles of Amendment dated December 19, 2008, regarding Series A and Series B Preferred Stock (5)
4	Form of stock certificate (1)
4.2	Form of certificate for the Series A Preferred stock (5)
4.3	Form of certificate for the Series B Preferred stock (5)
4.4	Warrant dated December 23, 2008, for purchase of share of Series B Preferred
	stock (5)
4.5	Form of Security Holders Agreement (9)
10.1	Incentive Stock Option Plan, as amended (1)
10.2	Employee Stock Ownership Plan and Trust (2)
10.3	2006 Incentive Stock Option Plan (3)
10.4	2006 Employee Stock Purchase Plan (3)
10.5	Amendment to the Employee Stock Ownership Plan and Trust (4)
10.6	Letter Agreement dated December 23, 2008, between the Registrant and the United States Department of the Treasury (5)
10.7	Relocation Assistance Agreement dated February 9, 2009, between the Registrant and Brendan P. Duffey (7)
10.8	Nonqualified Deferred Compensation Plan and Supplemental Retirement Plan Agreement dated December 31, 2008, between the Registrant and Roger L. Dick, Brendan P. Duffey, Christy D. Stoner, and Jimmy L. Strayhorn (7)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
101	Interactive data files providing financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012, in XBRL (eXtensible Business Reporting Language) (8)

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(1) Incorporated by reference from exhibits to Registrant’s Registration Statement on Form S-4 (Reg. No. 33-58882).

(2) Incorporated by reference to Registrant’s Annual Report on Form 10-KSB for the Fiscal year ended 1999.

(3) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the Quarter ended June 30, 2007.

(4) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the Quarter ended September 30, 2008.

(5) Incorporated by reference to Registrant’s current report on Form 8-K, filed with the Securities and Exchange Commission on December 23, 2008.

(6) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the Quarter ended September 30, 2009.

(7) Incorporated by reference to Registrant’s Annual Report on Form 10-K for the Fiscal year ended 2009.

(8) Pursuant to Regulation 406T of Regulation S-T, these interactive data files are furnished and not filed or part of a registration statement or prospectus for purposes of section 11 or 12 of the Securities Act of 1933, as amended, or section 18 of the Securities Exchange Act of 1934, as amended, and are otherwise not subject to liability.

(9) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011.

-38-

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.

		UWHARRIE CAPITAL CORP
		(Registrant)
Date: August 13, 2012	By:	/s/  Roger L. Dick
		Roger L. Dick
		President and Chief Executive Officer
Date: August 13, 2012	By:	/s/  Robert O. Bratton
		Robert O. Bratton
		Principal Financial Officer

-39-

EXHIBIT INDEX

Exhibit Number	Description of Exhibit
4.1	Registrant’s Articles of Incorporation (1)
3.2	Registrant’s By-laws (6)
3.2	Articles of Amendment dated December 19, 2008, regarding Series A and Series B Preferred Stock (5)
5	Form of stock certificate (1)
4.2	Form of certificate for the Series A Preferred stock (5)
4.3	Form of certificate for the Series B Preferred stock (5)
4.4	Warrant dated December 23, 2008, for purchase of share of Series B Preferred stock (5)
4.5	Form of Security Holders Agreement (9)
10.9	Incentive Stock Option Plan, as amended (1)
10.10	Employee Stock Ownership Plan and Trust (2)
10.11	2006 Incentive Stock Option Plan (3)
10.12	2006 Employee Stock Purchase Plan (3)
10.13	Amendment to the Employee Stock Ownership Plan and Trust (4)
10.14	Letter Agreement dated December 23, 2008, between the Registrant and the United States Department of the Treasury (5)
10.15	Relocation Assistance Agreement dated February 9, 2009, between the Registrant and Brendan P. Duffey (7)
10.16	Nonqualified Deferred Compensation Plan and Supplemental Retirement Plan Agreement dated December 31, 2008, between the Registrant and Roger L. Dick, Brendan P. Duffey, Christy D. Stoner, and Jimmy L. Strayhorn (7)
32.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
33	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
101	Interactive data files providing financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012, in XBRL (eXtensible Business Reporting Language) (8)

-40-

(1) Incorporated by reference from exhibits to Registrant’s Registration Statement on Form S-4 (Reg. No. 33-58882).

(2) Incorporated by reference to Registrant’s Annual Report on Form 10-KSB for the Fiscal year ended 1999.

(3) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the Quarter ended June 30, 2007.

(4) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the Quarter ended September 30, 2008.

(5) Incorporated by reference to Registrant’s current report on Form 8-K, filed with the Securities and Exchange Commission on December 23, 2008.

(6) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the Quarter ended September 30, 2009.

(7) Incorporated by reference to Registrant’s Annual Report on Form 10-K for the Fiscal year ended 2009.

(8) Pursuant to Regulation 406T of Regulation S-T, these interactive data files are furnished and not filed or part of a registration statement or prospectus for purposes of section 11 or 12 of the Securities Act of 1933, as amended, or section 18 of the Securities Exchange Act of 1934, as amended, and are otherwise not subject to liability.

(9) Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the Quarter ended June 30, 2011.

-41-

EX-31.1

Exhibit 31.1

UWHARRIE CAPITAL CORP

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to Rule 13a -14(a)

I, Roger L. Dick, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2012 of Uwharrie Capital Corp the “registrant”;

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 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: August 13, 2012	/s/ Roger L. Dick
	Roger L. Dick
	President and Chief Executive Officer

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EX-31.2

Exhibit 31.2

UWHARRIE CAPITAL CORP

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

Pursuant to Rule 13a -14(a)

I, Robert O. Bratton, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2012 of Uwharrie Capital Corp the “registrant”;

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 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: August 13, 2012	/s/ Robert O. Bratton
	Robert O. Bratton
	Principal Financial Officer

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EX-32

Exhibit 32

Certification pursuant to 18 U.S.C. 1350 as adopted pursuant

to Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned each hereby certifies that, to his knowledge, (i) the Form 10-Q filed by Uwharrie Capital Corp (the “Issuer”) for the quarter ended June 30, 2012, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in that report fairly presents, in all material respects, the financial condition and results of operations of the Issuer on the dates and for the periods presented therein.

Date: August 13, 2012	/s/  Roger L. Dick
	Roger L. Dick
	President and Chief Executive Officer
Date: August 13, 2012	/s/  Robert O. Bratton
	Robert O. Bratton
	Principal Financial Officer

-44-

XML

Allowance for Loan Losses (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Past due information of the loan portfolio by class
Loans 30-89 Days Past Due	$ 4,346	$ 5,813
Loans 90 Days or More Past Due	7,690	7,862
Total Past Due Loans	12,036	13,675
Current Loans	330,963	352,892
Net loans held for investment	336,038	359,860	[1]
Accruing Loans 90 or More Days Past Due
Commercial [Member]
Past due information of the loan portfolio by class
Loans 30-89 Days Past Due	254	212
Loans 90 Days or More Past Due	172	329
Total Past Due Loans	426	541
Current Loans	39,711	45,366
Net loans held for investment	40,137	45,907
Accruing Loans 90 or More Days Past Due
Real estate-commercial [Member]
Past due information of the loan portfolio by class
Loans 30-89 Days Past Due	979	2,396
Loans 90 Days or More Past Due	2,385	2,742
Total Past Due Loans	3,364	5,138
Current Loans	104,610	109,806
Net loans held for investment	107,974	114,944
Accruing Loans 90 or More Days Past Due
Other real estate construction [Member]
Past due information of the loan portfolio by class
Loans 30-89 Days Past Due	141	358
Loans 90 Days or More Past Due	2,430	2,084
Total Past Due Loans	2,571	2,442
Current Loans	24,703	29,159
Net loans held for investment	27,274	31,601
Accruing Loans 90 or More Days Past Due
Real estate 1-4 family construction [Member]
Past due information of the loan portfolio by class
Current Loans	2,756	5,543
Net loans held for investment	2,756	5,543
Accruing Loans 90 or More Days Past Due
Real estate-residential [Member]
Past due information of the loan portfolio by class
Loans 30-89 Days Past Due	2,557	2,341
Loans 90 Days or More Past Due	2,358	2,441
Total Past Due Loans	4,915	4,782
Current Loans	94,417	97,065
Net loans held for investment	99,332	101,847
Accruing Loans 90 or More Days Past Due
Home equity [Member]
Past due information of the loan portfolio by class
Loans 30-89 Days Past Due	340	298
Loans 90 Days or More Past Due	247	255
Total Past Due Loans	587	553
Current Loans	50,255	50,860
Net loans held for investment	50,842	51,413
Accruing Loans 90 or More Days Past Due
Consumer loans [Member]
Past due information of the loan portfolio by class
Loans 30-89 Days Past Due	75	208
Loans 90 Days or More Past Due	98	11
Total Past Due Loans	173	219
Current Loans	13,625	14,491
Net loans held for investment	13,798	14,710
Accruing Loans 90 or More Days Past Due
Other loans [Member]
Past due information of the loan portfolio by class
Current Loans	886	602
Net loans held for investment	886	602
Accruing Loans 90 or More Days Past Due

[1] Derived from audited consolidated financial statements

XML

Troubled Debts Restructures (Details Textual) (USD $)	6 Months Ended
	Jun. 30, 2012
Troubled Debt Restructure Period (Textual) [Abstract]
Troubled debt restructure is defined as being past due	90 days
Allowance for loan loss on TDR	$ 554,966

XML

Troubled Debts Restructures (Details 1) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012 Loan
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans	8
Recorded Investment	$ 1,089
Below market interest rate [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans
Recorded Investment
Other [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans	8
Recorded Investment	1,089
Commercial [Member] | Below market interest rate [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans
Recorded Investment
Commercial [Member] | Other [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans	1
Recorded Investment	9
Real estate-commercial [Member] | Below market interest rate [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans
Recorded Investment
Real estate-commercial [Member] | Other [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans	3
Recorded Investment	709
Other real estate construction [Member] | Below market interest rate [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans
Recorded Investment
Other real estate construction [Member] | Other [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans
Recorded Investment
Real estate 1-4 family construction [Member] | Below market interest rate [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans
Recorded Investment
Real estate 1-4 family construction [Member] | Other [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans
Recorded Investment
Real estate-residential [Member] | Below market interest rate [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans
Recorded Investment
Real estate-residential [Member] | Other [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans	3
Recorded Investment	367
Home equity [Member] | Below market interest rate [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans
Recorded Investment
Home equity [Member] | Other [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans
Recorded Investment
Consumer loans [Member] | Below market interest rate [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans
Recorded Investment
Consumer loans [Member] | Other [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans	1
Recorded Investment	4
Other loans [Member] | Below market interest rate [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans
Recorded Investment
Other loans [Member] | Other [Member]
Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default
Number of Loans
Recorded Investment

XML

Investment Securities (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Gross unrealized losses and fair value of investments
Available-for-sale Securities, Gross unrealized losses, Less than Twelve Months, Fair Value	$ 25,695	$ 9,734
Available-for-sale Securities, Gross unrealized losses, Less than Twelve Months, Unrealized Losses	95	85
Available-for-sale Securities, Gross unrealized losses, Twelve Months or More, Fair Value
Available-for-sale Securities, Gross unrealized losses, Twelve Months or More, Unrealized Losses
Available-for-sale Securities, Gross unrealized losses, Fair Value	25,695	9,734
Available-for-sale Securities, Gross unrealized losses, Unrealized Losses	95	85
GSE-Mortgage-backed securities and CMO's [Member]
Gross unrealized losses and fair value of investments
Available-for-sale Securities, Gross unrealized losses, Less than Twelve Months, Fair Value	25,695	9,734
Available-for-sale Securities, Gross unrealized losses, Less than Twelve Months, Unrealized Losses	95	85
Available-for-sale Securities, Gross unrealized losses, Twelve Months or More, Fair Value
Available-for-sale Securities, Gross unrealized losses, Twelve Months or More, Unrealized Losses
Available-for-sale Securities, Gross unrealized losses, Fair Value	25,695	9,734
Available-for-sale Securities, Gross unrealized losses, Unrealized Losses	$ 95	$ 85

XML

Troubled Debts Restructures (Tables)

6 Months Ended

Jun. 30, 2012

Troubled Debts Restructures [Abstract]

Breakdown of the types of concessions made by loan class

For the three months ended June 30, 2012

	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(dollars in thousands)
Other:
Commercial		—	$	—	$	—
Real estate – commercial		—		—		—
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		—		—		—
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
Total		—	$	—	$	—

For the six months ended June 30, 2012

	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(dollars in thousands)
Other:
Commercial		1	$	10	$	9
Real estate – commercial		2		619		616
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		1		24		24
Home equity		—		—		—
Consumer loans		1		52		48
Other loans		—		—		—
Total		5	$	705	$	697

Loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default

	Twelve months ended June 30, 2012
	Number of Loans		Recorded Investment
	(dollars in thousands)
Below market interest rate:
Commercial		—	$	—
Real estate – commercial		—		—
Other real estate construction		—		—
Real estate 1 – 4 family construction		—		—
Real estate – residential		—		—
Home Equity loans		—		—
Consumer loans		—		—
Other loans		—		—
		—	$	—
Other:
Commercial		1	$	9
Real estate – commercial		3		709
Other real estate construction		—		—
Real estate 1 – 4 family construction		—		—
Real estate – residential		3		367
Home Equity loans		—		—
Consumer loans		1		4
Other loans		—		—
		8	$	1,089
Total		8	$	1,089

Schedule of successes and failures of the types of debt restructuring

	Paid In Full				Paying as restructured				Converted to nonaccrual				Foreclosure/ Default
	Number of Loans		Recorded Investments		Number of Loans		Recorded Investments		Number of Loans		Recorded Investments		Number of Loans		Recorded Investments
	(dollars in thousands)
Below market interest rate		—	$	—		—	$	—		—	$	—		—	$	—
Other Loans		—		—		10		968		1		206		—		—
Total		—	$	—		10	$	968		1	$	206		—	$	—

XML

Fair Value Disclosures (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Level 1 [Member]
Securities available for sale
Total assets at fair value	$ 31,485
Level 2 [Member]
Securities available for sale
Total assets at fair value	66,839
Fair Value on a recurring basis [Member]
Securities available for sale
Total assets at fair value	98,324	88,661
Total liabilities at fair value
Fair Value on a recurring basis [Member] | U.S. Treasury [Member]
Securities available for sale
Total assets at fair value	31,485	33,532
Fair Value on a recurring basis [Member] | U.S. Government agencies [Member]
Securities available for sale
Total assets at fair value	18,551	19,997
Fair Value on a recurring basis [Member] | GSE-Mortgage-backed securities and CMO's [Member]
Securities available for sale
Total assets at fair value	39,413	24,263
Fair Value on a recurring basis [Member] | State and political subdivisions [Member]
Securities available for sale
Total assets at fair value	8,875	10,869
Fair Value on a recurring basis [Member] | Level 1 [Member]
Securities available for sale
Total assets at fair value	31,485	33,532
Total liabilities at fair value
Fair Value on a recurring basis [Member] | Level 1 [Member] | U.S. Treasury [Member]
Securities available for sale
Total assets at fair value	31,485	33,532
Fair Value on a recurring basis [Member] | Level 2 [Member]
Securities available for sale
Total assets at fair value	66,839	55,129
Total liabilities at fair value
Fair Value on a recurring basis [Member] | Level 2 [Member] | U.S. Government agencies [Member]
Securities available for sale
Total assets at fair value	18,551	19,997
Fair Value on a recurring basis [Member] | Level 2 [Member] | GSE-Mortgage-backed securities and CMO's [Member]
Securities available for sale
Total assets at fair value	39,413	24,263
Fair Value on a recurring basis [Member] | Level 2 [Member] | State and political subdivisions [Member]
Securities available for sale
Total assets at fair value	8,875	10,869
Fair Value on a recurring basis [Member] | Level 3 [Member]
Securities available for sale
Total assets at fair value
Total liabilities at fair value
Fair Value on a recurring basis [Member] | Level 3 [Member] | U.S. Treasury [Member]
Securities available for sale
Total assets at fair value
Fair Value on a recurring basis [Member] | Level 3 [Member] | U.S. Government agencies [Member]
Securities available for sale
Total assets at fair value
Fair Value on a recurring basis [Member] | Level 3 [Member] | GSE-Mortgage-backed securities and CMO's [Member]
Securities available for sale
Total assets at fair value
Fair Value on a recurring basis [Member] | Level 3 [Member] | State and political subdivisions [Member]
Securities available for sale
Total assets at fair value

XML

Allowance for Loan Losses (Details 5) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012		Dec. 31, 2011
Performing and nonperforming financing receivable
Financing Receivable	$ 336,038		$ 359,860	[1]
Performing [Member]
Performing and nonperforming financing receivable
Financing Receivable	335,309		358,705
Non-Performing [Member]
Performing and nonperforming financing receivable
Financing Receivable	7,690		7,862
Commercial [Member]
Performing and nonperforming financing receivable
Financing Receivable	40,137		45,907
Commercial [Member] | Performing [Member]
Performing and nonperforming financing receivable
Financing Receivable	39,965		45,578
Commercial [Member] | Non-Performing [Member]
Performing and nonperforming financing receivable
Financing Receivable	172		329
Real estate-commercial [Member]
Performing and nonperforming financing receivable
Financing Receivable	107,974		114,944
Real estate-commercial [Member] | Performing [Member]
Performing and nonperforming financing receivable
Financing Receivable	105,589		112,202
Real estate-commercial [Member] | Non-Performing [Member]
Performing and nonperforming financing receivable
Financing Receivable	2,385		2,742
Other real estate construction [Member]
Performing and nonperforming financing receivable
Financing Receivable	27,274		31,601
Other real estate construction [Member] | Performing [Member]
Performing and nonperforming financing receivable
Financing Receivable	24,844		29,517
Other real estate construction [Member] | Non-Performing [Member]
Performing and nonperforming financing receivable
Financing Receivable	2,430		2,084
Real estate 1-4 family construction [Member]
Performing and nonperforming financing receivable
Financing Receivable	2,756		5,543
Real estate 1-4 family construction [Member] | Performing [Member]
Performing and nonperforming financing receivable
Financing Receivable	2,756		5,543
Real estate-residential [Member]
Performing and nonperforming financing receivable
Financing Receivable	99,332		101,847
Real estate-residential [Member] | Performing [Member]
Performing and nonperforming financing receivable
Financing Receivable	96,974		99,406
Real estate-residential [Member] | Non-Performing [Member]
Performing and nonperforming financing receivable
Financing Receivable	2,358		2,441
Home equity [Member]
Performing and nonperforming financing receivable
Financing Receivable	50,842		51,413
Home equity [Member] | Performing [Member]
Performing and nonperforming financing receivable
Financing Receivable	50,595		51,158
Home equity [Member] | Non-Performing [Member]
Performing and nonperforming financing receivable
Financing Receivable	247		255
Consumer loans [Member]
Performing and nonperforming financing receivable
Financing Receivable	13,798		14,710
Consumer loans [Member] | Performing [Member]
Performing and nonperforming financing receivable
Financing Receivable	13,700	[1]	14,699
Consumer loans [Member] | Non-Performing [Member]
Performing and nonperforming financing receivable
Financing Receivable	98		11
Other loans [Member]
Performing and nonperforming financing receivable
Financing Receivable	886		602
Other loans [Member] | Performing [Member]
Performing and nonperforming financing receivable
Financing Receivable	$ 886		$ 602

[1] Derived from audited consolidated financial statements

XML

Allowance for Loan Losses (Details) (USD $) In Thousands, unless otherwise specified				3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011		Jun. 30, 2012 Commercial [Member]	Jun. 30, 2011 Commercial [Member]	Jun. 30, 2012 Commercial [Member]	Jun. 30, 2011 Commercial [Member]	Jun. 30, 2012 Non-Commercial [Member]	Jun. 30, 2011 Non-Commercial [Member]	Jun. 30, 2012 Non-Commercial [Member]	Jun. 30, 2011 Non-Commercial [Member]
Changes in the allowance for loan losses
Balance, beginning of period	$ 7,069	$ 6,815	[1]	$ 2,823	$ 4,697	$ 2,904	$ 5,363	$ 3,951	$ 4,333	$ 3,911	$ 3,704
Provision charged to operations					(138)	381	52		501	(221)	651
Charge-offs				(42)	(1,419)	(354)	(2,520)	(49)	(538)	(171)	(876)
Recoveries				7	3	48	5	16	38	28	69
Net (charge-offs)				(35)	(1,416)	(306)	(2,515)	(33)	(500)	(143)	(807)
Balance at end of period	$ 7,069	$ 6,815	[1]	$ 2,650	$ 3,662	$ 2,650	$ 3,662	$ 4,419	$ 3,612	$ 4,419	$ 3,612

[1] Derived from audited consolidated financial statements

XML

Fair Values of Financial Instruments and Interest Rate Risk (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Financial Assets
Loans held for investment, net	$ 336,038	$ 359,860	[1]
Loans held for sale	1,287	1,958	[1]
Restricted stock	1,700	1,700
Bank owned life insurance	6,300	6,171	[1]
Accrued interest receivable	1,968	2,084	[1]
Financial Liabilities
Deposits	441,956	431,338	[1]
Short-term borrowings	18,751	20,791	[1]
Accrued interest payable	272	301	[1]
Level 1 [Member]
Financial Assets
Cash and cash equivalents	45,148
Securities available for sale	31,485
Restricted stock	2,504
Level 2 [Member]
Financial Assets
Securities available for sale	66,839
Loans held for sale	1,287
Financial Liabilities
Short-term borrowings	18,751
Long-term debt	3,866
Level 3 [Member]
Financial Assets
Loans held for investment, net	347,182
Bank owned life insurance	6,300
Mortgage servicing rights	2,629
Accrued interest receivable	1,968
Financial Liabilities
Deposits	441,055
Junior subordinated debt	11,275
Accrued interest payable	272
Carrying Value [Member]
Financial Assets
Cash and cash equivalents	45,148	28,687
Securities available for sale	98,324	88,661
Loans held for investment, net	336,038	359,860
Loans held for sale	1,287	1,958
Restricted stock	2,504	3,289
Bank owned life insurance	6,300	6,171
Mortgage servicing rights	2,335	2,128
Accrued interest receivable	1,968	2,084
Financial Liabilities
Deposits	441,956	431,338
Short-term borrowings	18,751	20,791
Long-term debt	3,551	14,106
Junior subordinated debt	11,127	11,127
Accrued interest payable	272	301
Estimated Fair Value [Member]
Financial Assets
Cash and cash equivalents	45,148	28,687
Securities available for sale	98,324	88,661
Loans held for investment, net	347,182	374,636
Loans held for sale	1,287	1,958
Restricted stock	2,504	3,289
Bank owned life insurance	6,300	6,171
Mortgage servicing rights	2,629	2,494
Accrued interest receivable	1,968	2,084
Financial Liabilities
Deposits	441,055	430,641
Short-term borrowings	18,751	20,791
Long-term debt	3,866	14,611
Junior subordinated debt	11,275	11,283
Accrued interest payable	$ 272	$ 301

[1] Derived from audited consolidated financial statements

XML

Troubled Debts Restructures (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012 Loan
Paying as restructured [Member]
Schedule of successes and failures of the types of debt restructuring
Number of Loans	10
Recorded Investment	$ 968
Paid in Full [Member]
Schedule of successes and failures of the types of debt restructuring
Number of Loans
Recorded Investment
Foreclosure/Default [Member]
Schedule of successes and failures of the types of debt restructuring
Number of Loans
Recorded Investment
Converted to nonaccrual [Member]
Schedule of successes and failures of the types of debt restructuring
Number of Loans	1
Recorded Investment	206
Below market interest rate [Member] | Paying as restructured [Member]
Schedule of successes and failures of the types of debt restructuring
Number of Loans
Recorded Investment
Below market interest rate [Member] | Paid in Full [Member]
Schedule of successes and failures of the types of debt restructuring
Number of Loans
Recorded Investment
Below market interest rate [Member] | Foreclosure/Default [Member]
Schedule of successes and failures of the types of debt restructuring
Number of Loans
Recorded Investment
Below market interest rate [Member] | Converted to nonaccrual [Member]
Schedule of successes and failures of the types of debt restructuring
Number of Loans
Recorded Investment
Other loans [Member] | Paying as restructured [Member]
Schedule of successes and failures of the types of debt restructuring
Number of Loans	10
Recorded Investment	968
Other loans [Member] | Paid in Full [Member]
Schedule of successes and failures of the types of debt restructuring
Number of Loans
Recorded Investment
Other loans [Member] | Foreclosure/Default [Member]
Schedule of successes and failures of the types of debt restructuring
Number of Loans
Recorded Investment
Other loans [Member] | Converted to nonaccrual [Member]
Schedule of successes and failures of the types of debt restructuring
Number of Loans	1
Recorded Investment	$ 206

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2012

Basis of Presentation [Abstract]

Basis of Presentation

Note 1 – Basis of Presentation

The financial statements and accompanying notes are presented on a consolidated basis including Uwharrie Capital Corp (the “Company”) and its subsidiaries, Bank of Stanly (“Stanly”), Anson Bank & Trust Co. (“Anson”), Cabarrus Bank & Trust Company (“Cabarrus”), Strategic Investment Advisors, Inc. (“SIA”), and Uwharrie Mortgage Inc. Stanly consolidates its subsidiaries, the Strategic Alliance Corporation, BOS Agency, Inc. and Gateway Mortgage, Inc., each of which is wholly-owned by Stanly.

The information contained in the consolidated financial statements is unaudited. In the opinion of management, the consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”) and material adjustments necessary for a fair presentation of results of interim periods, all of which are of a normal recurring nature, have been made. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for an entire year. Management is not aware of economic events, outside influences or changes in concentrations of business that would require additional clarification or disclosure in the consolidated financial statements.

The organization and business of the Company, accounting policies followed by the Company and other information are contained in the notes to consolidated financial statements filed as part of the Company’s 2011 Annual Report on Form 10-K. This Quarterly Report should be read in conjunction with such Annual Report.

XML

Allowance for Loan Losses (Details 6) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Impaired Financing Receivables
Unpaid Principal Balance	$ 35,518		$ 35,518		$ 35,273
Recorded Investment With No Allowance	19,839	23,432	19,839	23,432
Recorded Investment With Allowance	13,495	9,657	13,495	9,657
Related Allowance	2,894	2,583	2,894	2,583
Average Recorded Investment	32,929	39,128	33,211	40,504
Interest Income	445	380	853	720
Commercial [Member]
Impaired Financing Receivables
Unpaid Principal Balance	1,240		1,240		2,099
Recorded Investment With No Allowance	823	889	823	889
Recorded Investment With Allowance	298	1,091	298	1,091
Related Allowance	153	578	153	578
Average Recorded Investment	1,401	1,339	1,551	1,373
Interest Income	13	29	27	43
Real estate-commercial [Member]
Impaired Financing Receivables
Unpaid Principal Balance	14,511		14,511		14,951
Recorded Investment With No Allowance	8,053	11,365	8,053	11,365
Recorded Investment With Allowance	4,395	1,523	4,395	1,523
Related Allowance	817	452	817	452
Average Recorded Investment	12,575	16,436	12,668	17,731
Interest Income	155	93	340	263
Other real estate construction [Member]
Impaired Financing Receivables
Unpaid Principal Balance	4,175		4,175		4,016
Recorded Investment With No Allowance	2,718	2,644	2,718	2,644
Recorded Investment With Allowance	1,455	1,370	1,455	1,370
Related Allowance	166	107	166	107
Average Recorded Investment	4,087	8,308	4,093	8,990
Interest Income	73	27	125	31
Real estate 1-4 family construction [Member]
Impaired Financing Receivables
Unpaid Principal Balance	1,308		1,308		1,095
Recorded Investment With No Allowance	714	501	714	501
Recorded Investment With Allowance	594	594	594	594
Related Allowance	235	202	235	202
Average Recorded Investment	1,326	1,474	1,202	1,300
Interest Income	10	4	16	26
Real estate-residential [Member]
Impaired Financing Receivables
Unpaid Principal Balance	12,664		12,664		11,877
Recorded Investment With No Allowance	6,932	7,231	6,932	7,231
Recorded Investment With Allowance	5,732	4,646	5,732	4,646
Related Allowance	1,075	1,001	1,075	1,001
Average Recorded Investment	12,043	9,893	12,270	9,557
Interest Income	174	210	311	325
Home equity [Member]
Impaired Financing Receivables
Unpaid Principal Balance	1,262		1,262		993
Recorded Investment With No Allowance	550	753	550	753
Recorded Investment With Allowance	712	240	712	240
Related Allowance	277	124	277	124
Average Recorded Investment	1,163	1,358	1,128	1,260
Interest Income	14	10	24	22
Consumer loans [Member]
Impaired Financing Receivables
Unpaid Principal Balance	358		358		242
Recorded Investment With No Allowance	49	49	49	49
Recorded Investment With Allowance	309	193	309	193
Related Allowance	171	119	171	119
Average Recorded Investment	334	320	299	293
Interest Income	6	7	10	10
Other loans [Member]
Impaired Financing Receivables
Unpaid Principal Balance
Recorded Investment With No Allowance
Recorded Investment With Allowance
Related Allowance
Average Recorded Investment
Interest Income

XML

Per Share Data (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Computation of basic and dilutive earnings per share
Weighted average number of common shares outstanding	7,568,978	7,593,929	7,568,978	7,593,929
Effect of ESOP shares	(162,696)	(119,751)	(150,282)	(117,736)
Adjusted weighted average number of common shares used in computing basic net income per common share	7,406,282	7,474,178	7,418,696	7,476,193
Effect of dilutive stock options
Weighted average number of common shares and dilutive potential common shares used in computing diluted net income per common share	7,406,282	7,474,178	7,418,696	7,476,193

XML

Fair Values of Financial Instruments and Interest Rate Risk (Tables)

6 Months Ended

Jun. 30, 2012

Fair Values of Financial Instruments and Interest Rate Risk [Abstract]

Comparison of carrying amounts and the estimated fair value of the financial instruments

June 30, 2012

	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3
	(dollars in thousands)
FINANCIAL ASSETS
Cash and cash equivalents	$	45,148	$	45,148	$	45,148	$	—	$	—
Securities available for sale		98,324		98,324		31,485		66,839		—
Loans held for investment, net		336,038		347,182		—		—		347,182
Loans held for sale		1,287		1,287		—		1,287		—
Restricted stock		2,504		2,504		2,504		—		—
Bank-owned life insurance		6,300		6,300		—		—		6,300
Mortgage servicing rights		2,335		2,629		—		—		2,629
Accrued interest receivable		1,968		1,968		—		—		1,968
FINANCIAL LIABILITIES
Deposits	$	441,956	$	441,055	$	—	$	—	$	441,055
Short-term borrowings		18,751		18,751		—		18,751		—
Long-term borrowings		3,551		3,866		—		3,866		—
Junior subordinated debt		11,127		11,275		—		—		11,275
Accrued interest payable		272		272		—		—		272

December 31, 2011

	Carrying Value		Estimated Fair Value
	(dollars in thousands)
FINANCIAL ASSETS
Cash and cash equivalents	$	28,687	$	28,687
Securities available for sale		88,661		88,661
Loans held for investment, net		359,860		374,636
Loans held for sale		1,958		1,958
Restricted stock		3,289		3,289
Bank-owned life insurance		6,171		6,171
Mortgage servicing rights		2,128		2,494
Accrued interest receivable		2,084		2,084
FINANCIAL LIABILITIES
Deposits	$	431,338	$	430,641
Short-term borrowings		20,791		20,791
Long-term borrowings		14,106		14,611
Junior subordinated debt		11,127		11,283
Accrued interest payable		301		301

XML

Allowance for Loan Losses (Details Textual)	6 Months Ended
	Jun. 30, 2012
Allowance For Loan Losses (Textual) [Abstract]
Financing receivable recorded investment number of days past due	90 days

XML

Per Share Data (Details Textual)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Per Share Data (Textual) [Abstract]
Stock outstanding options not included in the computation of EPS	122,341	123,570

XML

Investment Securities (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Carrying amounts and fair values of securities available for sale
Amortized Cost	$ 95,030	$ 85,302
Gross Unrealized Gains	3,389	3,444
Gross Unrealized Losses	95	85
Fair Value	98,324	88,661
U.S. Treasury [Member]
Carrying amounts and fair values of securities available for sale
Amortized Cost	29,876	32,073
Gross Unrealized Gains	1,609	1,459
Fair Value	31,485	33,532
U.S. Government agencies [Member]
Carrying amounts and fair values of securities available for sale
Amortized Cost	17,747	19,142
Gross Unrealized Gains	804	855
Fair Value	18,551	19,997
GSE-Mortgage-backed securities and CMO's [Member]
Carrying amounts and fair values of securities available for sale
Amortized Cost	39,207	24,016
Gross Unrealized Gains	301	332
Gross Unrealized Losses	95	85
Fair Value	39,413	24,263
State and political subdivisions [Member]
Carrying amounts and fair values of securities available for sale
Amortized Cost	8,200	10,071
Gross Unrealized Gains	675	798
Fair Value	$ 8,875	$ 10,869

XML

Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash flows from operating activities
Net income	$ 1,101	$ 918
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	480	405
Net amortization of security premiums/discounts	537	380
Net amortization of mortgage servicing rights	410	286
Impairment of foreclosed real estate	527	2
Provision for loan losses	703	1,529
Stock compensation	2	2
Net realized gains on sales / calls of available for sales securities	(16)	(933)
Income from mortgage loan sales	(1,476)	(714)
Proceeds from sales of loans held for sale	52,776	29,622
Origination of loans held for sale	(50,629)	(23,353)
(Gain) loss on sale of premises, equipment and other assets	(276)	5
Increase in cash surrender value of life insurance	(129)	(92)
Loss on sales of foreclosed real estate	(20)
Release of ESOP shares	23	40
Net change in interest receivable	116	341
Net change in other assets	881	(740)
Net change in interest payable	(29)	(20)
Net change in other liabilities	27	38
Net cash provided by operating activities	5,008	7,716
Cash flows from investing activities
Proceeds from sales, maturities and calls of securities available for sale	15,807	32,902
Purchase of securities available for sale	(26,055)	(24,908)
Net change in loans	22,449	(848)
Purchase of premises and equipment	(402)	(534)
Proceeds from sales of foreclosed real estate	1,529	438
Investment in other assets	(260)	(221)
Net decrease in restricted stock	785	380
Net cash provided by investing activities	13,853	7,209
Cash flows from financing activities
Net increase (decrease) in deposit accounts	10,618	(6,469)
Net increase (decrease) in short-term borrowed funds	(2,040)	2,397
Net decrease in long-term debt	(10,555)	(14,531)
Proceeds from issuance of new junior subordinated debt		4,438
Repayment of junior subordinated debt		(730)
Repurchase of common stock	(68)
Increase in unearned ESOP compensation	(82)	(20)
Dividends on preferred stock	(273)	(273)
Net cash used in financing activities	(2,400)	(15,188)
Increase (decrease) in cash and cash equivalents	16,461	(263)
Cash and cash equivalents, beginning of period	28,687	13,624
Cash and cash equivalents, end of period	45,148	13,361
Supplemental Disclosures of Cash Flow Information
Interest paid	1,950	2,524
Income taxes paid	57	210
Supplemental Schedule of Non-Cash Activities
Net change in fair-value of securities available for sale, net of tax	(41)	146
Loans transferred to foreclosured real estate	858	7,004
Company financed sales of other real estate owned	$ (188)

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Investment Securities (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Sales of securities available for sale
Gross proceeds from sales	$ 9,003	$ 10,504	$ 9,003	$ 25,568
Realized gains from sales	128	357	128	933
Realized losses from sales	(112)		(112)
Net Realized gains	$ 16	$ 357	$ 16	$ 933

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Allowance for Loan Losses (Details 3) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Composition of nonaccrual loans by class
Financing receivable recorded investment 90 days past due and nonaccrual	$ 7,690	$ 7,862
Commercial [Member]
Composition of nonaccrual loans by class
Financing receivable recorded investment 90 days past due and nonaccrual	172	329
Real estate-commercial [Member]
Composition of nonaccrual loans by class
Financing receivable recorded investment 90 days past due and nonaccrual	2,385	2,742
Other real estate construction [Member]
Composition of nonaccrual loans by class
Financing receivable recorded investment 90 days past due and nonaccrual	2,430	2,084
Real estate 1-4 family construction [Member]
Composition of nonaccrual loans by class
Financing receivable recorded investment 90 days past due and nonaccrual
Real estate-residential [Member]
Composition of nonaccrual loans by class
Financing receivable recorded investment 90 days past due and nonaccrual	2,358	2,441
Home equity [Member]
Composition of nonaccrual loans by class
Financing receivable recorded investment 90 days past due and nonaccrual	247	255
Consumer loans [Member]
Composition of nonaccrual loans by class
Financing receivable recorded investment 90 days past due and nonaccrual	98	11
Other loans [Member]
Composition of nonaccrual loans by class
Financing receivable recorded investment 90 days past due and nonaccrual

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Fair Values of Financial Instruments and Interest Rate Risk (Details Textual)	6 Months Ended
	Jun. 30, 2012
Fair Values of Financial Instruments and Interest Rate Risk (Textual) [Abstract]
Short term borrowings due period	Within one year

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
ASSETS
Cash and due from banks	$ 7,761	$ 7,487	[1]
Interest-earning deposits with banks	37,387	21,200	[1]
Securities available for sale, at fair value	98,324	88,661	[1]
Loans held for sale	1,287	1,958	[1]
Loans:
Loans held for investment	343,107	366,675	[1]
Less allowance for loan losses	(7,069)	(6,815)	[1]
Net loans held for investment	336,038	359,860	[1]
Premises and equipment, net	14,998	15,076	[1]
Interest receivable	1,968	2,084	[1]
Restricted stock	2,504	3,289	[1]
Bank owned life insurance	6,300	6,171	[1]
Goodwill	987	987	[1]
Other real estate owned	8,892	10,258	[1]
Prepaid assets	1,241	1,347	[1]
Other assets	7,898	8,524	[1]
Total assets	525,585	526,902	[1]
Deposits:
Demand noninterest-bearing	68,253	62,339	[1]
Interest checking and money market accounts	193,201	185,539	[1]
Savings deposits	41,269	39,273	[1]
Time deposits, $100,000 and over	55,511	58,274	[1]
Other time deposits	83,722	85,913	[1]
Total deposits	441,956	431,338	[1]
Short-term borrowed funds	18,751	20,791	[1]
Long-term debt	14,678	25,233	[1]
Interest payable	272	301	[1]
Other liabilities	3,663	3,636	[1]
Total liabilities	479,320	481,299	[1]
Off balance sheet items, commitments and contingencies (Note 8)			[1]
SHAREHOLDERS' EQUITY
Discount on preferred stock	(150)	(200)	[1]
Common stock, $1.25 par value: 20,000,000 shares authorized; issued and outstanding 7,568,978 and 7,593,929 shares, respectively	9,461	9,492	[1]
Additional paid-in capital plus stock option surplus	13,954	14,010	[1]
Unearned ESOP compensation	(810)	(772)	[1]
Undivided profits	11,157	10,379	[1]
Accumulated other comprehensive income	2,153	2,194	[1]
Total shareholders' equity	46,265	45,603	[1]
Total liabilities and shareholders' equity	525,585	526,902	[1]
Preferred Stock Series A
SHAREHOLDERS' EQUITY
Preferred stock, no par value: 10,000,000 shares authorized; 10,000 shares of series A and 500 shares of series B issued and outstanding	10,000	10,000	[1]
Preferred Stock Series B
SHAREHOLDERS' EQUITY
Preferred stock, no par value: 10,000,000 shares authorized; 10,000 shares of series A and 500 shares of series B issued and outstanding	$ 500	$ 500	[1]

[1] Derived from audited consolidated financial statements

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Troubled Debts Restructures (Details) (Other [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012 Contract	Jun. 30, 2012 Contract
Breakdown of the types of concessions made by loan class
Number of Contracts		5
Pre-Modification Outstanding Recorded Investment		$ 705
Post-Modification Outstanding Recorded Investment		697
Commercial [Member]
Breakdown of the types of concessions made by loan class
Number of Contracts		1
Pre-Modification Outstanding Recorded Investment		10
Post-Modification Outstanding Recorded Investment		9
Real estate-commercial [Member]
Breakdown of the types of concessions made by loan class
Number of Contracts		2
Pre-Modification Outstanding Recorded Investment		619
Post-Modification Outstanding Recorded Investment		616
Other real estate construction [Member]
Breakdown of the types of concessions made by loan class
Number of Contracts
Pre-Modification Outstanding Recorded Investment
Post-Modification Outstanding Recorded Investment
Real estate 1-4 family construction [Member]
Breakdown of the types of concessions made by loan class
Number of Contracts
Pre-Modification Outstanding Recorded Investment
Post-Modification Outstanding Recorded Investment
Real estate-residential [Member]
Breakdown of the types of concessions made by loan class
Number of Contracts		1
Pre-Modification Outstanding Recorded Investment		24
Post-Modification Outstanding Recorded Investment		24
Home equity [Member]
Breakdown of the types of concessions made by loan class
Number of Contracts
Pre-Modification Outstanding Recorded Investment
Post-Modification Outstanding Recorded Investment
Consumer loans [Member]
Breakdown of the types of concessions made by loan class
Number of Contracts		1
Pre-Modification Outstanding Recorded Investment		52
Post-Modification Outstanding Recorded Investment		48
Other loans [Member]
Breakdown of the types of concessions made by loan class
Number of Contracts
Pre-Modification Outstanding Recorded Investment
Post-Modification Outstanding Recorded Investment

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Consolidated Statement of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Statement of Other Comprehensive Income [Abstract]
Net income	$ 401	$ 709	$ 1,101	$ 918
Other comprehensive income (loss)
Unrealized gain (loss) on available for sale securities	366	1,574	(48)	1,145
Related tax effect	(122)	(553)	17	(426)
Reclassification of (gain) loss recognized in net income	(16)	(357)	(16)	(933)
Related tax effect	6	138	6	360
Total other comprehensive income (loss)	234	802	(41)	146
Comprehensive income	$ 635	$ 1,511	$ 1,026	$ 1,064

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Investment Securities (Details Textual) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Investment Securities (Textual) [Abstract]
Federal Reserve stock owned by Company	$ 802,250	$ 802,250
Federal Home Loan Bank Stock owned by Company	1,700,000	1,700,000
Securities available for sale pledged as collateral on public deposits	$ 33,500,000	$ 37,700,000
Yields on securities and investments tax rate	38.55%

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Investment Securities (Tables)

6 Months Ended

Jun. 30, 2012

Investment Securities [Abstract]

Carrying amounts and fair values of securities available for sale

June 30, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
			(dollars in thousands)
U.S. Treasury	$	29,876	$	1,609	$	—	$	31,485
U.S. Government agencies		17,747		804		—		18,551
GSE – Mortgage-backed securities and CMO’s		39,207		301		95		39,413
State and political subdivisions		8,200		675		—		8,875
Total securities available for sale	$	95,030	$	3,389	$	95	$	98,324
December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
			(dollars in thousands)
U.S. Treasury	$	32,073	$	1,459	$	—	$	33,532
U.S. Government agencies		19,142		855		—		19,997
GSE – Mortgage-backed securities and CMO’s		24,016		332		85		24,263
State and political subdivisions		10,071		798		—		10,869
Total securities available for sale	$	85,302	$	3,444	$	85	$	88,661

Sales of securities available for sale

	Three Months Ended June 30,					Six Months Ended June 30,
	2012			2011		2012			2011
				(dollars in thousands)
Gross proceeds from sales	$	9,003		$	10,504	$	9,003		$	25,568
Realized gains from sales	$	128		$	357	$	128		$	933
Realized losses from sales		(112	)		—		(112	)		—
Net Realized gains	$	16		$	357	$	16		$	933

Gross unrealized losses and fair value of investments

	Less than 12 Months				12 Months or More				Total
June 30, 2012	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
			(dollars in thousands)
Securities available for sale temporary impairment
GSE – Mortgage-backed securities and CMO’s	$	25,695	$	95	$	—	$	—	$	25,695	$	95
	$	25,695	$	95	$	—	$	—	$	25,695	$	95
	Less than 12 Months				12 Months or More				Total
December 31, 2011	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
			(dollars in thousands)
Securities available for sale temporary impairment
GSE – Mortgage-backed securities and CMO’s	$	9,734	$	85	$	—	$	—	$	9,734	$	85
	$	9,734	$	85	$	—	$	—	$	9,734	$	85

Amortized cost and fair value of the available for sale securities portfolio

	June 30, 2012
Securities available for sale	Amortized Cost		Estimated Fair Value		Book Yield (1)
U.S. Treasury
Due after one but within five years		16,337		17,183		1.90	%
Due after five but within ten years		13,539		14,302		1.93	%
		29,876		31,485		1.91	%
U.S. Government agencies
Due after one but within five years		17,747		18,551		2.32	%
		17,747		18,551		2.32	%
Mortgage-backed securities
Due after one but within five years		137		138		3.00	%
Due after five but within ten years		7,303		7,405		3.50	%
Due after ten years		31,767		31,870		2.93	%
		39,207		39,413		3.04	%
State and political subdivisions
Due after one but within five years		1,916		2,010		3.53	%
Due after five but within ten years		4,785		5,240		3.10	%
Due after ten years		1,499		1,625		4.12	%
		8,200		8,875		3.39	%
Total Securities available for sale
Due after one but within five years		36,137		37,882		2.20	%
Due after five but within ten years		25,627		26,947		2.60	%
Due after ten years		33,266		33,495		2.99	%
	$	95,030	$	98,324		2.58	%

1) Yields on securities and investments exempt from federal and/or state income taxes are stated on a fully tax- equivalent basis, assuming a 38.55% tax rate.

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Loans Held for Investment (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Composition of net loans held for investment by class
Loans, Total	$ 342,999	$ 366,567
Less:
Less allowance for loan losses	(7,069)	(6,815)	[1]
Deferred loan (fees) costs, net	108	108
Loans held for investment, net	336,038	359,860	[1]
Commercial Loan [Member] | Commercial [Member]
Composition of net loans held for investment by class
Loans, Total	40,137	45,907
Real estate-commercial [Member] | Commercial [Member]
Composition of net loans held for investment by class
Loans, Total	107,974	114,944
Other real estate construction loans [Member] | Commercial [Member]
Composition of net loans held for investment by class
Loans, Total	27,274	31,601
Real estate 1-4 family construction [Member] | Noncommercial [Member]
Composition of net loans held for investment by class
Loans, Total	2,756	5,543
Real estate-residential [Member] | Noncommercial [Member]
Composition of net loans held for investment by class
Loans, Total	99,332	101,847
Home equity [Member] | Noncommercial [Member]
Composition of net loans held for investment by class
Loans, Total	50,842	51,413
Consumer loans [Member] | Noncommercial [Member]
Composition of net loans held for investment by class
Loans, Total	13,798	14,710
Other loans [Member] | Noncommercial [Member]
Composition of net loans held for investment by class
Loans, Total	$ 886	$ 602

[1] Derived from audited consolidated financial statements

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Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2012

Allowance for Loan Losses [Abstract]

Changes in the allowance for loan losses

Commercial

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
				(dollars in thousands)
Balance, beginning of period	$	2,823		$	4,697		$	2,904		$	5,363
Provision (recovery) charged to operations		(138	)		381			52			814
Charge-offs		(42	)		(1,419	)		(354	)		(2,520	)
Recoveries		7			3			48			5
Net (charge-offs)		(35	)		(1,416	)		(306	)		(2,515	)
Balance at end of period	$	2,650		$	3,662		$	2,650		$	3,662

Non-Commercial

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
				(dollars in thousands)
Balance, beginning of period	$	3,951		$	4,333		$	3,911		$	3,704
Provision (recovery) charged to operations		501			(221	)		651			715
Charge-offs		(49	)		(538	)		(171	)		(876	)
Recoveries		16			38			28			69
Net (charge-offs)		(33	)		(500	)		(143	)		(807	)
Balance at end of period	$	4,419		$	3,612		$	4,419		$	3,612

Schedule of loans and reserve balances by loan class both individually and collectively evaluated for impairment

June 30, 2012

	Individually Evaluated				Collectively Evaluated				Total
	Reserve		Loans		Reserve		Loans		Reserve		Loans
			(dollars in thousands)
Commercial	$	1,136	$	17,742	$	1,514	$	157,643	$	2,650	$	175,385
Non-Commercial		1,758		15,592		2,661		152,022		4,419		167,614
Total	$	2,894	$	33,334	$	4,175	$	309,665	$	7,069	$	342,999
December 31, 2011
	Individually Evaluated				Collectively Evaluated				Total
	Reserve		Loans		Reserve		Loans		Reserve		Loans
			(dollars in thousands)
Commercial	$	1,137	$	18,882	$	1,767	$	173,570	$	2,904	$	192,452
Non-Commercial		1,446		14,207		2,465		159,908		3,911		174,115
Total	$	2,583	$	33,089	$	4,232	$	333,478	$	6,815	$	366,567

Past due information of the loan portfolio by class

June 30, 2012
	Loans 30-89 Days Past Due		Loans 90 Days or More Past due		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 or More Days Past Due
			(dollars in thousands)
Commercial	$	254	$	172	$	426	$	39,711	$	40,137	$	—
Real estate – commercial		979		2,385		3,364		104,610		107,974		—
Other real estate construction		141		2,430		2,571		24,703		27,274		—
Real estate 1-4 family construction		—		—		—		2,756		2,756		—
Real estate – residential		2,557		2,358		4,915		94,417		99,332		—
Home equity		340		247		587		50,255		50,842		—
Consumer loans		75		98		173		13,625		13,798		—
Other loans		—		—		—		886		886		—
Total	$	4,346	$	7,690	$	12,036	$	330,963	$	342,999	$	—
December 31, 2011
	Loans 30-89 Days Past Due		Loans 90 Days or More Past due		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 or More Days Past Due
			(dollars in thousands)
Commercial	$	212	$	329	$	541	$	45,366	$	45,907	$	—
Real estate – commercial		2,396		2,742		5,138		109,806		114,944		—
Other real estate construction		358		2,084		2,442		29,159		31,601		—
Real estate construction		—		—		—		5,543		5,543		—
Real estate – residential		2,341		2,441		4,782		97,065		101,847		—
Home equity		298		255		553		50,860		51,413		—
Consumer loan		208		11		219		14,491		14,710		—
Other loans		—		—		—		602		602		—
Total	$	5,813	$	7,862	$	13,675	$	352,892	$	366,567	$	—

Composition of nonaccrual loans by class

	June 30, 2012		December 31, 2011
	(dollars in thousands)
Commercial	$	172	$	329
Real estate – commercial		2,385		2,742
Other real estate construction		2,430		2,084
Real estate 1-4 family construction		—		—
Real estate – residential		2,358		2,441
Home equity		247		255
Consumer loans		98		11
Other loans		—		—
	$	7,690	$	7,862

Summary of risk grades of portfolio by class

June 30, 2012
	Pass		Watch		Sub-standard		Doubtful		Total
			(dollars in thousands)
Commercial	$	38,474	$	836	$	827	$	—	$	40,137
Real estate – commercial		88,910		8,700		10,364		—		107,974
Other real estate construction		21,687		499		5,088		—		27,274
Real estate 1-4 family construction		2,756		—		—		—		2,756
Real estate – residential		83,750		6,546		9,036		—		99,332
Home equity		48,907		732		1,203		—		50,842
Consumer loans		13,100		390		308		—		13,798
Other loans		886		—		—		—		886
Total	$	298,470	$	17,703	$	26,826	$	—	$	342,999
December 31, 2011
	Pass		Watch		Sub-standard		Doubtful		Total
			(dollars in thousands)
Commercial	$	42,892	$	1,670	$	1,345	$	—	$	45,907
Real estate – commercial		95,699		7,971		11,274		—		114,944
Other real estate construction		26,256		745		4,600		—		31,601
Real estate 1-4 family construction		5,538		5		—		—		5,543
Real estate – residential		89,209		4,269		8,369		—		101,847
Home equity		49,743		861		809		—		51,413
Consumer loans		13,970		332		408		—		14,710
Other loans		602		—		—		—		602
Total	$	323,909	$	15,853	$	26,805	$	—	$	366,567

Summary of performing and nonperforming loans by class

June 30, 2012

	Performing		Non-Performing		Total
	(dollars in thousands)
Commercial	$	39,965	$	172	$	40,137
Real estate – commercial		105,589		2,385		107,974
Other real estate construction		24,844		2,430		27,274
Real estate 1-4 family construction		2,756		—		2,756
Real estate – residential		96,974		2,358		99,332
Home equity		50,595		247		50,842
Consumer loans		13,700		98		13,798
Other loans		886		—		886
Total	$	335,309	$	7,690	$	342,999

December 31, 2011

	Performing		Non- Performing		Total
	(dollars in thousands)
Commercial	$	45,578	$	329	$	45,907
Real estate – commercial		112,202		2,742		114,944
Other real estate construction		29,517		2,084		31,601
Real estate 1 – 4 family construction		5,543		—		5,543
Real estate – residential		99,406		2,441		101,847
Home equity		51,158		255		51,413
Consumer loans		14,699		11		14,710
Other loans		602		—		602
Total	$	358,705	$	7,862	$	366,567

Summary of loans deemed impaired and specific reserves allocated by class

June 30, 2012

	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Related Allowance
	(dollars in thousands)
Commercial	$	1,240	$	823	$	298	$	153
Real estate – commercial		14,511		8,053		4,395		817
Other real estate construction		4,175		2,718		1,455		166
Real estate 1 – 4 family construction		1,308		714		594		235
Real estate – residential		12,664		6,932		5,732		1,075
Home equity		1,262		550		712		277
Consumer loans		358		49		309		171
Other loans		—		—		—		—
Total	$	35,518	$	19,839	$	13,495	$	2,894

December 31, 2011

	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Related Allowance
	(dollars in thousands)
Commercial	$	2,099	$	889	$	1,091	$	578
Real estate – commercial		14,951		11,365		1,523		452
Other real estate construction		4,016		2,644		1,370		107
Real estate 1 – 4 family construction		1,095		501		594		202
Real estate – residential		11,877		7,231		4,646		1,001
Home equity		993		753		240		124
Consumer loans		242		49		193		119
Other loans		—		—		—		—
Total	$	35,273	$	23,432	$	9,657	$	2,583

	Three Months ended June 30, 2012				Three Months ended June 30, 2011
	Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income
	(dollars in thousands)
Commercial	$	1,401	$	13	$	1,339	$	29
Real estate – commercial		12,575		155		16,436		93
Other real estate construction		4,087		73		8,308		27
Real estate 1 – 4 family construction		1,326		10		1,474		4
Real estate – residential		12,043		174		9,893		210
Home equity		1,163		14		1,358		10
Consumer loans		334		6		320		7
Other loans		—		—		—		—
Total	$	32,929	$	445	$	39,128	$	380
	Six Months ended June 30, 2012				Six Months ended June 30, 2011
	Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income
	(dollars in thousands)
Commercial	$	1,551	$	27	$	1,373	$	43
Real estate – commercial		12,668		340		17,731		263
Other real estate construction		4,093		125		8,990		31
Real estate 1 – 4 family construction		1,202		16		1,300		26
Real estate – residential		12,270		311		9,557		325
Home equity		1,128		24		1,260		22
Consumer loans		299		10		293		10
Other loans		—		—		—		—
Total	$	33,211	$	853	$	40,504	$	720

XML

Consolidated Statement of Changes in Shareholders' Equity (Unaudited) (USD $) In Thousands, except Share data	Total USD ($)		Number Common Shares Issued USD ($)	Preferred Stock Series A	Preferred Stock Series B	Discount on Preferred Stock USD ($)	Common Stock USD ($)	Additional Paid-In Capital USD ($)	Unearned ESOP Compensation USD ($)	Undivided Profits USD ($)		Accumulated Other Comprehensive Income ( Loss) USD ($)
Beginning balance at Dec. 31, 2011	$ 45,603	[1]				$ (200)		$ 14,010	$ (772)	$ 10,379		$ 2,194
Beginning balance, shares at Dec. 31, 2011	7,593,929	[1]	7,593,929	10,000	500		9,492
Net income	1,101									1,101
Repurchase of common stock	(68)		(24,951)				(31)	(37)
Other comprehensive loss	(41)											(41)
Release of ESOP shares	23							(21)	44
Increase in ESOP notes receivable	82
Increase in ESOP notes receivable	(82)								(82)
Stock compensation	2							2
Record preferred stock dividend and discount accretion	(273)					50				(323)
Ending balance at Jun. 30, 2012	$ 46,265					$ (150)		$ 13,954	$ (810)	$ 11,157	[1]	$ 2,153
Ending balance, shares at Jun. 30, 2012	7,568,978		7,568,978	10,000	500		9,461

[1] Derived from audited consolidated financial statements

XML

Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Preferred stock, par value			[1]
Preferred stock, shares authorized	10,000,000	10,000,000	[1]
Common stock, par value	$ 1.25	$ 1.25	[1]
Common stock, shares authorized	20,000,000	20,000,000	[1]
Common stock, shares issued	7,568,978	7,593,929	[1]
Common stock, shares outstanding	7,568,978	7,593,929	[1]
Preferred Stock Series A
Preferred stock, shares issued	10,000	10,000	[1]
Preferred stock, shares outstanding	10,000	10,000	[1]
Preferred Stock Series B
Preferred stock, shares issued	500	500	[1]
Preferred stock, shares outstanding	500	500	[1]

[1] Derived from audited consolidated financial statements

XML

Fair Value Disclosures

6 Months Ended

Jun. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value Disclosures

Note 9 – Fair Value Disclosures

Accounting Standards Codification (ASC) 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but clarifies and standardizes some divergent practices that have emerged since prior guidance was issued. ASC 820 creates a three-level hierarchy under which individual fair value estimates are to be ranked based on the relative reliability of the inputs used in the valuation.

ASC 820 defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, the Company considers the principal or most advantageous market in which those assets or liabilities are sold and considers assumptions that market participants would use when pricing those assets or liabilities. Fair values determined using Level 1 inputs rely on active and observable markets to price identical assets or liabilities. In situations where identical assets and liabilities are not traded in active markets, fair values may be determined based on Level 2 inputs, which exist when observable data exists for similar assets and liabilities. Fair values for assets and liabilities for which identical or similar assets and liabilities are not actively traded in observable markets are based on Level 3 inputs, which are considered to be unobservable.

Among the Company’s assets and liabilities, investment securities available for sale are reported at their fair values on a recurring basis. Certain other assets are adjusted to their fair value on a nonrecurring basis, including other real estate owned, impaired loans, loans held for sale, which are carried at the lower of cost or market; loan servicing rights, where fair value is determined using similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions; and goodwill, which is periodically tested for impairment. Deposits, short-term borrowings and long-term obligations are not reported at fair value.

Prices for US Treasury securities are readily available in the active markets in which those securities are traded, and the resulting fair values are shown in the ‘Level 1 input’ column. Prices for government agency securities, mortgage-backed securities and for state, county and municipal securities are obtained for similar securities, and the resulting fair values are shown in the ‘Level 2 input’ column. Prices for all other non-marketable investments are determined based on various assumptions that are not observable. The fair values for these investment securities are shown in the ‘Level 3 input’ column. Non-marketable investment securities, which are carried at their purchase price, include those that may only be redeemed by the issuer. The changes in securities between Level 1 and Level 2 were related to the purchase and sale of several securities and not the transfer of securities.

The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment by using one of several methods including collateral value, fair value of similar debt and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the present value of the expected repayments or fair value of collateral exceed the recorded investments in such loans. At June 30, 2012, substantially all of the total impaired loans were evaluated based on the fair value of the underlying collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the impaired loan as nonrecurring Level 2. When an internal assessment of fair value based upon market data issued or management determines the fair value of the underlying collateral is further impaired below the appraised value, the Company records the impaired loan as nonrecurring Level 3.

Foreclosed assets are adjusted to fair value upon transfer of the loans to other real estate owned. Real estate acquired in settlement of loans is recorded initially at estimated fair value of the property less estimated selling costs at the date of foreclosure. The initial recorded value may be subsequently reduced by additional allowances, which are charged to earnings if the estimated fair value of the property less estimated selling costs declines below the initial recorded value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the foreclosed asset as nonrecurring Level 2. When an internal assessment of fair value based upon market data issued or management determines the fair value of the underlying collateral is further impaired below the appraised value, the Company records the impaired loan as nonrecurring Level 3.

Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate, based on secondary market prices. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.

Servicing assets are evaluated for impairment based upon the fair value. Fair value is determined based upon discounted cash flows using market-based assumptions.

The following table provides fair value information for assets and liabilities measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011:

	June 30, 2012
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Securities available for sale:
US Treasury	$	31,485	$	31,485	$	—	$	—
US Government Agencies		18,551		—		18,551		—
GSE – Mortgage-backed securities and CMO’s		39,413		—		39,413		—
State and political subdivisions		8,875		—		8,875		—
Total assets at fair value	$	98,324	$	31,485	$	66,839	$	—
Total liabilities at fair value	$	—	$	—	$	—	$	—

	December 31, 2011
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Securities available for sale:
US Treasury	$	33,532	$	33,532	$	—	$	—
US Gov’t		19,997		—		19,997		—
Mortgage-backed securities and CMO’s		24,263		—		24,263		—
State and political subdivisions		10,869		—		10,869		—
Total assets at fair value	$	88,661	$	33,532	$	55,129	$	—
Total liabilities at fair value	$	—	$	—	$	—	$	—

The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with U.S. GAAP. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. Assets measured at fair value on a nonrecurring basis are included in the table below as of June 30, 2012 and December 31, 2011:

	June 30, 2012
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Impaired loans	$	10,601	$	—	$	—	$	10,601
Loans held for sale		1,287		—		1,287		—
Other real estate owned		3,151		—		—		3,151
Total assets at fair value	$	15,039	$	—	$	1,287	$	13,752
Total liabilities at fair value	$	—	$	—	$	—	$	—
	December 31, 2011
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Impaired loans	$	7,074	$	—	$	—	$	7,074
Loans held for sale		1,958		—		1,958		—
Other real estate owned		1,464		—		—		1,464
Total assets at fair value	$	10,496	$	—	$	1,958	$	8,538
Total liabilities at fair value	$	—	$	—	$	—	$	—

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 10, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	UWHARRIE CAPITAL CORP
Entity Central Index Key	0000898171
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		7,568,978

XML

Fair Values of Financial Instruments and Interest Rate Risk

6 Months Ended

Jun. 30, 2012

Fair Values of Financial Instruments and Interest Rate Risk [Abstract]

Fair Values of Financial Instruments and Interest Rate Risk

Note 10 - Fair Values of Financial Instruments and Interest Rate Risk

ASC 825, “Disclosures about Fair Value of Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those that are not measured and reported at fair value on a recurring basis or non-recurring basis.

The fair value estimates presented at June 30, 2012 and December 31, 2011, are based on relevant market information and information about the financial instruments. Fair value estimates are intended to represent the price an asset could be sold at or the price a liability could be settled for. However, given there is no active market or observable market transactions for many of the Company’s financial instruments, the Company has made estimates of many of these fair values which are subjective in nature, involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimated values. The estimated fair values disclosed in the following table do not represent market values of all assets and liabilities of the Company and should not be interpreted to represent the underlying value of the Company. The following table reflects a comparison of carrying amounts and the estimated fair value of the financial instruments as of June 30, 2012 and December 31, 2011:

June 30, 2012

	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3
	(dollars in thousands)
FINANCIAL ASSETS
Cash and cash equivalents	$	45,148	$	45,148	$	45,148	$	—	$	—
Securities available for sale		98,324		98,324		31,485		66,839		—
Loans held for investment, net		336,038		347,182		—		—		347,182
Loans held for sale		1,287		1,287		—		1,287		—
Restricted stock		2,504		2,504		2,504		—		—
Bank-owned life insurance		6,300		6,300		—		—		6,300
Mortgage servicing rights		2,335		2,629		—		—		2,629
Accrued interest receivable		1,968		1,968		—		—		1,968
FINANCIAL LIABILITIES
Deposits	$	441,956	$	441,055	$	—	$	—	$	441,055
Short-term borrowings		18,751		18,751		—		18,751		—
Long-term borrowings		3,551		3,866		—		3,866		—
Junior subordinated debt		11,127		11,275		—		—		11,275
Accrued interest payable		272		272		—		—		272

December 31, 2011

	Carrying Value		Estimated Fair Value
	(dollars in thousands)
FINANCIAL ASSETS
Cash and cash equivalents	$	28,687	$	28,687
Securities available for sale		88,661		88,661
Loans held for investment, net		359,860		374,636
Loans held for sale		1,958		1,958
Restricted stock		3,289		3,289
Bank-owned life insurance		6,171		6,171
Mortgage servicing rights		2,128		2,494
Accrued interest receivable		2,084		2,084
FINANCIAL LIABILITIES
Deposits	$	431,338	$	430,641
Short-term borrowings		20,791		20,791
Long-term borrowings		14,106		14,611
Junior subordinated debt		11,127		11,283
Accrued interest payable		301		301

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

• Cash and cash equivalents – The carrying amount of cash and cash equivalents approximate their fair values due to the short period of time until their expected realization and are recorded in Level 1.

• Securities available for sale – Securities available for sale are carried at fair value based on quoted and observable market prices and are recorded in Levels 1 and 2. Also see discussion in note 9

• Loans – The fair value of loans is estimated based on discounted expected cash flows using the current interest rates at which similar loans would be made and carried in level 3. Loans held for sale, which represent current mortgage production forward sales not yet delivered, are valued based on secondary market prices. The fair value of loans does not consider the lack of liquidity and uncertainty in the market that would affect the valuation. Loans held for sale are recorded in Level 2.

• Restricted stock – It is not practicable to determine fair value of restricted stock which is comprised of Federal Home Loan Bank and Federal Reserve Bank stock due to restrictions placed on its transferability and it is presented at its carrying value and is recorded in Level 1 due to the redemption provisions of the Federal Home Loan Bank and the Federal Reserve Bank.

• Bank-owned life insurance – The carrying amount of bank-owned life insurance is the current cash surrender value and is recorded in level 3.

• Mortgage serving rights – Fair value is determined based upon discounted cash flows using market-based assumptions and is recorded in Level 3.

• Accrued interest receivable and payable – Both accrued interest receivable and payable are recorded in Level 3, as there are not active markets for these.

• Deposits – The fair value of deposits is estimated based on discounted cash flow analyses using offered market rates and is recorded in Level 3. The fair value of deposits does not consider any customer related intangibles.

• Borrowings – The fair value disclosed for short-term borrowings, which are composed of overnight borrowings and debt due within one year approximate the carrying value for such debt and is recorded in Level 2. The estimated fair value for long-term borrowings are estimated based on discounted cash flow analyses using offered market rates. Total borrowings are carried in Level 2. Junior subordinated debt is fair valued based on discounted cash flow analyses and is recorded in Level 3.

At June 30, 2012, the subsidiary banks had outstanding standby letters of credit and commitments to extend credit. These off-balance sheet financial instruments are generally exercisable at the market rate prevailing at the date the underlying transaction will be completed; therefore, they were deemed to have no current fair value. See Note 8.

XML

Consolidated Statements of Income (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Interest Income
Loans, including fees	$ 4,941	$ 5,417	$ 10,148	$ 10,759
Investment securities
US Treasury	140	163	287	442
US Government agencies and corporations	204	278	393	502
State and political subdivisions	89	93	180	187
Interest-earning deposits with banks and federal funds sold	40	11	72	18
Total interest income	5,414	5,962	11,080	11,908
Interest Expense
Interest checking and money market accounts	134	211	285	443
Savings deposits	53	81	105	164
Time deposits, $100,000 and over	200	288	415	566
Other time deposits	256	295	520	601
Short-term borrowed funds	81	79	155	182
Long-term debt	199	272	441	548
Total interest expense	923	1,226	1,921	2,504
Net interest income	4,491	4,736	9,159	9,404
Provision for loan losses	363	160	703	1,529
Net interest income after provision for loan losses	4,128	4,576	8,456	7,875
Noninterest Income
Service charges on deposit accounts	436	449	868	893
Other service fees and commissions	861	909	1,591	1,766
Gain (loss) on sale of securities	16	357	16	933
Gain (loss) on fixed assets and other assets	25	(5)	296	(5)
Income from mortgage loan sales	667	331	1,476	714
Other income	118	88	238	205
Total noninterest income	2,123	2,129	4,485	4,506
Noninterest Expense
Salaries and employee benefits	3,157	3,050	6,263	6,095
Net occupancy expense	285	282	570	583
Equipment expense	183	194	371	400
Data processing costs	223	208	434	417
Office supplies and printing	81	98	152	171
Foreclosed real estate expense	342	82	810	125
Professional fees and services	127	484	172	746
Marketing and donations	152	153	338	297
Electronic banking expense	225	227	454	428
Software amortization and maintenance	141	140	283	276
FDIC insurance	171	177	345	404
Other noninterest expense	535	571	1,196	1,163
Total noninterest expense	5,622	5,666	11,388	11,105
Income before income taxes	629	1,039	1,553	1,276
Income taxes	228	330	452	358
Net income	401	709	1,101	918
Net Income	401	709	1,101	918
Dividends - preferred stock	(161)	(161)	(323)	(323)
Net income available to common shareholders	$ 240	$ 548	$ 778	$ 595
Net income per common share
Basic	$ 0.03	$ 0.07	$ 0.10	$ 0.08
Diluted	$ 0.03	$ 0.07	$ 0.10	$ 0.08
Weighted average shares outstanding
Basic	7,406,282	7,474,178	7,418,696	7,476,193
Diluted	7,406,282	7,474,178	7,418,696	7,476,193

XML

Investment Securities

6 Months Ended

Jun. 30, 2012

Investment Securities [Abstract]

Investment Securities

Note 4 – Investment Securities

Carrying amounts and fair values of securities available for sale are summarized below:

June 30, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
			(dollars in thousands)
U.S. Treasury	$	29,876	$	1,609	$	—	$	31,485
U.S. Government agencies		17,747		804		—		18,551
GSE – Mortgage-backed securities and CMO’s		39,207		301		95		39,413
State and political subdivisions		8,200		675		—		8,875
Total securities available for sale	$	95,030	$	3,389	$	95	$	98,324
December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
			(dollars in thousands)
U.S. Treasury	$	32,073	$	1,459	$	—	$	33,532
U.S. Government agencies		19,142		855		—		19,997
GSE – Mortgage-backed securities and CMO’s		24,016		332		85		24,263
State and political subdivisions		10,071		798		—		10,869
Total securities available for sale	$	85,302	$	3,444	$	85	$	88,661

At both June 30, 2012 and December 31, 2011 the Company owned Federal Reserve stock reported at cost of $802,250 and is included in other assets. Also at both June 30, 2012 and December 31, 2011, the Company owned Federal Home Loan Bank Stock (FHLB) of $1.7 million. The investments in Federal Reserve stock and FHLB stock are required investments related to the Company’s membership in, and borrowings, with these banks. These investments are carried at cost since there is no ready market and historically redemption has been made at par value. The Company estimated that the fair value approximated cost and that these investments were not impaired at June 30, 2012.

Results from sales of securities available for sale for the three and six month period ended June 30, 2012 and June 30, 2011 are as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2012			2011		2012			2011
				(dollars in thousands)
Gross proceeds from sales	$	9,003		$	10,504	$	9,003		$	25,568
Realized gains from sales	$	128		$	357	$	128		$	933
Realized losses from sales		(112	)		—		(112	)		—
Net Realized gains	$	16		$	357	$	16		$	933

At June 30, 2012 and December 31, 2011 securities available for sale with a carrying amount of $33.5 million and $37.7 million, respectively, were pledged as collateral on public deposits and for other purposes as required or permitted by law.

The following tables show the gross unrealized losses and fair value of investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2012 and December 31, 2011. These unrealized losses on investment securities are a result of temporary fluctuations in the market prices due to a rise in interest rates, which will adjust if rates decline, and a volatile market and are in no way a reflection of the quality of the investments. At June 30, 2012, the unrealized losses related to six mortgage backed securities. At December 31, 2011, the unrealized losses related to three mortgage backed securities.

	Less than 12 Months				12 Months or More				Total
June 30, 2012	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
			(dollars in thousands)
Securities available for sale temporary impairment
GSE – Mortgage-backed securities and CMO’s	$	25,695	$	95	$	—	$	—	$	25,695	$	95
	$	25,695	$	95	$	—	$	—	$	25,695	$	95
	Less than 12 Months				12 Months or More				Total
December 31, 2011	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
			(dollars in thousands)
Securities available for sale temporary impairment
GSE – Mortgage-backed securities and CMO’s	$	9,734	$	85	$	—	$	—	$	9,734	$	85
	$	9,734	$	85	$	—	$	—	$	9,734	$	85

Declines in the fair value of the investment portfolio are believed by management to be temporary in nature. When evaluating an investment for other-than-temporary impairment losses, management considers among other things, the length of time and the extent to which the fair value has been in a loss position, the financial condition of the issuer and the intent and the ability the Company has to hold the investment until the loss position is recovered.

Any unrealized losses were largely due to increases in market interest rates over the yields available at the time of purchase. The fair value is expected to recover as the bonds approach their maturity date or market yields for such investments decline. At June 30, 2012, the Company had no intent to sell and not more likely than not to be required to sell the available for sale securities that were in a loss position prior to full recovery.

The aggregate amortized cost and fair value of the available for sale securities portfolio at June 30, 2012 by remaining contractual maturity are as follows:

	June 30, 2012
Securities available for sale	Amortized Cost		Estimated Fair Value		Book Yield (1)
U.S. Treasury
Due after one but within five years		16,337		17,183		1.90	%
Due after five but within ten years		13,539		14,302		1.93	%
		29,876		31,485		1.91	%
U.S. Government agencies
Due after one but within five years		17,747		18,551		2.32	%
		17,747		18,551		2.32	%
Mortgage-backed securities
Due after one but within five years		137		138		3.00	%
Due after five but within ten years		7,303		7,405		3.50	%
Due after ten years		31,767		31,870		2.93	%
		39,207		39,413		3.04	%
State and political subdivisions
Due after one but within five years		1,916		2,010		3.53	%
Due after five but within ten years		4,785		5,240		3.10	%
Due after ten years		1,499		1,625		4.12	%
		8,200		8,875		3.39	%
Total Securities available for sale
Due after one but within five years		36,137		37,882		2.20	%
Due after five but within ten years		25,627		26,947		2.60	%
Due after ten years		33,266		33,495		2.99	%
	$	95,030	$	98,324		2.58	%

1) Yields on securities and investments exempt from federal and/or state income taxes are stated on a fully tax- equivalent basis, assuming a 38.55% tax rate.

XML

Per Share Data

6 Months Ended

Jun. 30, 2012

Per Share Data [Abstract]

Per Share Data

Note 3 – Per Share Data

Basic and diluted net income per common share is computed based on the weighted average number of shares outstanding during each period after retroactively adjusting for stock dividends. Diluted net income per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the net income of the Company. For the six months ended June 30, 2012, the Company’s 122,341 stock options outstanding did not have a dilutive effect on per share results because the exercise prices exceeded the share values for each period. The Company had 123,570 stock options outstanding at June 30, 2011 and they did not have a dilutive effect.

Basic and diluted net income per common share have been computed based upon net income available to common shareholders as presented in the accompanying consolidated statements of operations divided by the weighted average number of common shares outstanding or assumed to be outstanding. The computation of basic and dilutive earnings per share is summarized below:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Weighted average number of common shares outstanding		7,568,978			7,593,929			7,568,978			7,593,929
Effect of ESOP shares		(162,696	)		(119,751	)		(150,282	)		(117,736	)
Adjusted weighted average number of common shares used in computing basic net income per common share		7,406,282			7,474,178			7,418,696			7,476,193
Effect of dilutive stock options		—			—			—			—
Weighted average number of common shares and dilutive potential common shares used in computing diluted net income per common share		7,406,282			7,474,178			7,418,696			7,476,193

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Loans Held for Investment (Tables)

6 Months Ended

Jun. 30, 2012

Loans Held for Investment [Abstract]

Composition of net loans held for investment by class

	June 30, 2012			December 31, 2011
	(dollars in thousands)
Commercial
Commercial	$	40,137		$	45,907
Real estate – commercial		107,974			114,944
Other real estate construction loans		27,274			31,601
Noncommercial
Real estate 1-4 family construction		2,756			5,543
Real estate – residential		99,332			101,847
Home equity		50,842			51,413
Consumer loans		13,798			14,710
Other loans		886			602
		342,999			366,567
Less:
Allowance for loan losses		(7,069	)		(6,815	)
Deferred loan (fees) costs, net		108			108
Loans held for investment, net	$	336,038		$	359,860

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2012

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

Note 11 – Recent Accounting Pronouncements

In May 2011, the FASB issued Accounting Standards Update No. 2011-04, “Fair Value Measurement”. The purpose of the standard is to clarify and combine fair value measurements and disclosure requirements for U.S. generally accepted accounting principles, or GAAP, and international financial reporting standards, or IFRS. The new standard provides amendments and wording changes used to describe certain requirements for measuring fair value and for disclosing information about fair value measurements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2011, and should be applied prospectively to the beginning of the annual period of adoption. The adoption of this statement did not have a material impact on the consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, an update to ASC 220, “Comprehensive Income.” This update requires that all nonowner changes in stockholders’ equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Additionally, ASU 2011-05 requires entities to present, on the face of the financial statements, reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement or statements where the components of net income and the components of other comprehensive income are presented. The option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity was eliminated. ASU 2011-05 is effective for annual periods beginning after December 15, 2011, and did not have a significant impact on the Company’s financial statements.

In September 2011, the FASB issued ASU 2011-08, an update to ASC 350 “Intangibles – Goodwill and Other.” This update gives entities the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if an entity concludes otherwise, then it is required to perform the first step of the two-step impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. ASU 2011-08 is effective for annual and interim impairment tests beginning after December 15, 2011, and did not have a significant impact on the Company’s financial statements.

From time to time the FASB issues exposure drafts of proposed statements of financial accounting standards. Such exposure drafts are subject to comment from the public, to revisions by the FASB and to final issuance by the FASB as statements of financial accounting standards. Management considers the effect of the proposed statements on the consolidated financial statements of the Company and monitors the status of changes to and proposed effective dates of exposure drafts.

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Troubled Debts Restructures

6 Months Ended

Jun. 30, 2012

Troubled Debts Restructures [Abstract]

Troubled Debts Restructures

Note 7 – Troubled Debt Restructures

A modification of a loan constitutes a troubled debt restructuring (“TDR”) when a borrower is experiencing financial difficulty and the modification involves providing a concession to the existing loan contract. The Company offers various types of concessions when modifying loans to troubled borrowers, however, forgiveness of principal is rarely granted. Concessions offered are term extensions, capitalizing accrued interest, reducing interest rates to below current market rates or a combination of any of these. Combinations from time to time may include allowing a customer to be placed on interest-only payments. The presentations below in the “other” category are TDR’s with a combination of concessions. At the time of a TDR, additional collateral or a guarantor may be requested.

Loans modified as a TDR are typically already on nonaccrual status and partial chargeoffs may have in some cases already been taken against the outstanding loan balance. The Company classifies TDR loans as impaired loans and evaluates the need for an allowance for loan loss on a loan-by-loan basis. An allowance is based on either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price or the estimated fair value of the underlying collateral less any selling costs, if the loan is deemed to be collateral dependent.

For the three and six months ended June 30, 2012 the following table presents a breakdown of the types of concessions made by loan class:

For the three months ended June 30, 2012

	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(dollars in thousands)
Other:
Commercial		—	$	—	$	—
Real estate – commercial		—		—		—
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		—		—		—
Home equity		—		—		—
Consumer loans		—		—		—
Other loans		—		—		—
Total		—	$	—	$	—

For the six months ended June 30, 2012

	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(dollars in thousands)
Other:
Commercial		1	$	10	$	9
Real estate – commercial		2		619		616
Other real estate construction		—		—		—
Real estate 1 – 4 family construction		—		—		—
Real estate – residential		1		24		24
Home equity		—		—		—
Consumer loans		1		52		48
Other loans		—		—		—
Total		5	$	705	$	697

The following table presents loans that were modified as troubled debt restructurings within the previous twelve months ending June 30, 2012 for which there was a payment default:

	Twelve months ended June 30, 2012
	Number of Loans		Recorded Investment
	(dollars in thousands)
Below market interest rate:
Commercial		—	$	—
Real estate – commercial		—		—
Other real estate construction		—		—
Real estate 1 – 4 family construction		—		—
Real estate – residential		—		—
Home Equity loans		—		—
Consumer loans		—		—
Other loans		—		—
		—	$	—
Other:
Commercial		1	$	9
Real estate – commercial		3		709
Other real estate construction		—		—
Real estate 1 – 4 family construction		—		—
Real estate – residential		3		367
Home Equity loans		—		—
Consumer loans		1		4
Other loans		—		—
		8	$	1,089
Total		8	$	1,089

A default on a troubled debt restructure is defined as being past due 90 days or being out of compliance with the modification agreement. As mentioned, the Company considers TDRs to be impaired loans and has $554,966 in allowance for loan loss as a direct result of these TDR’s.

The following table presents the successes and failures of the types of modifications within the previous twelve months ending June 30, 2012:

June 30, 2012

	Paid In Full				Paying as restructured				Converted to nonaccrual				Foreclosure/ Default
	Number of Loans		Recorded Investments		Number of Loans		Recorded Investments		Number of Loans		Recorded Investments		Number of Loans		Recorded Investments
	(dollars in thousands)
Below market interest rate		—	$	—		—	$	—		—	$	—		—	$	—
Other Loans		—		—		10		968		1		206		—		—
Total		—	$	—		10	$	968		1	$	206		—	$	—

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Loans Held for Investment

6 Months Ended

Jun. 30, 2012

Loans Held for Investment [Abstract]

Loans Held for Investment

Note 5 – Loans Held for Investment

The composition of net loans held for investment by class as of June 30, 2012 and December 31, 2011 are as follows:

	June 30, 2012			December 31, 2011
	(dollars in thousands)
Commercial
Commercial	$	40,137		$	45,907
Real estate – commercial		107,974			114,944
Other real estate construction loans		27,274			31,601
Noncommercial
Real estate 1-4 family construction		2,756			5,543
Real estate – residential		99,332			101,847
Home equity		50,842			51,413
Consumer loans		13,798			14,710
Other loans		886			602
		342,999			366,567
Less:
Allowance for loan losses		(7,069	)		(6,815	)
Deferred loan (fees) costs, net		108			108
Loans held for investment, net	$	336,038		$	359,860

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Allowance for Loan Losses

6 Months Ended

Jun. 30, 2012

Allowance for Loan Losses [Abstract]

Allowance for Loan Losses

Note 6 – Allowance for Loan Losses

The following table shows the change in the allowance for loss losses by loan segment for the three and six month periods ended June 30, 2012 and 2011, respectively:

Commercial

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
				(dollars in thousands)
Balance, beginning of period	$	2,823		$	4,697		$	2,904		$	5,363
Provision (recovery) charged to operations		(138	)		381			52			814
Charge-offs		(42	)		(1,419	)		(354	)		(2,520	)
Recoveries		7			3			48			5
Net (charge-offs)		(35	)		(1,416	)		(306	)		(2,515	)
Balance at end of period	$	2,650		$	3,662		$	2,650		$	3,662

Non-Commercial

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
				(dollars in thousands)
Balance, beginning of period	$	3,951		$	4,333		$	3,911		$	3,704
Provision (recovery) charged to operations		501			(221	)		651			715
Charge-offs		(49	)		(538	)		(171	)		(876	)
Recoveries		16			38			28			69
Net (charge-offs)		(33	)		(500	)		(143	)		(807	)
Balance at end of period	$	4,419		$	3,612		$	4,419		$	3,612

The following table shows period-end loans and reserve balances by loan segment both individually and collectively evaluated for impairment at June 30, 2012 and December 31, 2011:

June 30, 2012

	Individually Evaluated				Collectively Evaluated				Total
	Reserve		Loans		Reserve		Loans		Reserve		Loans
			(dollars in thousands)
Commercial	$	1,136	$	17,742	$	1,514	$	157,643	$	2,650	$	175,385
Non-Commercial		1,758		15,592		2,661		152,022		4,419		167,614
Total	$	2,894	$	33,334	$	4,175	$	309,665	$	7,069	$	342,999
December 31, 2011
	Individually Evaluated				Collectively Evaluated				Total
	Reserve		Loans		Reserve		Loans		Reserve		Loans
			(dollars in thousands)
Commercial	$	1,137	$	18,882	$	1,767	$	173,570	$	2,904	$	192,452
Non-Commercial		1,446		14,207		2,465		159,908		3,911		174,115
Total	$	2,583	$	33,089	$	4,232	$	333,478	$	6,815	$	366,567

Past due loan information is used by management when assessing the adequacy of the allowance for loan losses. The following table summarizes the past due information of the loan portfolio by class:

June 30, 2012
	Loans 30-89 Days Past Due		Loans 90 Days or More Past due		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 or More Days Past Due
			(dollars in thousands)
Commercial	$	254	$	172	$	426	$	39,711	$	40,137	$	—
Real estate – commercial		979		2,385		3,364		104,610		107,974		—
Other real estate construction		141		2,430		2,571		24,703		27,274		—
Real estate 1-4 family construction		—		—		—		2,756		2,756		—
Real estate – residential		2,557		2,358		4,915		94,417		99,332		—
Home equity		340		247		587		50,255		50,842		—
Consumer loans		75		98		173		13,625		13,798		—
Other loans		—		—		—		886		886		—
Total	$	4,346	$	7,690	$	12,036	$	330,963	$	342,999	$	—
December 31, 2011
	Loans 30-89 Days Past Due		Loans 90 Days or More Past due		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 or More Days Past Due
			(dollars in thousands)
Commercial	$	212	$	329	$	541	$	45,366	$	45,907	$	—
Real estate – commercial		2,396		2,742		5,138		109,806		114,944		—
Other real estate construction		358		2,084		2,442		29,159		31,601		—
Real estate construction		—		—		—		5,543		5,543		—
Real estate – residential		2,341		2,441		4,782		97,065		101,847		—
Home equity		298		255		553		50,860		51,413		—
Consumer loan		208		11		219		14,491		14,710		—
Other loans		—		—		—		602		602		—
Total	$	5,813	$	7,862	$	13,675	$	352,892	$	366,567	$	—

Once a loan becomes 90 days past due, the loan is automatically transferred to a nonaccrual status. The exception to this policy is credit card loans that remain in accruing 90 days or more until they are paid current or charged off. Also, mortgage loans that were originated for sale but were not sold and are being held in the loan portfolio remain in an accruing status until they are foreclosed.

The composition of nonaccrual loans by class as of June 30, 2012 and December 31, 2011 is as follows:

	June 30, 2012		December 31, 2011
	(dollars in thousands)
Commercial	$	172	$	329
Real estate – commercial		2,385		2,742
Other real estate construction		2,430		2,084
Real estate 1-4 family construction		—		—
Real estate – residential		2,358		2,441
Home equity		247		255
Consumer loans		98		11
Other loans		—		—
	$	7,690	$	7,862

Management uses a risk-grading program to facilitate the evaluation of probable inherent loan losses and to measure the adequacy of the allowance for loan losses. In this program, risk grades are initially assigned by the loan officers and reviewed and monitored by the lenders and credit administration. The program has eight risk grades summarized in five categories as follows:

Pass: Loans that are pass grade credits include loans that are fundamentally sound and risk factors are reasonable and acceptable. They generally conform to policy with only minor exceptions and any major exceptions are clearly mitigated by other economic factors.

Watch: Loans that are watch credits include loans on management’s watch list where a risk concern may be anticipated in the near future.

Substandard: Loans that are considered substandard are loans that are inadequately protected by current sound net worth, paying capacity of the obligor or the value of the collateral pledged. All nonaccrual loans are graded as substandard.

Doubtful: Loans that are considered to be doubtful have all weaknesses inherent in loans classified substandard, plus the added characteristic that the weaknesses make the collection or liquidation in full on the basis of current existing facts, conditions and values highly questionable and improbable.

Loss: Loans that are considered to be a loss are considered to be uncollectible and of such little value that their continuance as bankable assets is not warranted.

The tables below summarize risk grades of the loan portfolio by class at June 30, 2012 and December 31 2011:

June 30, 2012
	Pass		Watch		Sub-standard		Doubtful		Total
			(dollars in thousands)
Commercial	$	38,474	$	836	$	827	$	—	$	40,137
Real estate – commercial		88,910		8,700		10,364		—		107,974
Other real estate construction		21,687		499		5,088		—		27,274
Real estate 1-4 family construction		2,756		—		—		—		2,756
Real estate – residential		83,750		6,546		9,036		—		99,332
Home equity		48,907		732		1,203		—		50,842
Consumer loans		13,100		390		308		—		13,798
Other loans		886		—		—		—		886
Total	$	298,470	$	17,703	$	26,826	$	—	$	342,999
December 31, 2011
	Pass		Watch		Sub-standard		Doubtful		Total
			(dollars in thousands)
Commercial	$	42,892	$	1,670	$	1,345	$	—	$	45,907
Real estate – commercial		95,699		7,971		11,274		—		114,944
Other real estate construction		26,256		745		4,600		—		31,601
Real estate 1-4 family construction		5,538		5		—		—		5,543
Real estate – residential		89,209		4,269		8,369		—		101,847
Home equity		49,743		861		809		—		51,413
Consumer loans		13,970		332		408		—		14,710
Other loans		602		—		—		—		602
Total	$	323,909	$	15,853	$	26,805	$	—	$	366,567

Loans that are in nonaccrual status or 90 days past due and still accruing are considered to be nonperforming. The following tables show the breakdown between performing and nonperforming loans by class at June 30, 2012 and December 31, 2011:

June 30, 2012

	Performing		Non-Performing		Total
	(dollars in thousands)
Commercial	$	39,965	$	172	$	40,137
Real estate – commercial		105,589		2,385		107,974
Other real estate construction		24,844		2,430		27,274
Real estate 1-4 family construction		2,756		—		2,756
Real estate – residential		96,974		2,358		99,332
Home equity		50,595		247		50,842
Consumer loans		13,700		98		13,798
Other loans		886		—		886
Total	$	335,309	$	7,690	$	342,999

December 31, 2011

	Performing		Non- Performing		Total
	(dollars in thousands)
Commercial	$	45,578	$	329	$	45,907
Real estate – commercial		112,202		2,742		114,944
Other real estate construction		29,517		2,084		31,601
Real estate 1 – 4 family construction		5,543		—		5,543
Real estate – residential		99,406		2,441		101,847
Home equity		51,158		255		51,413
Consumer loans		14,699		11		14,710
Other loans		602		—		602
Total	$	358,705	$	7,862	$	366,567

Loans are considered impaired when, based on current information and events; it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement. If a loan is deemed impaired, a specific calculation is performed and a specific reserve is allocated, if necessary. The tables below summarize the loans deemed impaired and the amount of specific reserves allocated by class at June 30, 2012 and December 31, 2011:

June 30, 2012

	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Related Allowance
	(dollars in thousands)
Commercial	$	1,240	$	823	$	298	$	153
Real estate – commercial		14,511		8,053		4,395		817
Other real estate construction		4,175		2,718		1,455		166
Real estate 1 – 4 family construction		1,308		714		594		235
Real estate – residential		12,664		6,932		5,732		1,075
Home equity		1,262		550		712		277
Consumer loans		358		49		309		171
Other loans		—		—		—		—
Total	$	35,518	$	19,839	$	13,495	$	2,894

December 31, 2011

	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Related Allowance
	(dollars in thousands)
Commercial	$	2,099	$	889	$	1,091	$	578
Real estate – commercial		14,951		11,365		1,523		452
Other real estate construction		4,016		2,644		1,370		107
Real estate 1 – 4 family construction		1,095		501		594		202
Real estate – residential		11,877		7,231		4,646		1,001
Home equity		993		753		240		124
Consumer loans		242		49		193		119
Other loans		—		—		—		—
Total	$	35,273	$	23,432	$	9,657	$	2,583

	Three Months ended June 30, 2012				Three Months ended June 30, 2011
	Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income
	(dollars in thousands)
Commercial	$	1,401	$	13	$	1,339	$	29
Real estate – commercial		12,575		155		16,436		93
Other real estate construction		4,087		73		8,308		27
Real estate 1 – 4 family construction		1,326		10		1,474		4
Real estate – residential		12,043		174		9,893		210
Home equity		1,163		14		1,358		10
Consumer loans		334		6		320		7
Other loans		—		—		—		—
Total	$	32,929	$	445	$	39,128	$	380
	Six Months ended June 30, 2012				Six Months ended June 30, 2011
	Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income
	(dollars in thousands)
Commercial	$	1,551	$	27	$	1,373	$	43
Real estate – commercial		12,668		340		17,731		263
Other real estate construction		4,093		125		8,990		31
Real estate 1 – 4 family construction		1,202		16		1,300		26
Real estate – residential		12,270		311		9,557		325
Home equity		1,128		24		1,260		22
Consumer loans		299		10		293		10
Other loans		—		—		—		—
Total	$	33,211	$	853	$	40,504	$	720

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 8 - Commitments and Contingencies

The subsidiary banks are party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of their customers. These financial instruments include commitments to extend credit, lines of credit and standby letters of credit. These instruments involve elements of credit risk in excess of amounts recognized in the accompanying financial statements.

The banks’ risk of loss with the unfunded loans and lines of credit or standby letters of credit is represented by the contractual amount of these instruments. The banks use the same credit policies in making commitments under such instruments as they do for on-balance sheet instruments. The amount of collateral obtained, if any, is based on management’s credit evaluation of the borrower. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Credit card commitments are unsecured. At June 30, 2012, outstanding financial instruments whose contract amounts represent credit risk were approximately:

(in thousands)
Commitments to extend credit	$	68,085
Credit card commitments		8,029
Standby letters of credit		1,320
Total commitments	$	77,434

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Investment Securities (Details 3) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Amortized cost and fair value of the available for sale securities portfolio
Due after one but within five years, Amortized Cost	$ 36,137
Due after one but within five years, Estimated Fair Value	37,882
Due after one but within five years, Book Yield	2.20%
Due after five but within ten years, Amortized Cost	25,627
Due after five but within ten years, Estimated Fair Value	26,947
Due after five but within ten years, Book Yield	2.60%
Due after ten years, Amortized Cost	33,266
Due after ten years, Fair Value	33,495
Due after ten years, Book Yield	2.99%
Total securities available for sale, Amortized Cost	95,030
Total securities available for sale Estimated Fair Value	98,324	88,661
Total securities available for sale Book Yield	2.58%
U.S. Treasury [Member]
Amortized cost and fair value of the available for sale securities portfolio
Due after one but within five years, Amortized Cost	16,337
Due after one but within five years, Estimated Fair Value	17,183
Due after one but within five years, Book Yield	1.90%
Due after five but within ten years, Amortized Cost	13,539
Due after five but within ten years, Estimated Fair Value	14,302
Due after five but within ten years, Book Yield	1.93%
Total securities available for sale, Amortized Cost	29,876
Total securities available for sale Estimated Fair Value	31,485	33,532
Total securities available for sale Book Yield	1.91%
U.S. Government agencies [Member]
Amortized cost and fair value of the available for sale securities portfolio
Due after one but within five years, Amortized Cost	17,747
Due after one but within five years, Estimated Fair Value	18,551
Due after one but within five years, Book Yield	2.32%
Total securities available for sale, Amortized Cost	17,747
Total securities available for sale Estimated Fair Value	18,551	19,997
Total securities available for sale Book Yield	2.32%
Mortgage-backed securities [Member]
Amortized cost and fair value of the available for sale securities portfolio
Due after one but within five years, Amortized Cost	137
Due after one but within five years, Estimated Fair Value	138
Due after one but within five years, Book Yield	3.00%
Due after five but within ten years, Amortized Cost	7,303
Due after five but within ten years, Estimated Fair Value	7,405
Due after five but within ten years, Book Yield	3.50%
Due after ten years, Amortized Cost	31,767
Due after ten years, Fair Value	31,870
Due after ten years, Book Yield	2.93%
Total securities available for sale, Amortized Cost	39,207
Total securities available for sale Estimated Fair Value	39,413	24,263
Total securities available for sale Book Yield	3.04%
State and political subdivisions [Member]
Amortized cost and fair value of the available for sale securities portfolio
Due after one but within five years, Amortized Cost	1,916
Due after one but within five years, Estimated Fair Value	2,010
Due after one but within five years, Book Yield	3.53%
Due after five but within ten years, Amortized Cost	4,785
Due after five but within ten years, Estimated Fair Value	5,240
Due after five but within ten years, Book Yield	3.10%
Due after ten years, Amortized Cost	1,499
Due after ten years, Fair Value	1,625
Due after ten years, Book Yield	4.12%
Total securities available for sale, Amortized Cost	8,200
Total securities available for sale Estimated Fair Value	$ 8,875	$ 10,869
Total securities available for sale Book Yield	3.39%

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Fair Value Disclosures (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Level 1 [Member]
Assets measured at fair value on a nonrecurring basis
Total assets at fair value	$ 31,485
Level 2 [Member]
Assets measured at fair value on a nonrecurring basis
Total assets at fair value	66,839
Fair Value Nonrecurring [Member]
Assets measured at fair value on a nonrecurring basis
Impaired loans	10,601	7,074
Loans held for sale	1,287	1,958
Other real estate owned	3,151	1,464
Total assets at fair value	15,039	10,496
Total liabilities at fair value
Fair Value Nonrecurring [Member] | Level 1 [Member]
Assets measured at fair value on a nonrecurring basis
Impaired loans
Loans held for sale
Other real estate owned
Total assets at fair value
Total liabilities at fair value
Fair Value Nonrecurring [Member] | Level 2 [Member]
Assets measured at fair value on a nonrecurring basis
Loans held for sale	1,287	1,958
Total assets at fair value	1,287	1,958
Total liabilities at fair value
Fair Value Nonrecurring [Member] | Level 3 [Member]
Assets measured at fair value on a nonrecurring basis
Impaired loans	10,601	7,047
Other real estate owned	3,151	1,464
Total assets at fair value	13,752	8,538
Total liabilities at fair value

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Per Share Data (Tables)

6 Months Ended

Jun. 30, 2012

Per Share Data [Abstract]

Computation of basic and dilutive earnings per share

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Weighted average number of common shares outstanding		7,568,978			7,593,929			7,568,978			7,593,929
Effect of ESOP shares		(162,696	)		(119,751	)		(150,282	)		(117,736	)
Adjusted weighted average number of common shares used in computing basic net income per common share		7,406,282			7,474,178			7,418,696			7,476,193
Effect of dilutive stock options		—			—			—			—
Weighted average number of common shares and dilutive potential common shares used in computing diluted net income per common share		7,406,282			7,474,178			7,418,696			7,476,193

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies [Abstract]

Outstanding financial instruments whose contract amounts represent credit risk

(in thousands)
Commitments to extend credit	$	68,085
Credit card commitments		8,029
Standby letters of credit		1,320
Total commitments	$	77,434

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Commitments and Contingencies (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012
Outstanding financial instruments whose contract amounts represent credit risk
Total commitments	$ 77,434
Commitments to extend credit [Member]
Outstanding financial instruments whose contract amounts represent credit risk
Total commitments	68,085
Credit card commitments [Member]
Outstanding financial instruments whose contract amounts represent credit risk
Total commitments	8,029
Standby letters of credit [Member]
Outstanding financial instruments whose contract amounts represent credit risk
Total commitments	$ 1,320

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Allowance for Loan Losses (Details 4) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Summary of risk grades of portfolio by class
Financing Receivable	$ 336,038	$ 359,860	[1]
Commercial [Member]
Summary of risk grades of portfolio by class
Financing Receivable	40,137	45,907
Real estate-commercial [Member]
Summary of risk grades of portfolio by class
Financing Receivable	107,974	114,944
Other real estate construction [Member]
Summary of risk grades of portfolio by class
Financing Receivable	27,274	31,601
Real estate 1-4 family construction [Member]
Summary of risk grades of portfolio by class
Financing Receivable	2,756	5,543
Real estate-residential [Member]
Summary of risk grades of portfolio by class
Financing Receivable	99,332	101,847
Home equity [Member]
Summary of risk grades of portfolio by class
Financing Receivable	50,842	51,413
Consumer loans [Member]
Summary of risk grades of portfolio by class
Financing Receivable	13,798	14,710
Other loans [Member]
Summary of risk grades of portfolio by class
Financing Receivable	886	602
Pass [Member]
Summary of risk grades of portfolio by class
Financing Receivable	298,470	323,909
Pass [Member] | Commercial [Member]
Summary of risk grades of portfolio by class
Financing Receivable	38,474	42,892
Pass [Member] | Real estate-commercial [Member]
Summary of risk grades of portfolio by class
Financing Receivable	88,910	95,699
Pass [Member] | Other real estate construction [Member]
Summary of risk grades of portfolio by class
Financing Receivable	21,687	26,256
Pass [Member] | Real estate 1-4 family construction [Member]
Summary of risk grades of portfolio by class
Financing Receivable	2,756	5,538
Pass [Member] | Real estate-residential [Member]
Summary of risk grades of portfolio by class
Financing Receivable	83,750	89,209
Pass [Member] | Home equity [Member]
Summary of risk grades of portfolio by class
Financing Receivable	48,907	49,743
Pass [Member] | Consumer loans [Member]
Summary of risk grades of portfolio by class
Financing Receivable	13,100	13,970
Pass [Member] | Other loans [Member]
Summary of risk grades of portfolio by class
Financing Receivable	886	602
Watch [Member]
Summary of risk grades of portfolio by class
Financing Receivable	17,703	15,853
Watch [Member] | Commercial [Member]
Summary of risk grades of portfolio by class
Financing Receivable	836	1,670
Watch [Member] | Real estate-commercial [Member]
Summary of risk grades of portfolio by class
Financing Receivable	8,700	7,971
Watch [Member] | Other real estate construction [Member]
Summary of risk grades of portfolio by class
Financing Receivable	499	745
Watch [Member] | Real estate 1-4 family construction [Member]
Summary of risk grades of portfolio by class
Financing Receivable		5
Watch [Member] | Real estate-residential [Member]
Summary of risk grades of portfolio by class
Financing Receivable	6,546	4,269
Watch [Member] | Home equity [Member]
Summary of risk grades of portfolio by class
Financing Receivable	732	861
Watch [Member] | Consumer loans [Member]
Summary of risk grades of portfolio by class
Financing Receivable	390	332
Sub-standard [Member]
Summary of risk grades of portfolio by class
Financing Receivable	26,826	26,805
Sub-standard [Member] | Commercial [Member]
Summary of risk grades of portfolio by class
Financing Receivable	827	1,345
Sub-standard [Member] | Real estate-commercial [Member]
Summary of risk grades of portfolio by class
Financing Receivable	10,364	11,274
Sub-standard [Member] | Other real estate construction [Member]
Summary of risk grades of portfolio by class
Financing Receivable	5,088	4,600
Sub-standard [Member] | Real estate-residential [Member]
Summary of risk grades of portfolio by class
Financing Receivable	9,036	8,369
Sub-standard [Member] | Home equity [Member]
Summary of risk grades of portfolio by class
Financing Receivable	1,203	809
Sub-standard [Member] | Consumer loans [Member]
Summary of risk grades of portfolio by class
Financing Receivable	308	408
Doubtful [Member]
Summary of risk grades of portfolio by class
Financing Receivable
Doubtful [Member] | Commercial [Member]
Summary of risk grades of portfolio by class
Financing Receivable
Doubtful [Member] | Real estate-commercial [Member]
Summary of risk grades of portfolio by class
Financing Receivable
Doubtful [Member] | Other real estate construction [Member]
Summary of risk grades of portfolio by class
Financing Receivable
Doubtful [Member] | Real estate 1-4 family construction [Member]
Summary of risk grades of portfolio by class
Financing Receivable
Doubtful [Member] | Real estate-residential [Member]
Summary of risk grades of portfolio by class
Financing Receivable
Doubtful [Member] | Home equity [Member]
Summary of risk grades of portfolio by class
Financing Receivable
Doubtful [Member] | Consumer loans [Member]
Summary of risk grades of portfolio by class
Financing Receivable
Doubtful [Member] | Other loans [Member]
Summary of risk grades of portfolio by class
Financing Receivable

[1] Derived from audited consolidated financial statements

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Consolidated Statements of Income (Parenthetical) (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Consolidated Statements of Income [Abstract]
Time deposits	$ 100,000	$ 100,000	$ 100,000	$ 100,000

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Comprehensive Income

6 Months Ended

Jun. 30, 2012

Comprehensive Income [Abstract]

Comprehensive Income

Note 2 – Comprehensive Income

The Company reports as comprehensive income all changes in shareholders’ equity during the year from sources other than shareholders. Other comprehensive income refers to all components (revenues, expenses, gains, and losses) of comprehensive income that are excluded from net income. The Company’s only component of other comprehensive income is unrealized gains and losses, net of income tax, on investment securities available for sale.

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Fair Value Disclosures (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value Disclosures [Abstract]

Fair value information for assets and liabilities measured at fair value on a recurring basis

	June 30, 2012
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Securities available for sale:
US Treasury	$	31,485	$	31,485	$	—	$	—
US Government Agencies		18,551		—		18,551		—
GSE – Mortgage-backed securities and CMO’s		39,413		—		39,413		—
State and political subdivisions		8,875		—		8,875		—
Total assets at fair value	$	98,324	$	31,485	$	66,839	$	—
Total liabilities at fair value	$	—	$	—	$	—	$	—

	December 31, 2011
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Securities available for sale:
US Treasury	$	33,532	$	33,532	$	—	$	—
US Gov’t		19,997		—		19,997		—
Mortgage-backed securities and CMO’s		24,263		—		24,263		—
State and political subdivisions		10,869		—		10,869		—
Total assets at fair value	$	88,661	$	33,532	$	55,129	$	—
Total liabilities at fair value	$	—	$	—	$	—	$	—

Assets measured at fair value on a nonrecurring basis

	June 30, 2012
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Impaired loans	$	10,601	$	—	$	—	$	10,601
Loans held for sale		1,287		—		1,287		—
Other real estate owned		3,151		—		—		3,151
Total assets at fair value	$	15,039	$	—	$	1,287	$	13,752
Total liabilities at fair value	$	—	$	—	$	—	$	—
	December 31, 2011
	(dollars in thousands)
	Total		Level 1		Level 2		Level 3
Impaired loans	$	7,074	$	—	$	—	$	7,074
Loans held for sale		1,958		—		1,958		—
Other real estate owned		1,464		—		—		1,464
Total assets at fair value	$	10,496	$	—	$	1,958	$	8,538
Total liabilities at fair value	$	—	$	—	$	—	$	—

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Allowance for Loan Losses (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011		Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010
Schedule of loans and reserve balances by loan class both individually and collectively evaluated for impairment
Reserve	$ 7,069		$ 6,815	[1]
Loans	342,999		366,567
Individually Evaluated [Member]
Schedule of loans and reserve balances by loan class both individually and collectively evaluated for impairment
Reserve	2,894		2,583
Loans	33,334		33,089
Collectively Evaluated [Member]
Schedule of loans and reserve balances by loan class both individually and collectively evaluated for impairment
Reserve	4,175		4,232
Loans	309,665		333,478
Commercial [Member]
Schedule of loans and reserve balances by loan class both individually and collectively evaluated for impairment
Reserve	2,650	2,823	2,904		3,662	4,697	5,363
Loans	175,385		192,452
Commercial [Member] | Individually Evaluated [Member]
Schedule of loans and reserve balances by loan class both individually and collectively evaluated for impairment
Reserve	1,136		1,137
Loans	17,742		18,882
Commercial [Member] | Collectively Evaluated [Member]
Schedule of loans and reserve balances by loan class both individually and collectively evaluated for impairment
Reserve	1,514		1,767
Loans	157,643		173,570
Non Commercial [Member]
Schedule of loans and reserve balances by loan class both individually and collectively evaluated for impairment
Reserve	4,419	3,951	3,911		3,612	4,333	3,704
Loans	167,614		174,115
Non Commercial [Member] | Individually Evaluated [Member]
Schedule of loans and reserve balances by loan class both individually and collectively evaluated for impairment
Reserve	1,758		1,446
Loans	15,592		14,207
Non Commercial [Member] | Collectively Evaluated [Member]
Schedule of loans and reserve balances by loan class both individually and collectively evaluated for impairment
Reserve	2,661		2,465
Loans	$ 152,022		$ 159,908

[1] Derived from audited consolidated financial statements

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Fair Value Disclosures (Policies)

6 Months Ended

Jun. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value Policy

Accounting Standards Codification (ASC) 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but clarifies and standardizes some divergent practices that have emerged since prior guidance was issued. ASC 820 creates a three-level hierarchy under which individual fair value estimates are to be ranked based on the relative reliability of the inputs used in the valuation.

ASC 820 defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, the Company considers the principal or most advantageous market in which those assets or liabilities are sold and considers assumptions that market participants would use when pricing those assets or liabilities. Fair values determined using Level 1 inputs rely on active and observable markets to price identical assets or liabilities. In situations where identical assets and liabilities are not traded in active markets, fair values may be determined based on Level 2 inputs, which exist when observable data exists for similar assets and liabilities. Fair values for assets and liabilities for which identical or similar assets and liabilities are not actively traded in observable markets are based on Level 3 inputs, which are considered to be unobservable.

Fair Value of Financial Instruments

ASC 825, “Disclosures about Fair Value of Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those that are not measured and reported at fair value on a recurring basis or non-recurring basis.

Fair Value Measurements

In May 2011, the FASB issued Accounting Standards Update No. 2011-04, “Fair Value Measurement”. The purpose of the standard is to clarify and combine fair value measurements and disclosure requirements for U.S. generally accepted accounting principles, or GAAP, and international financial reporting standards, or IFRS. The new standard provides amendments and wording changes used to describe certain requirements for measuring fair value and for disclosing information about fair value measurements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2011, and should be applied prospectively to the beginning of the annual period of adoption. The adoption of this statement did not have a material impact on the consolidated financial statements.

Comprehensive Income

In June 2011, the FASB issued ASU 2011-05, an update to ASC 220, “Comprehensive Income.” This update requires that all nonowner changes in stockholders’ equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Additionally, ASU 2011-05 requires entities to present, on the face of the financial statements, reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement or statements where the components of net income and the components of other comprehensive income are presented. The option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity was eliminated. ASU 2011-05 is effective for annual periods beginning after December 15, 2011, and did not have a significant impact on the Company’s financial statements.

Intangibles Goodwill and Other

In September 2011, the FASB issued ASU 2011-08, an update to ASC 350 “Intangibles – Goodwill and Other.” This update gives entities the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if an entity concludes otherwise, then it is required to perform the first step of the two-step impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. ASU 2011-08 is effective for annual and interim impairment tests beginning after December 15, 2011, and did not have a significant impact on the Company’s financial statements.