Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2012

Assets Recorded at Fair Value on Recurring Basis

The following tables present the balances of assets recorded at fair value on a recurring basis by level within the hierarchy as of June 30, 2012 and December 31, 2011 (in thousands).

	Total June 30,  2012		Quoted Prices in  Active Markets for  Identical Assets  (Level 1)		Significant Other Observable  Inputs  (Level 2)		Significant Unobservable Inputs (Level 3)
Investment Securities:
Government Sponsored Enterprises	$	84,560	$	84,560	$	--	$	--
Trust Preferred Securities		4,336		--		2,801		1,535
Total Investment Securities		88,896		84,560		2,801		1,535
Mortgage-Backed and Related Securities		64,572		--		64,572		--
Total	$	153,468	$	84,560	$	67,373	$	1,535

	Total  December 31, 2011		Quoted Prices in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs  (Level 2)		Significant Unobservable Inputs  (Level 3)
Investment Securities:
U.S. Agency Obligations	$	1	$	1	$	--	$	--
Government Sponsored Enterprises		87,538		87,538		--		--
Trust Preferred Securities		4,205		--		2,750		1,455
Total Investment Securities		91,744		87,539		2,750		1,455
Mortgage-Backed and Related Securities		74,134		--		74,134		--
Total	$	165,878	$	87,539	$	76,884	$	1,455

Reconciliation of Beginning and Ending Balances for Assets Measured at Fair Value on Recurring Basis

The following is a reconciliation of the beginning and ending balances for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the period ended June 30, 2012.

	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	(in thousands)
	Investment Securities
	Available-for-Sale
Beginning balance at March 31, 2012	$	1,521
Transfers into Level 3		--
Total gains/ (losses) included in:
Net loss		--
Other comprehensive income		13
Purchases, sales, issuances and settlements, net		1
Ending balance at June 30, 2012	$	1,535
	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	(in thousands)
	Investment Securities
	Available-for-Sale
Beginning balance at December 31, 2011	$	1,455
Transfers into Level 3		--
Total gains/ (losses) included in:
Net loss		--
Other comprehensive income		76
Purchases, sales, issuances and settlements, net		4
Ending balance at June 30, 2012	$	1,535

Assets and Liabilities Measured at Fair Value on Recurring or Non-recurring Basis Using Significant Unobservable Inputs

For Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis as of June 30, 2012, the significant unobservable inputs used in the fair value measurements were as follows: (in thousands)

				Significant	Significant
	Fair Value at		Valuation	Unobservable	Unobservable
	June 30, 2012		Technique	Inputs	Input Value
Non-performing loans	$	16,604	Appraised Value/	Appraisals and/or sales of		n/a
			Discounted Cash Flows/	comparable properties/
			Market Value of the Note	Independent quotes
OREO		9,640	Appraised Value/	Appraisals and/or sales of		n/a
			Comparable Sales/	comparable properties/
			Other Estimates from	Independent quotes/bids
			Independent Sources
Total assets at fair value	$	26,244

For Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis as of December 31, 2011, the significant unobservable inputs used in the fair value measurements were as follows: (in thousands)

				Significant	Significant
	Fair Value at		Valuation	Unobservable	Unobservable
	December 31, 2011		Technique	Inputs	Input Value
Non performing Loans	$	16,367	Appraised Value/	Appraisals and/or sales of	n/a
			Discounted Cash Flows/	comparable properties/
			Market Value of the Note	Independent quotes
OREO		8,398	Appraised Value/	Appraisals and/or sales of	n/a
			Comparable Sales/	comparable properties/
			Other Estimates from	Independent quotes/bids
			Independent Sources
Total assets at fair value	$	24,765

Fair Value Measurements

					Fair Value Measurements
					Quoted
					Prices in
					Active Markets		Significant
					for Identical		Other		Significant
					Assets or		Observable		Unobservable
	Carrying				Liabilities		Inputs		Inputs
(dollars in thousands)	Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
June 30, 2012
Financial Instruments - Assets
Cash and cash equivalents	$	45,306	$	45,306	$	45,306	$	--	$	--
Loans		140,457		144,790		--		--		144,790
Financial Instruments - Liabilities
Time deposits	$	118,705	$	119,336	$	--	$	119,336	$	--
Securities sold under agreements
to repurchase		5,839		5,839		--		5,839		--
Subordinated debentures		12,372		12,372		--		12,372		--
December 31, 2011
Financial Instruments - Assets
Cash and cash equivalents	$	23,893	$	23,893	$	23,893	$	--	$	--
Loans		156,019		161,219		--		--		161,219
Financial Instruments - Liabilities
Time deposits	$	124,877	$	125,404	$	--	$	125,404	$	--
Securities sold under agreements
to repurchase		5,268		5,268		--		5,268		--
Subordinated debentures		12,372		12,372		--		12,372		--