Fair Value (Tables)

6 Months Ended

Jun. 30, 2012

Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

			Fair Value Measurements at
			June 30, 2012 Using:
					Significant
			Quoted Prices in		Other		Significant
	Total		Active Markets for		Observable		Unobservable
	June 30,		Identical Assets		Inputs		Inputs
	2012		(Level 1)		(Level 2)		(Level 3)
Assets
Investment securities available-for-sale
U.S. government sponsored entities and agencies	$	136,155	$	0	$	136,155	$	0
U.S. government agency mortgage backed		184,107		0		184,107		0
Corporate		1,060		0		0		1,060
Derivatives		1,596		0		1,596		0
Total	$	322,918	$	0	$	321,858	$	1,060

Liabilities
Derivatives	$	1,596	$	0	$	1,596	$	0
Total	$	1,596	$	0	$	1,596	$	0

			Fair Value Measurements at
			December 31, 2011 Using:
					Significant
			Quoted Prices in		Other		Significant
	Total		Active Markets for		Observable		Unobservable
	December 31,		Identical Assets		Inputs		Inputs
	2011		(Level 1)		(Level 2)		(Level 3)
Assets
Investment securities available-for-sale
U.S. government sponsored entities and agencies	$	169,460		0		169,460		0
U.S. government agency mortgage backed		151,992		0		151,992		0
Corporate		1,060		0		0		1,060
Derivatives		1,349		0		1,349		0
Total	$	323,861		0		322,801		1,060

Liabilities
Derivatives	$	1,349		0		1,349		0
Total	$	1,349				1,349		0

Reconciliation of Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs Level Three

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the period ended June 30 (in thousands):

	Corporate Securities
	6/30/12		12/31/11

Balance of recurring Level 3 assets at January 1	$	1,060	$	1,060
Total gains or losses for the period:
Included in earnings
Included in other comprehensive income
Purchases		0		0
Sales		0		0
Issuances		0		0
Settlements		0		0
Transfers into Level 3		0		0
Transfers out of Level 3		0		0

Balance of recurring Level 3 assets at December 31	$	1,060	$	1,060

Quantitative information about Recurring Level Three Fair Value Measurements

The following table presents quantitative information about recurring Level 3 fair value measurements at June 30, 2012 (in thousands):

Valuation

Fair value

Technique(s)

Unobservable Input(s)

Value

Corporate security

1,060

Discounted cash flow

Probability of default

Assets and Liabilities Measured at Fair Value on Nonrecurring Basis

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

			Fair Value Measurements at
			June 30, 2012 Using:
					Significant
			Quoted Prices in		Other		Significant
	Total		Active Markets for		Observable		Unobservable
	June 30		Identical Assets		Inputs		Inputs
	2012		(Level 1)		(Level 2)		(Level 3)
Assets
Impaired loans:
Commercial	$	419	$	0	$	75	$	344
Nonresidential real estate		0
Owner occupied properties		7,884		0		605		7,279
Non owner occupied properties		7,669		0		906		6,763
Residential real estate
Home equity lines of credit		0		0		0		0
Multifamily properties		1,543		0		0		1,543
Other		3,162		0		2,672		490
Construction		3,493		0		2,801		692
Total	$	24,170	$	0	$	7,059	$	17,111

			Fair Value Measurements at
			December 31, 2011 Using:
					Significant
			Quoted Prices in		Other		Significant
	Total		Active Markets for		Observable		Unobservable
	December 31		Identical Assets		Inputs		Inputs
	2011		(Level 1)		(Level 2)		(Level 3)
Assets
Impaired loans
Commercial	$	383	$	0	$	0	$	383
Nonresidential real estate		0
Owner occupied properties		8,320		0		0		8,320
Non owner occupied properties		5,858		0		375		5,483
Residential real estate
Home equity lines of credit		0		0		0		0
Multifamily properties		0		0		0		0
Other		3,332		0		1,832		1,500
Construction		3,787		0		214		3,573
Total	$	21,680	$	0	$	2,421	$	19,259

Carrying Amounts and Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values of financial instruments at June 30, 2012 and December 31, 2011 are as follows (in thousands):

				Fair Value Measurements at
				June 30, 2012 Using:
	Carrying Value			Level 1			Level 2			Level 3			Total
(Dollars in thousands)
Financial assets
Cash and cash equivalents	$	66,719		$	66,719		$			$			$	66,719
Interest-bearing deposits with Banks		250						250						250
Securities available-for-sale		321,322						320,262			1,060			321,322
Securities held-to-maturity		54,882						56,746						56,746
Federal Home Loan Bank stock		5,099			N/A									N/A
Loans held for sale		13,983						13,983						13,983
Loans, net		1,125,387						1,111,953			17,111			1,129,064
Accrued interest receivable		4,684						4,684						4,684
Derivative assets		1,596						1,596						1,596
Financial liabilities
Deposits	$	(1,455,328	)	$	(1,081,198	)	$	(374,130	)	$			$	(1,455,328	)
Short-term borrowings		(24,373	)					(24,373	)					(24,373	)
Notes payable		(48,727	)					(21,497	)		(22,355	)		(43,852	)
Accrued interest payable		(1,201	)					(1,201	)					(1,201	)
Standby letters of credit		(180	)					(180	)					(180	)
Derivative liabilities		(1,596	)					(1,596	)					(1,596	)

				Fair Value Measurements at
				December 31, 2011 Using:
	Carrying Value			Level 1			Level 2			Level 3			Total
(Dollars in thousands)
Financial assets
Cash and cash equivalents	$	135,964		$	135,964		$			$			$	135,964
Interest-bearing deposits with Banks		250						250						250
Securities available-for-sale		322,512						321,452			1,060			322,512
Securities held-to-maturity		48,975						50,643						50,643
Federal Home Loan Bank stock		5,099			N/A									N/A
Loans held for sale		8,920						8,920						8,920
Loans, net		1,111,666						1,093,529			19,259			1,112,788
Accrued interest receivable		4,887						4,887						4,887
Derivative assets		1,349						1,349						1,349
Financial liabilities
Deposits	$	(1,498,821	)	$	(1,092,434	)	$	(408,859	)	$			$	(1,501,293	)
Short-term borrowings		(29,300	)					(29,300	)					(29,300	)
Notes payable		(48,739	)					(27,477	)		(18,476	)		(45,953	)
Accrued interest payable		(1,582	)					(1,582	)					(1,582	)
Standby letters of credit		(263	)					(263	)					(263	)
Derivative liabilities		(1,349	)					(1,349	)					(1,349	)

Impaired Loans

Quantitative information about Recurring Level Three Fair Value Measurements

The following table presents quantitative information about recurring Level 3 fair value measurements at June 30, 2012 (in thousands):

Fair
Value

Valuation Technique(s)

Unobservable Input(s)

Value

Assets

Impaired Loans:

Commercial

344

Cost, sales, income approach

adjustments for comparable properties, market conditions

5-10%

Nonresidential real estate

Owner occupied properties

7,279

Cost, sales, income approach

adjustments for comparable properties, market conditions

5-10%

Non owner occupied properties

6,763

Cost, sales, income approach

adjustments for comparable properties, market conditions

5-10%

Residential real estate

Home equity lines of credit

Multifamily properties

1,543

Cost, sales, income approach

adjustments for comparable properties, market conditions

5-10%

Other

490

Cost, sales, income approach

adjustments for comparable properties, market conditions

5-10%

Construction

692

Cost, sales, income approach

adjustments for comparable properties, market conditions

5-10%

Total

17,111

- Definition

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

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- Definition

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

+ References

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

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 18

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

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

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

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 32

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

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

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

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 2

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19207-110258

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

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 10

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13433-108611

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

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 11

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

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

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 12

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

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

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 10

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

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

-Paragraph 30

-Subparagraph (a)

-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612

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

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 14

-Subparagraph a

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

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

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 45

-Paragraph 2

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

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

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 19

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

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

Reference 12: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 15

-Subparagraph b-d

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

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