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Fair Value (Tables)
 9 Months Ended
Sep. 30, 2012
Fair Value [Abstract]  
Fair value of assets measured on recurring and nonrecurring basis
GAAP establishes a framework for measuring fair value and expands disclosures about fair value measurements. There is a three-level fair value hierarchy for fair value measurements.  Level 1 inputs are quoted prices in active markets for identical assets or liabilities that a company has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.   The following tables present the balance of securities available for sale and mortgage loans held for sale, which are measured at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2012 and December 31, 2011.

 
(Dollars in thousands)
 
 
 
 
 
 
 
September 30, 2012
Fair Value Measurements
 
Level 1
Valuation
 
Level 2
Valuation
 
Level 3
Valuation
Mortgage-backed securities
$
160,086
 
-
 
160,086
 
-
U.S. Government
 
 
 
 
 
 
 
 
sponsored enterprises
$
1,294
 
-
 
1,294
 
-
State and political subdivisions
$
116,149
 
-
 
116,149
 
-
Corporate bonds
$
1,551
 
-
 
1,551
 
-
Trust preferred securities
$
1,250
 
-
 
-
 
1,250
Equity securities
$
1,455
 
1,455
 
-
 
-
Mortgage loans held for sale
$
5,984
 
-
 
-
 
5,984
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
December 31, 2011
Fair Value Measurements
 
Level 1
Valuation
 
Level 2
Valuation
 
Level 3
Valuation
Mortgage-backed securities
$
213,693
 
-
 
208,349
 
5,344
U.S. Government
 
 
 
 
 
 
 
 
sponsored enterprises
$
7,694
 
-
 
7,694
 
-
State and political subdivisions
$
97,097
 
-
 
97,097
 
-
Corporate bonds
$
543
 
-
 
543
 
-
Trust preferred securities
$
1,250
 
-
 
-
 
1,250
Equity securities
$
1,111
 
1,111
 
-
 
-
Mortgage loans held for sale
$
5,146
 
-
 
-
 
5,146
 
 
 
The Company's September 30, 2012 and December 31, 2011 fair value measurement for impaired loans and other real estate on a non-recurring basis is presented below:

(Dollars in thousands)
 
 
 
 
 
 
 
 
 
Fair Value
Measurements
September 30, 2012
 
Level 1
Valuation
 
Level 2
Valuation
 
Level 3
Valuation
 
Total Gains/(Losses) for
the Nine Months Ended September 30, 2012
 
Impaired loans
$
57,495
 
-
 
-
 
57,495
 
(5,408
)
Other real estate
$
6,595
 
-
 
-
 
6,595
 
(710
)
 
 
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
Fair Value
Measurements
December 31, 2011
 
Level 1
Valuation
 
Level 2
Valuation
 
Level 3
Valuation
 
Total Gains/(Losses) for
the Year Ended
December 31, 2011
 
Impaired loans
$
49,901
 
-
 
431
 
49,470
 
(11,864
)
Other real estate
$
7,576
 
-
 
-
 
7,576
 
(1,322
)
 
 
 
Analysis of fair value measurements of investment securities available for sale using Level 3, significant unobservable inputs
The following is an analysis of fair value measurements of investment securities available for sale using Level 3, significant unobservable inputs, for the nine months ended September 30, 2012.  Transfers out of Level 3 during the nine months ended September 30, 2012 are attributable to one available for sale security reported in Level 3 at December 31, 2011 because market pricing was unavailable from the Bank's third party bond accounting provider at that time.  This security was reported in Level 2 at September 30, 2012, as the market valuation was provided by the Bank's third party bond accounting provider.

 
(Dollars in thousands)
 
 
Investment Securities Available for Sale
 
Level 3 Valuation
 
Balance, beginning of period
$
6,594
 
Change in book value
 
-
 
Change in gain/(loss) realized and unrealized
 
-
 
Purchases/(sales)
 
-
 
Transfers in and/or (out) of Level 3
 
(5,344
)
Balance, end of period
$
1,250
 
 
 
 
Change in unrealized gain/(loss) for assets still held in Level 3
$
-
 
Carrying amount and estimated fair value of financial instruments
The carrying amount and estimated fair value of the Company's financial instruments at September 30, 2012 and December 31, 2011 are as follows:

(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
Fair Value Measurements at September 30, 2012
Carrying
Amount
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
55,904
 
55,904
 
-
 
-
 
55,904
Investment securities available for sale
 
281,785
 
1,455
 
279,080
 
1,250
 
281,785
Other investments
 
5,599
 
-
 
-
 
5,599
 
5,599
Mortgage loans held for sale
 
5,984
 
-
 
-
 
5,984
 
5,984
Loans, net
 
609,231
 
-
 
-
 
604,690
 
604,690
Cash surrender value of life insurance
 
13,142
 
-
 
13,142
 
-
 
13,142
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
Deposits
$
768,470
 
-
 
767,543
 
-
 
767,543
Securities sold under agreements
 
 
 
 
 
 
 
 
 
 
to repurchase
 
43,136
 
-
 
43,136
 
-
 
43,136
FHLB borrowings
 
70,000
 
-
 
75,938
 
-
 
75,938
Junior subordinated debentures
 
20,619
 
-
 
20,619
 
-
 
20,619
 
 
(Dollars in thousands)
 
 
 
December 31, 2011
Carrying
Amount
 
Estimated
Fair Value
Assets:
 
 
 
Cash and cash equivalents
$
29,236
 
29,236
Investment securities available for sale
 
321,388
 
321,388
Other investments
 
5,712
 
5,712
Mortgage loans held for sale
 
5,146
 
5,146
Loans, net
 
653,893
 
648,640
Cash surrender value of life insurance
 
12,835
 
12,835
 
 
 
 
Liabilities:
 
 
 
 
Deposits and demand notes payable
$
827,111
 
826,810
Securities sold under agreements
 
 
 
 
to repurchase
 
39,600
 
39,600
FHLB borrowings
 
70,000
 
75,046
Junior subordinated debentures
 
20,619
 
20,619