View Filing Data

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2011	Feb. 24, 2012	Jun. 30, 2011
Document and Entity Information [Abstract]
Entity Registrant Name	FARMERS & MERCHANTS BANCORP INC
Entity Central Index Key	0000792966
Document Type	10-K
Document Period End Date	Dec. 31, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 83,117,871.75
Entity Common Stock, Shares Outstanding		4,682,622

Consolidated Balance Sheet - USD ($) $ in Thousands	Dec. 31, 2011	Dec. 31, 2010
Assets
Cash and due from banks (Note 1)	$ 31,609	$ 28,987
Federal Funds Sold	11,534	14,392
Total cash and cash equivalents	43,143	43,379
Securities - available for sale (Note 3)	327,519	287,317
Other Securities, at cost (Note 3)	4,365	4,406
Loans, net (Note 4)	501,124	521,883
Premises and equipment (Note 5)	16,984	17,202
Goodwill (Note 2)	4,074	4,074
Mortgage Servicing Rights (Note 6)	2,071	2,178
Other Real Estate Owned	3,572	4,468
Other assets (Note 2)	20,141	21,456
Total Assets	922,993	906,363
Deposits
Noninterest-bearing	84,567	70,554
Interest-bearing
NOW accounts	193,137	176,897
Savings	170,052	159,698
Time (Note 7)	291,626	317,364
Total deposits	739,382	724,513
Securities sold under agreement to repurchase (Note 8)	52,440	51,241
FHLB Advances (Note 9)	16,662	29,874
Dividend payable	890	894
Accrued expenses and other liabilities (Note 10)	8,528	5,438
Total liabilities	817,902	811,960
Stockholders' Equity (Note 14 and 15)
Common stock - No par value - 6,500,000 shares authorized; 5,200,000 shares issued & outstanding	12,677	12,677
Treasury Stock - 478,663 shares 2011, 477,106 shares 2010	(9,898)	(9,799)
Unearned Stock Awards - 29,715 shares 2011, 28,925 shares 2010	(564)	(580)
Retained earnings	96,495	91,567
Accumulated other comprehensive income	6,381	538
Total stockholders' equity	105,091	94,403
Total Liabilities and Stockholders' Equity	$ 922,993	$ 906,363

Consolidated Balance Sheet (Parenthetical) - $ / shares shares in Thousands	Dec. 31, 2011	Dec. 31, 2010
Consolidated Balance Sheet [Abstract]
Common stock, par value
Common stock, shares authorized	6,500,000	6,500,000
Common stock, shares issued	5,200,000	5,200,000
Common stock, shares outstanding	5,200,000	5,200,000
Treasury stock, shares	483,663	477,106
Unearned stock awards, shares	29,715	28,925

Consolidated Statement of Income - USD ($) $ in Thousands	12 Months Ended
Consolidated Statement of Income - USD ($) $ in Thousands	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Interest Income
Loans, including fees	$ 29,840	$ 32,860	$ 33,585
Debt securities:
U.S. Treasury and government agency	4,457	4,583	5,496
Municipalities	2,107	2,167	1,788
Dividends	185	188	200
Federal funds sold	19	26	19
Other	52	69	26
Total interest income	36,660	39,893	41,114
Interest Expense
Deposits	6,980	9,126	11,007
Federal funds purchased and securities sold under agreements to repurchase	293	278	486
Borrowed funds	883	1,459	1,727
Total interest expense	8,156	10,863	13,220
Net Interest Income - Before provision for loan losses	28,504	29,030	27,894
Provision for Loan Losses (Note 4)	1,715	5,325	3,558
Net Interest Income After Provision For Loan Losses	26,789	23,705	24,336
Noninterest Income
Customer service fees	3,313	2,487	3,276
Other service charges and fees	3,385	3,464	2,611
Net gain (loss) on sale of other assets owned	(1,169)	(109)	(70)
Net gain on sale of loans	807	1,395	1,776
Net gain on sale of securities (Note 3)	504	956	230
Total noninterest income	6,840	8,193	7,823
Noninterest Expenses
Salaries and Wages	9,212	8,773	8,601
Employee benefits (Note 11)	2,835	2,909	3,018
Net occupancy expense	1,501	1,456	1,113
Furniture and equipment	1,379	1,504	1,504
Data processing	978	953	1,136
Franchise taxes	892	863	914
FDIC Assessment	762	1,053	1,306
Mortgage servicing rights amortization (Note 6)	498	683	933
Other general and administrative	4,165	4,341	4,554
Total other operating expenses	22,222	22,535	23,079
Income Before Income Taxes	11,407	9,363	9,080
Income Taxes (Note 10)	2,893	2,382	2,475
Net Income	$ 8,514	$ 6,981	$ 6,605
Earnings Per Share - Basic and Diluted	$ 1.82	$ 1.48	$ 1.39
Weighted Average Shares Outstanding	4,689,021	4,721,235	4,741,392

Consolidated Statement of Changes in Shareholders Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Treasury Stock	Unearned Stock Awards	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning balance, shares at Dec. 31, 2008		4,781,706
Beginning balance at Dec. 31, 2008	$ 90,547	$ 12,677	$ (8,727)	$ (503)	$ 84,864	$ 2,236
Comprehensive income (Note 1):
Net income	6,605				6,605
Change in net unrealized gain on securities sale, net of reclassification adjustment and tax	278					278
Total comprehensive income	6,883
Purchase of Treasury Stock, shares		(28,907)
Purchase of Treasury Stock	(555)		(555)
Shares issued for vested stock awards	123			123
Grant of Restricted Stock Awards-11,000, 10,150 and 10,000 shares (Net of Forfeiture-778, 1,575 and 350) for the period ended 2011, 2010 and 2009 respectively, shares		9,650
Grant of Restricted Stock Awards-11,000, 10,150 and 10,000 shares (Net of Forfeiture-778, 1,575 and 350) for the period ended 2011, 2010 and 2009 respectively	(1)		200	(193)	(8)
Cash dividends declared - $0.76, $0.73 and $0.72 per share for the year 2011, 2010 and 2009 respectively	(3,413)				(3,413)
Ending balance, shares at Dec. 31, 2009		4,762,449
Ending balance at Dec. 31, 2009	93,584	$ 12,677	(9,082)	(573)	88,048	2,514
Comprehensive income (Note 1):
Net income	6,981				6,981
Change in net unrealized gain on securities sale, net of reclassification adjustment and tax	(1,976)					(1,976)
Total comprehensive income	5,005
Purchase of Treasury Stock, shares		(48,130)
Purchase of Treasury Stock	(894)		(894)
Shares issued for vested stock awards	151			151
Grant of Restricted Stock Awards-11,000, 10,150 and 10,000 shares (Net of Forfeiture-778, 1,575 and 350) for the period ended 2011, 2010 and 2009 respectively, shares		8,575
Grant of Restricted Stock Awards-11,000, 10,150 and 10,000 shares (Net of Forfeiture-778, 1,575 and 350) for the period ended 2011, 2010 and 2009 respectively	1		177	(158)	(18)
Cash dividends declared - $0.76, $0.73 and $0.72 per share for the year 2011, 2010 and 2009 respectively	(3,444)				(3,444)
Ending balance, shares at Dec. 31, 2010		4,722,894
Ending balance at Dec. 31, 2010	94,403	$ 12,677	(9,799)	(580)	91,567	538
Comprehensive income (Note 1):
Net income	8,514				8,514
Change in net unrealized gain on securities sale, net of reclassification adjustment and tax	5,843					5,843
Total comprehensive income	14,357
Purchase of Treasury Stock, shares		(16,779)
Purchase of Treasury Stock	(310)		(310)
Shares issued for vested stock awards	202			202
Grant of Restricted Stock Awards-11,000, 10,150 and 10,000 shares (Net of Forfeiture-778, 1,575 and 350) for the period ended 2011, 2010 and 2009 respectively, shares		10,222
Grant of Restricted Stock Awards-11,000, 10,150 and 10,000 shares (Net of Forfeiture-778, 1,575 and 350) for the period ended 2011, 2010 and 2009 respectively	2		211	(186)	(23)
Cash dividends declared - $0.76, $0.73 and $0.72 per share for the year 2011, 2010 and 2009 respectively	(3,563)				(3,563)
Ending balance, shares at Dec. 31, 2011		4,716,337
Ending balance at Dec. 31, 2011	$ 105,091	$ 12,677	$ (9,898)	$ (564)	$ 96,495	$ 6,381

Consolidated Statement of Changes in Shareholders Equity (Parenthetical) - $ / shares shares in Thousands	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Restricted Stock Awards Shares	11,000	10,150	10,000
Restricted Stock Awards, Net of Forfeiture	778	1,575	350
Cash dividends declared, per share	$ 0.76	$ 0.73	$ 0.72
Common Stock
Restricted Stock Awards Shares	11,000	10,150	10,000
Restricted Stock Awards, Net of Forfeiture	778	1,575	350
Treasury Stock
Restricted Stock Awards Shares	11,000	10,150	10,000
Restricted Stock Awards, Net of Forfeiture	778	1,575	350
Unearned Stock Awards
Restricted Stock Awards Shares	11,000	10,150	10,000
Restricted Stock Awards, Net of Forfeiture	778	1,575	350
Retained Earnings
Restricted Stock Awards Shares	11,000	10,150	10,000
Restricted Stock Awards, Net of Forfeiture	778	1,575	350
Cash dividends declared, per share	$ 0.76	$ 0.73	$ 0.72

Consolidated Statement of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Cash Flows from Operating Activities
Net income	$ 8,514	$ 6,981	$ 6,605
Adjustments to reconcile net income to net cash from operating activities:
Depreciation	1,135	1,147	1,171
Amortization of servicing rights	498	683	933
Amortization of Core Deposit Intangible	312	235	157
Provision for loan loss	1,715	5,325	3,558
Gain on sale of loans held for sale	(807)	(1,392)	(1,203)
Originations of loans held for sale	(52,853)	(83,705)	(118,491)
Proceeds from sale of loans held for sale	53,631	82,315	118,284
Accretion and amortization of securities	2,902	1,595	809
Deferred income tax expense (benefit)	(165)	210	142
Loss on sale of other assets	1,153	109	75
Gain on sales of securities	(504)	(956)	(230)
Change in other assets and other liabilities, net	1,628	(1,112)	(6,026)
Net cash provided by operating activities	17,159	11,435	5,784
Activity in securities:
Sales	30,376	55,700	16,333
Maturities, prepayments and calls	53,661	104,602	78,292
Purchases	(117,744)	(244,812)	(124,354)
Loan and lease originations and principal collections, net	18,266	38,094	(3,723)
Proceeds from sales of assets	14	716	494
Additions to premises and equipment	(947)	(2,294)	(412)
Net cash paid for acquisition		(1,141)
Net cash used in investing activities	(16,374)	(49,135)	(33,370)
Cash Flows from Financing Activities
Net increase (decrease) in deposits	14,869	48,069	60,712
Net change in federal funds purchased and securities sold under agreements to repurchase	1,199	7,984	(4,957)
Proceeds from issuance of long-term debt		9,000
Repayment of long-term debt	(13,212)	(13,326)	(11,436)
Purchase of Treasury Stock	(310)	(894)	(555)
Cash dividends paid on common stock	(3,567)	(3,402)	(3,417)
Net cash provided by (used) financing activities	(1,021)	47,431	40,347
Net Increase (Decrease) in Cash and Cash Equivalents	(236)	9,731	12,761
Cash and Cash Equivalents - Beginning of Year	43,379	33,648	20,887
Cash and Cash Equivalents - End of Year	43,143	43,379	33,648
Cash paid during the year for:
Interest	8,285	11,244	13,275
Income taxes	1,850	1,875	2,725
Noncash investing activities:
Transfer of Other Real Estate	$ 2,236	$ 3,867	$ 1,588

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2011

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 1 - Summary of Significant Accounting Policies

Nature of Operations

The Farmers & Merchants Bancorp, Inc. (the Company) through its bank subsidiary, The Farmers & Merchants State Bank (the Bank) provides a variety of financial services to individuals and small businesses through its offices in Northwest Ohio and Northeast Indiana.

Consolidation Policy

The consolidated financial statements include the accounts of Farmers & Merchants Bancorp, Inc. and its wholly-owned subsidiary, The Farmers & Merchants State Bank (the Bank), a commercial banking institution. All significant inter-company balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the valuation of mortgage servicing rights, goodwill, available for sale investment securities, other real estate owned and impaired loans. Actual results could differ from those estimates.

The determination of the adequacy of the allowance for loan losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions. In connection with the determination of the estimated losses on loans, management obtains independent appraisals for significant collateral.

The Bank’s loans are generally secured by specific items of collateral including real property, consumer assets, and business assets. Although the Bank has a diversified loan portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent on local economic conditions in the agricultural industry.

While management uses available information to recognize losses on loans, further reductions in the carrying amounts of loans may be necessary based on changes in local economic conditions. In addition regulatory agencies, as an integral part of their examination process, periodically review the estimated losses on loans. Such agencies may require the Bank to recognize additional losses based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the estimated losses on loans may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated.

Cash and Cash Equivalents

For purposes of the consolidated statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. This includes cash on hand, amounts due from banks, and federal funds sold. Generally, federal funds are purchased and sold for one day periods.

Restrictions on Cash and Amounts Due from Banks

The Bank is required to maintain average balances on hand with the Federal Reserve Bank. The aggregate reserve was $4.2 million for December 31, 2011 and it was $3.3 million for December 31, 2010.

The Company and its subsidiary maintain cash balances with high quality credit institutions. At times such balances may be in excess of the federally insured limits.

Securities

Debt securities are classified as available-for-sale. Securities available-for-sale are carried at fair value with unrealized gains and losses reported in other comprehensive income. Realized gains and losses on securities available for sale are included in other income (expense) and, when applicable, are reported as a reclassification adjustment, net of tax, in other comprehensive income. Gains and losses on sales of securities are determined on the specific-identification method.

Declines in the fair value of securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The related write-downs are included in earnings as realized losses.

Other Securities

Other Securities consists of Federal Home Loan Bank of Cincinnati and Indianapolis stock and Farmer Mac stock. These stocks are carried at cost and are held to enable the Bank to conduct business with the entities. The Federal Home Loan Banks sell and purchase their stock at par; therefore cost approximates market value. The Federal Home Loan Bank of Cincinnati stock is held as collateral security for all indebtedness of the Bank to the Federal Home Loan Bank.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at the amount of unpaid principal, reduced by unearned discounts and deferred loan fees and costs, as well as, by the allowance for loan losses. Interest income is accrued on a daily basis based on the principal outstanding.

Generally, a loan is classified as nonaccrual and the accrual of interest income is generally discontinued when a loan becomes ninety days past due as to principal or interest and these loans are placed on a “cash basis” for purposes of income recognition. Management may elect to continue the accrual of interest when the estimated net realizable value of collateral is sufficient to cover the principal and accrued interest, and the loan is in the process of collection. When a loan is placed on nonaccrual status, all previously accrued and unpaid interest receivable is charged against income.

Loan origination and commitment fees and certain direct loan origination costs are deferred and amortized as a net adjustment to the related loan’s yield. The Bank is generally amortizing these costs over the contractual life of such loans.

Allowance for Loan Losses

The allowance for loan losses is established through a provision for loan losses charged to income. Loans deemed to be uncollectable and changes in the allowance relating to loans are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based on management’s periodic review of the collectability of the loans in light of historical experiences, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. This evaluation is inherently subjective, as it requires estimates that are subject to revision as more information becomes available.

The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as doubtful, substandard or special mention. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. The unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and agricultural loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

At 120 days delinquent, secured consumer loans are charged down to the value of the collateral, if repossession of the collateral is assured and/or in the process of repossession. Consumer mortgage loan deficiencies are charged down upon the sale of the collateral or sooner upon the recognition of collateral deficiency.

For the majority of the Bank’s impaired loans, the Bank will apply the observable market price methodology. However, the Bank may also utilize a measurement incorporating the present value of expected future cash flows discounted at the loan’s effective rate of interest. To determine observable market price, collateral asset values securing an impaired loan are periodically evaluated. Maximum time of re-evaluation is every 12 months for chattels and titled vehicles and every two years for real estate. In this process, third party evaluations are obtained and heavily relied upon. Until such time that updated appraisals are received, the Bank may discount the collateral value used.

Large groups of homogeneous loans are collectively evaluated for impairment. Accordingly, the Bank does not separately identify individual consumer loans for impairment disclosures.

For more information regarding the actual composition and classification of loans involved in the establishment of the allowance for loan loss, please see Note 4 provided here with the notes to consolidated financial statements.

Loans Held for Sale

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

Servicing Assets

Servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets. Capitalized servicing rights are reported in other assets and are amortized into noninterest expense in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to amortized cost. Impairment is determined by stratifying rights by predominant characteristics, such as interest rates and terms. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market based assumptions. Impairment is recognized through a valuation allowance for an individual stratum, to the extent that fair value is less than the capitalized amount for the stratum. Fees received for servicing loans owned by investors are based on a percentage of the outstanding monthly principal balance of such loans and are included in operating income as loan payments are received. Costs of servicing loans are charged to expense as incurred.

Goodwill and other Intangible Assets

Goodwill results from business acquisitions and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. Goodwill is assessed at least annually with the assistance of an independent third party for impairment and any such impairment is recognized in the period identified. No impairment has been recognized from the goodwill established from the Bank’s acquisition which occurred on December 31, 2007.

Other intangible assets consist of core deposit intangible assets arising from business acquisitions. They are initially measured at fair value and then are amortized on a straight line method over their estimated useful lives.

Off Balance Sheet Instruments

In the ordinary course of business, the Bank has entered into commitments to extend credit, including commitments under credit card arrangements, commercial letters of credit and standby letters of credit. Such financial instruments are recorded when they are funded.

Foreclosed Real Estate

Foreclosed real estate held for sale is carried at the lower of fair value minus estimated costs to sell, or cost. Costs of holding foreclosed real estate are charged to expense in the current period, except for significant property improvements, which are capitalized. Valuations are periodically performed by management and an allowance is established by a charge to non-interest expense if the carrying value exceeds the fair value minus estimated costs to sell. Foreclosed real estate is classified as other real estate owned. The net income from operations of foreclosed real estate held for sale is reported in non-interest income. At December 31, the Bank’s holding of other real estate owned totaled approximately $3.6 and $4.5 million for 2011 and 2010 respectively.

Bank Premises and Equipment

Land is carried at cost. Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is based on the estimated useful lives of the various properties and is computed using straight line and accelerated methods. Costs for maintenance and repairs are charged to operations as incurred. Gains and losses on dispositions are included in current operations.

Federal Income Tax

Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the various temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws.

Earnings Per Share

Basic earnings per share represent income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Basic and dilutive earnings per share are the same as the restricted stock grants are primarily anti-dilutive. As of December 31, the Company held 29,715, 28,925 and 27,772 shares of anti-dilutive restricted stock awards for 2011, 2010 and 2009 respectively.

Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income.

The components of other comprehensive income and related tax effects are as follows:


	(In Thousands)
	2011			2010			2009
Net unrealized gain (loss) on available-for-sale securities	$	9,357		$	(2,037	)	$	701
Reclassification adjustment for gain on sale of available-for-sale securities		(504	)		(956	)		(281	)

Net unrealized gains (losses)		8,853			(2,993	)		420
Tax effect		3,010			(1,017	)		142

Other comprehensive income (loss)	$	5,843		$	(1,976	)	$	278

Other securities, not classified as available for sale, had a realized loss of $51 thousand for 2009. This amount is not included in the above table.

Reclassification

Certain amounts in the 2010 and 2009 consolidated financial statements have been reclassified to conform with the 2011 presentation.

Recent Accounting Pronouncements

Troubled Debt Restructurings – In April 2011, The FASB issued ASU 2011-02 “A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”, which provides additional guidance to help creditors in determining whether a creditor has granted a concession and whether a debtor is experiencing financial difficulties for purposes of determining whether a restructuring constitutes a troubled debt restructuring. The amendments in this update were effective for the Company for the year ended December 31, 2011. The adoption of this standard did not have any additional impact to the Bank’s troubled debt restructuring classification totals.

Fair Value – In May 2011, the FASB issued ASU 2011-04 “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS”. The standard clarifies existing fair value measurement and disclosure requirements and changes existing principles and disclosure guidance. Clarifications were made to the relevancy of the highest and best use valuation concept, measurement of an instrument classified in an entity’s shareholder’s equity and disclosure of quantitative information about the unobservable inputs for level 3 fair value measurements. Changes to existing principles and disclosures included measurement of financial instruments managed within a portfolio, the application of premiums and discounts in fair value measurement, and additional disclosures related to fair value measurements. The updated guidance and requirements are effective for financial statements issued for the first interim or annual period beginning after December 15, 2011, and should be applied prospectively. The adoption of this standard is not expected to have a material effect on the Company’s financial statement.

Comprehensive Income – In June 2011, the FASB issued ASU 2011-05 “Presentation of Comprehensive Income”. This standard requires an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but continuous statements. This standard eliminates the option to present the components of other comprehensive income as part of the statement of equity. This standard is effective for fiscal years and interim periods with those years beginning after December 15, 2011. The implementation of this standard will only change the presentation of comprehensive income; it will not have an impact on the Company’s financial position or results of operations. In December 2011, the FASB issued ASU 2011-12.This standard defers the requirement to present reclassification adjustments for each component of OCI to both net income and OCI on the face of the financial statements.

Goodwill – In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment”. This standard gives an entity the option to assess qualitative factors to determine if goodwill is impaired. If the qualitative assessment indicates no impairment, a quantitative goodwill impairment test is not required. The standard is effective for fiscal years beginning after December 15, 2011, and early adoption is permitted. The adoption of this standard is not expected to have a material effect on the Company’s financial statements. The Company utilizes the services of an independent third party to assess if any impairment exists on its goodwill.

Business Combination and Asset Purchase

12 Months Ended

Dec. 31, 2011

Business Combination and Asset Purchase [Abstract]

Business Combination and Asset Purchase

Note 2 - Business Combination and Asset Purchase

On July 9, 2010 the Bank completed its purchase of a branch office in Hicksville, Ohio from First Place Bank. Deposits of approximately $28 million and loans of $14 million were included in the purchase. The new office is located within the Bank’s current market area, shortening the distance between offices in the Ohio and Indiana market area. The following table summarizes the estimated values of the assets acquired and the liabilities assumed:


($ in Thousands)

Cash	$	114
Loans, Net of Discount		13,792
Accrued Interest on Loans		64
Premises and Equipment		1,803
Core Deposit Intangible Asset		1,087
Other Assets		11

Total Assets Acquired	$	16,871


Deposits	$	27,749
Accrued Interest on Deposits		13
Other Liabilities		10

Total Liabilities Assumed	$	27,772

Net Liabilities Assumed	$	(10,901	)

In connection with a December 31, 2007 Knisely acquisition, the Company recognized a core deposit intangible asset of $1.1 million, which is being amortized on a straight line basis over 7 years, which represents the estimated remaining economic useful life of the deposits.

The Company also recognized core deposit intangible assets of $1.09 million with the purchase of the Hicksville office. These are being amortized over an estimated remaining economic useful life of the deposits of 7 years on a straight line basis.

The estimated amortization expense for the years ended December 31, 2011, 2010 and 2009 was $312, $235 and $157 thousand, respectively.

Amortization expense of the core deposit intangible assets remaining is as follows:


	(In Thousands)
	Knisley		Hicksville		Total
2012	$	157	$	156	$	313
2013		157		156		313
2014		157		156		313
2015		—		155		155
2016		—		155		155
Thereafter		—		77		77

Total	$	471	$	855	$	1,326

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 88-16
-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 141
-Paragraph 51, 52
-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 Statement of Financial Accounting Standard (FAS)
-Number 141R
-Appendix F
-Paragraph F4
-Subparagraph e

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 141R
-Paragraph 67-73
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e6927-128479

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6972119&loc=d3e1490-128463

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e7008-128479

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6972119&loc=d3e1500-128463

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4926-128472

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4922-128472

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e6996-128479

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=6972119&loc=d3e1524-128463

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6972119&loc=d3e1392-128463

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e7000-128479

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4845-128472

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4934-128472

Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6972119&loc=d3e1497-128463

Reference 18: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6972119&loc=d3e1486-128463

Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6972119&loc=d3e1383-128463

+ Details

Securities

12 Months Ended

Dec. 31, 2011

Securities [Abstract]

Securities

Note 3 - Securities

The amortized cost and fair value of securities, with gross unrealized gains and losses, follows:

		$327,519		$327,519		$327,519			$327,519
	(In Thousands)
	2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
Available-for-Sale:
U.S. Treasury	$	26,050	$	641	$	—		$	26,691
U.S. Government agency		174,545		3,270		(18	)		177,797
Mortgage-backed securities		54,113		1,318		(18	)		55,413
State and local governments		63,143		4,476		(1	)		67,618

Total available-for-sale securities	$	317,851	$	9,705	$	(37	)	$	327,519

		$327,519		$327,519		$327,519			$327,519
	(In Thousands)
	2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
Available-for-Sale:
U.S. Treasury	$	32,698	$	—	$	(420	)	$	32,278
U.S. Government agency		166,000		1,308		(1,604	)		165,704
Mortgage-backed securities		23,282		1,249		—			24,531
State and local governments		64,522		792		(510	)		64,804

Total available-for-sale securities	$	286,502	$	3,349	$	(2,534	)	$	287,317

Investment securities will at times depreciate to an unrealized loss position. The Bank utilizes the following criteria to assess whether impairment is other than temporary. No one item by itself will necessarily signal that a security should be recognized as an other than temporary impairment.

The fair value of the security has significantly declined from book value.

A downgrade has occurred that lowered the credit rating to below investment grade (below Baa3 by Moody and BBB – by Standard and Poors.)

Dividends have been reduced or eliminated or scheduled interest payments have not been made.

The underwater security has longer than 10 years to maturity and the loss position had existed for more than 3 years.

Management does not possess both the intent and ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value.

If the impairment is judged to be other than temporary, the cost basis of the individual security shall be written down to fair value, thereby establishing a new cost basis. The new cost basis shall not be changed for subsequent recoveries in fair value. The amount of the write down shall be included in current earnings as a realized loss. The recovery in fair value, if any, shall be recognized in earnings when the security is sold. The table below is presented by category of security and length of time in a continuous loss position. The Bank currently does not hold any securities with other than temporary impairment.

Information pertaining to securities with gross unrealized losses at December 31, 2011 and 2010, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:

		0000000000			0000000000		0000000000		0000000000
	2011
	(In Thousands) Less Than Twelve Months					(In Thousands) Twelve Months & Over
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value
U.S. Government agency	$	(18	)	$	12,192	$	—	$	—
Mortgage-backed securities		(18	)		—		—		—
State and local governments		(1	)		652		—		—

Total available-for-sales securities	$	(37	)	$	12,844	$	—	$	—

		0000000000			0000000000		0000000000			0000000000
	2010
	(In Thousands) Less Than Twelve Months					(In Thousands) Twelve Months & Over
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
U.S. Treasury	$	(420	)	$	32,278	$	—		$	—
U.S. Government agency		(1,604	)		88,026		—			—
Mortgage-backed securities		—			—		—			—
State and local governments		(411	)		20,386		(99	)		11,302

Total available-for-sales securities	$	(2,435	)	$	140,690	$	(99	)	$	11,302

Unrealized losses on securities have not been recognized into income because the issuers’ bonds are of high credit quality and the Bank has the intent and ability to hold the securities for the foreseeable future. The fair value is expected to recover as the bonds approach the maturity date.

The gross realized gains and losses for the years ended December 31, are presented below:


	(In Thousands)
	2011		2010		2009
Gross realized gains	$	504	$	956	$	281
Gross realized losses		—		—		(51	)


Net realized gains	$	504	$	956	$	230


Tax expense related to net realized gains	$	171	$	325	$	78

The amortized cost and fair value of debt securities at December 31, 2011, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	(In Thousands)
	Amortized Cost		Fair Value
One year or less	$	16,510	$	16,742
After one year through five years		190,170		194,686
After five years through ten years		45,523		47,566
After ten years		11,535		13,112

Total	$	263,738	$	272,106
Mortgage-backed securities		54,113		55,413

Total	$	317,851	$	327,519

Investments with a carrying value and fair value of $194.7 million at December 31, 2011 and $186.6 million at December 31, 2010 were pledged to secure public deposits and securities sold under repurchase agreements.

Other securities include Federal Home Loan Bank of Cincinnati and Indianapolis stock and Farmer Mac stock as of December 31, 2011. The stock is carried at cost, which approximates fair value. The loss recognized in 2009 was Bankers Bank stock which was written down to a carrying value of zero in December 2009 for a loss of $51 thousand.

- Definition

Tabular disclosure of investments in certain debt and equity securities (and certain other trading assets) which include all debt and equity securities (other than those equity securities accounted for under the equity or cost methods of accounting) with readily determinable fair values. Other trading assets include assets that are carried on the balance sheet at fair value and held for trading purposes. A debt security represents a creditor relationship with an enterprise that is in the form of a security. Debt securities include, among other items, US Treasury securities, US government securities, municipal securities, corporate bonds, convertible debt, commercial paper, and all securitized debt instruments. An equity security represents an ownership interest in an enterprise or the right to acquire or dispose of an ownership interest in an enterprise at fixed or determinable prices. Equity securities include, among other things, common stock, certain preferred stock, warrant rights, call options, and put options, but do not include convertible debt. An entity may opt to provide the reader with additional narrative text to better understand the nature of investments in debt and equity securities (and other trading assets).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 115
-Paragraph 3, 19, 20, 21, 22, 137
-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 Accounting Standards Codification
-Topic 310
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6379141&loc=d3e15032-111544

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27161-111563

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 320
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6957658&loc=d3e62557-112803

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27357-111563

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27290-111563

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27405-111563

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27232-111563

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Debt Security
-URI http://asc.fasb.org/extlink&oid=6509901
-Topic 320

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Equity Security
-URI http://asc.fasb.org/extlink&oid=6511694
-Topic 320

+ Details

Loans

12 Months Ended

Dec. 31, 2011

Loans [Abstract]

Loans

Note 4 - Loans

The Company had $987 thousand in loans held for sale in 2011 as compared to $1.8 million in loans held for sale in 2010. Due to materiality, these loans are included in the Consumer Real Estate loan numbers.

Loans at December 31 are summarized below:


	(In Thousands)
Loans:	2011			2010
Commercial real estate	$	201,158		$	194,268
Agricultural real estate		31,993			33,650
Consumer real estate		81,585			86,036
Commercial and industrial		114,497			117,344
Agricultural		52,598			65,400
Consumer		23,375			29,008
Industrial Development Bonds		1,196			1,965

	$	506,402		$	527,671
Less: Net deferred loan fees and costs		(187	)		(82	)

		506,215			527,589
Less: Allowance for loan losses		(5,091	)		(5,706	)

Loans - Net	$	501,124		$	521,883

The following is a maturity schedule by major category of loans:


	(In Thousands)
	Within One Year		After One Year Within Five Years		After Five Years		Total
Commercial Real Estate	$	17,857	$	126,255	$	57,046	$	201,158
Agricultural Real Estate		3,234		10,401		18,358	$	31,993
Consumer Real Estate		6,715		15,058		59,812	$	81,585
Commercial and industrial		69,453		41,053		3,991	$	114,497
Agricultural		35,314		14,833		2,451	$	52,598
Consumer		5,703		15,677		1,995	$	23,375
Industrial Development Bonds		25		279		892	$	1,196

	$	138,301	$	223,556	$	144,545	$	506,402

The distribution of fixed rate loans and variable rate loans by major loan category is as follows as of December 31, 2011 and December 21, 2010:


	(In Thousands)
	Fixed Rate		Variable Rate
Commercial Real Estate	$	100,686	$	100,472
Agricultural Real Estate		20,708		11,285
Consumer Real Estate		70,326		11,259
Commercial and industrial loans		89,306		25,191
Agricultural		48,280		4,318
Consumer, Master Card and Overdrafts		18,773		4,602
Industrial Development Bonds		1,196		—

As of December 31, 2011 and 2010 one to four family residential mortgage loans amounting to $71.3 million and $75.3 million, respectively, have been pledged as security for loans the Bank has received from the Federal Home Loan Bank.

The percentage of delinquent loans has trended downward since the beginning of 2010 from a high of 2.85% of total loans in January to a low of 0.67% as of the end of December 2011. These percentages do not include nonaccrual loans which are not past due. This level of delinquency is due in part to an adherence to sound underwriting practices over the course of time, an improvement in the financial status of companies to which the Bank extends credit, continued financial stability in the agricultural loan portfolio, and the writing down of uncollectable credits in a timely manner.

Industrial Development Bonds are included in the commercial and industrial category for the remainder of the tables in this Note 4.

The following table represents the contractual aging of the recorded investment in past due loans by class or loans as of December 31, 2011 and 2010 net of deferred fees:


	(In Thousands)
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Financing Receivables		Recorded Investment > 90 Days and Accruing

2011
Residential	$	753	$	248	$	441	$	1,442	$	80,143	$	81,585		—
Ag RE		—		—		—		—		31,993		31,993		—
Ag		7		—		—		7		52,591		52,598		—
Commercial Real Estate		46		611		927		1,584		199,574		201,158		—
Commercial and Industrial		78		—		420		498		115,195		115,693		—
Consumer		24		—		—		24		23,164		23,188		—


Total	$	908	$	859	$	1,788	$	3,555	$	502,660	$	506,215	$	—


2010
Residential	$	610	$	29	$	169	$	808	$	85,228	$	86,036	$	—
Ag RE		—		—		—		—		33,650		33,650		—
Ag		—		—		1,474		1,474		63,926		65,400		—
Commercial Real Estate		548		—		445		993		193,275		194,268		—
Commercial and Industrial		957		52		831		1,840		117,469		119,309		15
Consumer		147		6		33		186		28,740		28,926		33


Total	$	2,262	$	87	$	2,952	$	5,301	$	522,288	$	527,589	$	48

The following table presents the recorded investment in nonaccrual loans by class or loans as of December 31, 2011 and December 31, 2010:


	(In Thousands)
	2011		2010

Consumer real estate	$	700	$	587
Agricultural real estate		—		531
Agriculture		7		1,474
Commercial real estate		1,003		1,705
Commercial		421		1,543
Consumer		—		4

Total	$	2,131	$	5,844

The Bank uses a nine tier risk rating system to grade its loans. The grade of a loan may change during the life of the loan. The risk ratings are described as follows.

Zero (0) Unclassified. Any loan which has not been assigned a classification.

One (1) Excellent. Credit to premier customers having the highest credit rating based on an extremely strong financial condition, which compares favorably with industry standards (upper quartile of RMA ratios). Financial statements indicate a sound earnings and financial ratio trend for several years with satisfactory profit margins and excellent liquidity exhibited. Prime credits may also be borrowers with loans fully secured by highly liquid collateral such as traded stocks, bonds, certificates of deposit, savings account, etc. No credit or collateral exceptions exist and the loan adheres to the Bank’s loan policy in every respect. Financing alternatives would be readily available and would qualify for unsecured credit. This grade is summarized by high liquidity, minimum risk, strong ratios, and low handling costs.

Two (2) Good. Desirable loans of somewhat less stature than Grade 1, but with strong financial statements. Loan supported by financial statements containing strong balance sheets, generally with a leverage position less than 1.50, and a history of profitability. Probability of serious financial deterioration is unlikely. Possessing a sound repayment source (and a secondary source), which would allow repayment in a reasonable period of time. Individual loans backed by liquid personal assets, established history and unquestionable character.

Three (3) Satisfactory. Satisfactory loans of average or slightly above average risk – having some deficiency or vulnerability to changing economic conditions, but still fully collectible. Projects should normally demonstrate acceptable debt service coverage. Generally, customers should have a leverage position less than 2.00. May be some weakness but with offsetting features of other support readily available. Loans that are meeting the terms of repayment.

Loans may be graded 3 when there is no recent information on which to base a current risk evaluation and the following conditions apply:

At inception, the loan was properly underwritten and did not possess an unwarranted level of credit risk;

At inception, the loan was secured with collateral possessing a loan value adequate to protect the Bank from loss;

The loan exhibited two or more years of satisfactory repayment with a reasonable reduction of the principal balance;

During the period that the loan has been outstanding, there has been no evidence of any credit weakness. Some examples of weakness include slow payment, lack of cooperation by the borrower, breach of loan covenants, or the business is in an industry which is known to be experiencing problems. If any of the credit weaknesses is observed, a lower risk grade is warranted.

Four (4) Satisfactory / Monitored. A “4” (Satisfactory/Monitored) risk grade may be established for a loan considered satisfactory but which is of average credit risk due to financial weakness or uncertainty. The loans warrant a higher than average level of monitoring to ensure that weaknesses do not advance. The level of risk in Satisfactory/Monitored classification is considered acceptable and within normal underwriting guidelines, so long as the loan is given management supervision.

Five (5) Special Mention. Loans that possess some credit deficiency or potential weakness which deserves close attention, but which do not yet warrant substandard classification. Such loans pose unwarranted financial risk that, if not corrected, could weaken the loan and increase risk in the future. The key distinctions of a 5 (Special Mention) classification are that (1) it is indicative of an unwarranted level of risk, and (2) weaknesses are considered “potential”, versus “defined”, impairments to the primary source of loan repayment and collateral.

Six (6) Substandard. One or more of the following characteristics may be exhibited in loans classified substandard:

Loans, which possess a defined credit weakness and the likelihood that a loan will be paid from the primary source, are uncertain. Financial deterioration is underway and very close attention is warranted to ensure that the loan is collected without loss.

Loans are inadequately protected by the current net worth and paying capacity of the borrower.

The primary source of repayment is weakened, and the Bank is forced to rely on a secondary source of repayment such as collateral liquidation or guarantees.

Loans are characterized by the distinct possibility that the Bank will sustain some loss if deficiencies are not corrected.

Unusual courses of action are needed to maintain a high probability of repayment.

The borrower is not generating enough cash flow to repay loan principal; however, continues to make interest payments.

The lender is forced into a subordinate position or unsecured collateral position due to flaws in documentation.

Loans have been restructured so that payment schedules, terms and collateral represent concessions to the borrower when compared to the normal loan terms.

The lender is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan

There is significant deterioration in the market conditions and the borrower is highly vulnerable to these conditions.

Seven (7) Doubtful. One or more of the following characteristics may be exhibited in loans classified Doubtful:

Loans have all of the weaknesses of those classified as Substandard. Additionally, however, these weaknesses make collection or liquidation in full based on existing conditions improbable.

The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment.

The possibility of loss is high, but, because of certain important pending factors which may strengthen the loan, loss classification is deferred until its exact status is known. A Doubtful classification is established deferring the realization of the loss.

Eight (8) Loss. Loans are considered uncollectable and of such little value that continuing to carry them as assets on the institution’s financial statements is not feasible. Loans will be classified Loss when it is neither practical nor desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.

The following table represents the risk category of loans by class based on the most recent analysis performed as of the time periods shown of December 31, 2011 and December 31, 2010.


	(In Thousands)
	Agriculture Real Estate				Agriculture				Commercial Real Estate				Commercial				Industrial Development Bonds
	2011		2010		2011		2010		2011		2010		2011		2010		2011		2010

1-2	$	1,059	$	484	$	1,500	$	109	$	3,545	$	—	$	710	$	341	$	188	$	275
3		12,613		12,216		25,019		27,964		23,346		26,333		22,506		14,026		622		733
4		17,255		19,624		26,008		35,655		162,788		153,948		82,745		92,066		386		957
5		383		208		57		173		6,098		6,765		3,897		3,388		—		—
6		683		1,097		7		1,474		4,677		6,771		4,219		6,688		—		—
7		—		21		7		25		704		451		420		835		—		—
8		—		—		—		—		—		—		—		—		—		—

Total	$	31,993	$	33,650	$	52,598	$	65,400	$	201,158	$	194,268	$	114,497	$	117,344	$	1,196	$	1,965

For consumer residential real estate, and other, the Company also evaluates credit quality based on the aging status of the loan, which was previously stated, and by payment activity. The following tables present the recorded investment in those classes based on payment activity and assigned risk grading as of December 31, 2011 and December 31, 2010.


	(In Thousands)
	Consumer Real Estate
	2011		2010

Grade
Pass		81,062	$	84,723
Special mention (5)		—		387
Substandard (6)		240		639
Doubtful (7)		283		287

Total	$	81,585	$	86,036


	(In Thousands)
	Consumer - Credit Card				Consumer - Other
	2011		2010		2011		2010
Performing	$	3,607	$	3,553	$	19,531	$	25,323
Nonperforming		—		5		50		44

Total	$	3,607	$	3,559	$	19,581	$	25,367

Information about impaired loans as of and for the years ended December 31, 2011 and 2010 are as follows:


	(In Thousands)
	2011		2010

Impaired loans without a valuation allowance	$	446	$	2,849
Impaired loans with a valuation allowance		1,408		1,520

Total impaired loans	$	1,854	$	4,369

Valuation allowance related to impaired loans	$	175	$	632
Total non-accrual loans	$	2,131	$	5,844
Total loans past-due ninety days or more and still accruing	$	—	$	48


	(In Thousands)
	2011		2010		2009
Average investment in impaired loans	$	5,466	$	10,136	$	13,643

Interest income recognized on impaired loans	$	1,230	$	61	$	290

Interest income recognized on a cash basis on impaired loans	$	1,175	$	41	$	290

No additional funds are committed to be advanced in connection with impaired loans.

The Bank had approximately $207 thousand of its impaired loans classified as trouble debt restructured as of December 31, 2011 as compared to $760 thousand of its impaired loans classified as trouble debt restructured as of December 31, 2010.


			(In Thousands)
			Pre-		Post-
			Modification		Modification
December 31, 2011			Outstanding		Outstanding
	Number of		Recorded		Recorded
Troubled Debt Restructurings	Contracts		Investment		Investment
Commercial Real Estate		5	$	3,940	$	3,219
Ag Real Estate		2	$	154	$	150
Commercial and Industrial		1	$	148	$	25

Troubled Debt Restructurings	Number of		Recorded
That Subsequently Defaulted	Contracts		Investment
Commercial Real Estate		1	$	207
Ag Real Estate		—	$	—
Commercial and Industrial		—	$	—

The Bank uses the following guidelines as stated in policy to determine when to realize a charge-off, whether a partial or full loan balance. A charge down in whole or in part is realized when unsecured consumer loans, credit card credits and overdraft lines of credit reach 90 days delinquency. At 120 days delinquent, secured consumer loans are charged down to the value of the collateral, if repossession of the collateral is assured and/or in the process of repossession. Consumer mortgage loan deficiencies are charged down upon the sale of the collateral or sooner upon the recognition of collateral deficiency. Commercial and agricultural credits are charged down at 120 days delinquency, unless an established and approved work-out plan is in place or litigation of the credit will likely result in recovery of the loan balance. Upon notification of bankruptcy, unsecured debt is charged off. Additional charge-off may be realized as further unsecured positions are recognized.

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2011and 2010 (in thousands):


	(In Thousands)
	Recorded Investment		Unpaid Principal Balance		Related Allowance		YTD Average Recorded Investment		YTD Interest Income Recognized
2011

With no related allowance recorded:
Residential	$	239	$	239	$	—	$	156	$	36
Agriculture real estate		—		—		—		180		15
Agriculture		—		—		—		2,683		1,156
Commercial real estate		207		384		—		1,381		22
Commercial		—		—		—		485		1
Consumer		—		—		—		1		—
With a specific allowance recorded:
Residential		283		308		54		431		—
Agriculture real estate		—		—		—		—		—
Agriculture		—		—		—		—		—
Commercial real estate		704		854		29		144		—
Commercial		420		420		91		402		—
Consumer		—		—		—		—		—

Totals:
Residential	$	522	$	547	$	54	$	587	$	36

Agriculture real estate	$	—	$	—	$	—	$	180	$	15

Agriculture	$	—	$	—	$	—	$	2,683	$	1,156

Commercial real estate	$	911	$	1,238	$	29	$	1,525	$	22

Commercial	$	420	$	420	$	91	$	887	$	1

Consumer	$	—	$	—	$	—	$	1	$	—


	(In Thousands)
	Recorded Investment		Unpaid Principal Balance		Related Allowance		YTD Average Recorded Investment		YTD Interest Income Recognized
2010

With no related allowance recorded:
Residential	$	384	$	384	$	—	$	—	$	—
Agriculture real estate		219		219		—		119		31
Agriculture		1,397		1,397		—		2,786		—
Commercial real estate		849		1,699		—		2,209		26
Commercial		—		—		—		2,221		2
Consumer		—		—		—		—		—
With a specific allowance recorded:
Residential		287		317		66		1,375		—
Agriculture real estate		—		—		—		—		—
Agriculture		—		—		—		5		1
Commercial real estate		476		476		73		296		1
Commercial		757		757		493		1,125		—
Consumer		—		—		—		—		—

Totals:
Residential	$	671	$	701	$	66	$	1,375	$	—

Agriculture real estate	$	219	$	219	$	—	$	119	$	31

Agriculture	$	1,397	$	1,397	$	—	$	2,791	$	1

Commercial real estate	$	1,325	$	2,175	$	73	$	2,505	$	27

Commercial	$	757	$	757	$	493	$	3,346	$	2

Consumer	$	—	$	—	$	—	$	—	$	—

The ALLL has a direct impact on the provision expense. An increase in the ALLL is funded through recoveries and provision expense. The following tables summarize the activities in the allowance for credit losses.

The following is an analysis of the allowance for credit losses:


	(In Thousands)
	2011			2010			2009
Allowance for Loan Losses
Balance at beginning of year	$	5,706		$	6,008		$	5,496
Provision for loan loss		1,715			5,325			3,558
Loans charged off		(2,681	)		(6,422	)		(3,288	)
Recoveries		351			795			242

Allowance for Loan & Leases Losses	$	5,091		$	5,706		$	6,008

Allowance for Unfunded Loan Commitments & Letters of Credit	$	130		$	153		$	227

Total Allowance for Credit Losses	$	5,221		$	5,859		$	6,235

The Company segregates its Allowance for Loan and Lease Losses (ALLL) into two reserves: The ALLL and the Allowance for Unfunded Loan Commitments and Letters of Credit (AULC). When combined, these reserves constitute the total Allowance for Credit Losses (ACL).

The AULC is reported within other liabilities on the balance sheet while the ALLL is netted within the loans, net asset line. The ACL presented above represents the full amount of reserves available to absorb possible credit losses.

The following table breaks down the activity within ALLL for each loan portfolio segment and shows the contribution provided by both the recoveries and the provision along with the reduction of the allowance caused by charge-offs.

Additional analysis related to the allowance for credit losses as of December 31, 2011 and 2010 is as follows:


	(In Thousands)
	Consumer Real Estate			Agriculture Real Estate		Agriculture			Commercial Real Estate			Commercial and Industrial			Consumer			Unfunded Loan Commitment & Letters of Credit			Unallocated			Total

2011
ALLOWANCE FOR CREDIT LOSSES:
Beginning balance	$	258		$	122	$	327		$	1,868		$	2,354		$	380		$	153		$	397		$	5,859
Charge Offs		(422	)		—		(24	)		(360	)		(1,500	)		(375	)		—			—		$	(2,681	)
Recoveries		61			—		67			32			19			172			—			—		$	351
Provision		364			18		(104	)		548			1,074			138			—			(323	)		1,715
Other Non-interest expense related to unfunded		—			—		—			—			—			—			(23	)		—			(23	)

Ending Balance	$	261		$	140	$	266		$	2,088		$	1,947		$	315		$	130		$	74		$	5,221

Ending balance: individually evaluated for impairment	$	55		$	—	$	—		$	29		$	91		$	—		$	—		$	—		$	175

Ending balance: collectively evaluated for impairment	$	206		$	140	$	266		$	2,059		$	1,856		$	315		$	130		$	74		$	5,046

Ending balance: loans acquired with deteriorated credit quality		2			—		—			—			—			—			—			—			2

FINANCING RECEIVABLES:
Ending balance	$	81,585		$	31,993	$	52,598		$	201,158		$	115,693		$	23,188		$	—		$	—		$	506,215

Ending balance: individually evaluated for impairment	$	523		$	—	$	—		$	911		$	420		$	—		$	—		$	—		$	1,854

Ending balance: collectively evaluated for impairment	$	81,062		$	31,993	$	52,598		$	200,247		$	115,273		$	23,188		$	—		$	—		$	504,361

Ending balance: loans acquired with deteriorated credit quality	$	856		$	—	$	—		$	—		$	—		$	—		$	—		$	—		$	856


2010
ALLOWANCE FOR CREDIT LOSSES:
Beginning balance	$	439		$	120	$	647		$	1,810		$	2,494		$	497		$	227		$	1		$	6,235
Charge Offs		(507	)		—		(136	)		(1,147	)		(4,188	)		(444	)		—			—			(6,422	)
Recoveries		55			—		17			52			515			156			—			—			795
Provision		271			2		(201	)		1,153			3,533			171			—			396			5,325
Other Non-interest expense related to unfunded		—			—		—			—			—			—			(74	)		—			(74	)

Ending Balance	$	258		$	122	$	327		$	1,868		$	2,354		$	380		$	153		$	397		$	5,859

Ending balance: individually evaluated for impairment	$	66		$	—	$	—		$	73		$	493		$	—								$	632

Ending balance: collectively evaluated for impairment	$	190		$	122	$	327		$	1,795		$	1,861		$	380		$	153		$	397		$	5,226

Ending balance: loans acquired with deteriorated credit quality		2			—		—			—			—			2									4
FINANCING RECEIVABLES:
Ending balance	$	75,785		$	34,446	$	65,400		$	204,327		$	119,262		$	28,369								$	527,589

Ending balance: individually evaluated for impairment	$	671		$	219	$	1,397		$	1,325		$	757		$	—								$	4,369

Ending balance: collectively evaluated for impairment	$	75,114		$	34,227	$	64,003		$	203,002		$	118,505		$	28,451								$	523,302

Ending balance: loans acquired with deteriorated credit quality	$	987		$	—	$	—		$	—		$	—		$	156								$	1,143

- Definition

The entire disclosure for claims held for amounts due a company. Examples include trade accounts receivables, notes receivables, loans receivables.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 3, 4
-Article 5

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 7
-Article 9

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 01-6
-Paragraph 13
-Subparagraph 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 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Article 4
-Section 08
-Paragraph k

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.3,4)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6965416&loc=d3e5074-111524

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6965416&loc=d3e5066-111524

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(k))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=6965416&loc=d3e5162-111524

+ Details

Premises and Equipment

12 Months Ended

Dec. 31, 2011

Premises and Equipment [Abstract]

Premises and Equipment

Note 5 - Premises and Equipment

The major categories of banking premises and equipment and accumulated depreciation at December 31 are summarized below:


	(In Thousands)
	2011			2010
Land	$	3,635		$	3,635
Buildings (useful life 15-39 years)		18,979			18,831
Furnishings (useful life 3-15 years)		9,994			9,640

		32,608			32,106
Less: Accumulated depreciation		(15,624	)		(14,904	)

Premises and Equipment (Net)	$	16,984		$	17,202

Depreciation expense for the years ended December 31, 2011, 2010 and 2009 amounted to $1.1, $1.1, and $1.2 million, respectively.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

+ References + Details

Servicing

12 Months Ended

Dec. 31, 2011

Servicing [Abstract]

Servicing

Note 6 - Servicing

Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of loans serviced for others were $273 and $278 million at December 31, 2011 and 2010, respectively.

The balance of capitalized servicing rights included in other assets at December 31, 2011 and 2010, was $2.1 and $2.2 million, respectively. The capitalized addition of servicing rights is included in net gain on sale of loans on the consolidated statement of income. The capitalized additions are as shown in the table following.

The fair market value of the capitalized servicing rights as of December 31, 2011 and 2010 was $2.8 million and $2.5 million, respectively. The valuations were completed by stratifying the loans into like groups based on loan type and term. Impairment was measured by estimating the fair value of each stratum, taking into consideration an estimated level of prepayment based upon current market conditions. An average constant prepayment rate of 12.6 and 16.6 were utilized for 2011 and 2010, respectively. All stratums showed positive values compared to carrying value using a discount yield of 7.75% for 2011 and for 2010.

The following summarizes mortgage servicing rights capitalized and amortized during each year:


	(In Thousands)
	2011			2010
Beginning Year	$	2,178		$	2,177
Capitalized Additions		391			684
Amortization		(498	)		(683	)
Valuation Allowance		—			—

End of Year	$	2,071		$	2,178

- Definition

The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 140
-Paragraph 17
-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 Accounting Standards Codification
-Topic 860
-SubTopic 20
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6942082&loc=d3e107207-111719

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 860
-SubTopic 30
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6862952&loc=d3e113969-111729

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 860
-SubTopic 50
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6863725&loc=d3e122739-111746

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 860
-SubTopic 50
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6863725&loc=d3e122596-111746

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 860
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6865494&loc=SL6226446-111709

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 860
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6865494&loc=SL6226443-111709

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 860
-SubTopic 20
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6942082&loc=d3e107314-111719

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 860
-SubTopic 50
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6863725&loc=d3e122625-111746

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Staff Position (FSP)
-Number FAS140-4/FIN46(R)-8
-Paragraph 6
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Staff Position (FSP)
-Number FAS140-4/FIN46(R)-8
-Paragraph B1-B12
-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.

+ Details

Deposits

12 Months Ended

Dec. 31, 2011

Deposits, Securities Sold Under Agreement to Repurchase, Federal Home Loan Bank Advances and Minimum Regulatory Capital Requirements [Abstract]

Deposits

Note 7 - Deposits

Time deposits at December 31 consist of the following:


	(In Thousands)
	2011		2010
Time deposits under $100,000	$	163,726	$	184,993
Time deposits of $100,000 or more		127,900		132,371

	$	291,626	$	317,364

At December 31, 2011 the scheduled maturities for time deposits are as follows:


	(In Thousands)
2012	$	142,601
2013		76,501
2014		42,494
2015		21,490
2016		7,316
thereafter		1,224

	$	291,626

- Definition

The entire disclosure for deposit liabilities including data and tables. It may include a description of the entity's deposit liabilities, the aggregate amount of time deposits (including certificates of deposit) in denominations of $100,000 or more at the balance sheet date; the aggregate amount of any demand deposits that have been reclassified as loan balances, such as overdrafts, at the balance sheet date; deposits that are received on terms other than those in the normal course of business, the amount of accrued interest on deposit liabilities; securities, mortgage loans or other financial instruments that serve as collateral for deposits; for time deposits having a remaining term of more than one year, the aggregate amount of maturities for each of the five years following the balance sheet date; and the weighted average interest rate for all deposit liabilities held by the entity.

+ References + Details

Securities Sold Under Agreement to Repurchase

12 Months Ended

Dec. 31, 2011

Deposits, Securities Sold Under Agreement to Repurchase, Federal Home Loan Bank Advances and Minimum Regulatory Capital Requirements [Abstract]

Securities Sold Under Agreement to Repurchase

Note 8 - Securities Sold Under Agreement to Repurchase

The Bank’s policy requires qualifying securities to be used as collateral for the underlying repurchase agreements. As of December 31, 2011 and 2010 securities with a book value of $61.6 million and $74.8 million, respectively, were pledged to secure the repurchase agreements. The table below presents the daily securities sold under agreement to repurchase and does not include the term repurchase agreements.


	Daily Securities Sold Under Agreement to Repurchase
	Amount Outstanding at End of Period (000’S)		Weighted Average Rate End of Period			Maximum Amount Borrowings Outstanding Month End (000’s)		Approximate Average Outstanding in Period (000’s)		Approximate Weighted Average Interest Rate For the Period

2011	$	38,209		0.15	%	$	42,154	$	36,910		0.30	%

2010	$	37,191		0.36	%	$	37,501	$	34,046		0.36	%

2009	$	33,457		0.42	%	$	40,530	$	37,696		0.48	%

Federal Home Loan Bank Advances

12 Months Ended

Dec. 31, 2011

Deposits, Securities Sold Under Agreement to Repurchase, Federal Home Loan Bank Advances and Minimum Regulatory Capital Requirements [Abstract]

Federal Home Loan Bank Advances

Note 9 - Federal Home Loan Bank Advances

Long term debt consists of various loans from the Federal Home Loan Bank. Repayment structures vary, ranging from monthly installments, annual payments or upon maturity. Interest payments are due monthly with interest rates on the loans varying from 1.77% to 4.84%. Total borrowings were $16.7 million and $29.9 million for 2011 and 2010, respectively. The advances are secured by $71.3 and $75.3 million of mortgage loans as of December 31, 2011 and 2010, respectively under a blanket collateral agreement.

The advances are subject to prepayment penalties and the provisions and conditions of the credit policy of the Federal Home Loan Bank. Future obligations of the advances are as follows at December 31, 2011:


	(In Thousands)
2012	$	5,062
2013		7,100
2014		4,500

	$	16,662

- Definition

The entire disclosure for borrowing from the Federal Home Loan Bank, including: (i) general description; (ii) title and nature of obligation; (iii) interest rate; (iv) payment terms; (v) maturity dates by year; (vi) collateral requirements; (vii) restrictive covenants; (viii) priority; (ix) conversion or redemption features; (x) carrying value of assets pledged as collateral; (xi) combined aggregate maturities for next five years; (xii) unused or available balances.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Audit and Accounting Guide (AAG)
-Number AAG-DEP
-Chapter 15
-Paragraph 37
-IssueDate 2006-05-01
-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 AICPA
-Name Statement of Position (SOP)
-Number 01-6
-Paragraph 14
-Subparagraph h
-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 Statement of Financial Accounting Standard (FAS)
-Number 47
-Paragraph 17
-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 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher OTS
-Name Federal Regulation (FR)
-Number Title 12
-Chapter V
-Section 563c.102
-Paragraph 15, 18
-Subsection I
-LegacyDoc This is a non-GAAP reference that was included in the 2009 taxonomy. It will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 45
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6479118&loc=d3e64650-112822

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6479336&loc=d3e64711-112823

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6802200&loc=d3e1835-112601

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 210
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-03.13(a))
-URI http://asc.fasb.org/extlink&oid=6876686&loc=d3e534808-122878

+ Details

Federal Income Taxes

12 Months Ended

Dec. 31, 2011

Federal Income Taxes [Abstract]

Federal Income Taxes

Note 10 - Federal Income Taxes

The components of income tax expense (benefit) for the years ended December 31 are as follows:


	(In Thousands)
	2011			2010		2009
Current:
Federal	$	3,058		$	2,172	$	2,333
Deferred:
Federal		(165	)		210		142

	$	2,893		$	2,382	$	2,475

The following is a reconciliation of the statutory federal income tax rate to the effective tax rate:


	(In Thousands)
	2011			2010			2009
Income tax at statutory rates	$	3,878		$	3,183		$	3,087
Increase(decrease) resulting from:
Tax exempt interest		(689	)		(744	)		(629	)

Change in prior estimates and other		(296	)		(57	)		17

	$	2,893		$	2,382		$	2,475

Deferred tax assets and liabilities at December 31 are comprised of the following:


	(In Thousands)
	2011			2010
Deferred Tax Assets:
Allowance for loan losses	$	1,731		$	1,940
Other		860			749

Total deferred tax assets		2,591			2,689
Deferred Tax Liabilities:
Accreted discounts on bonds		62			65
FHLB stock dividends		859			860
Mortgage servicing rights		704			741
Other		1,007			899
Net unrealized gain on available-for-sale securities		3,287			277

Total deferred tax liabilities		5,919			2,842

Net Deferred Tax Liability	$	(3,328	)	$	(153	)

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
-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 Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 43, 44, 45, 46, 47, 48, 49
-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 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(h))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319

+ Details

Employee Benefit Plan

12 Months Ended

Dec. 31, 2011

Employee Benefit Plan [Abstract]

Employee Benefit Plan

Note 11 - Employee Benefit Plan

The Bank has established a 401(k) profit sharing plan, which allows eligible employees to save at a minimum one percent of eligible compensation on a pre-tax basis, subject to certain Internal Revenue Service limitations. The Bank will match 50% of employee 401(k) contributions up to four percent of total eligible compensation. In addition, the Bank may make a discretionary contribution from time to time. A participant is 100% vested in the participant’s deferral contributions and employer matching contributions. A six-year vesting schedule applies to employer discretionary contributions. Contributions to the 401(k) profit sharing plan for both the employer matching contribution and the discretionary contribution were $680, $551, and $570 thousand for 2011, 2010 and 2009, respectively.

Restricted Stock Awards

The Company has a Long-Term Stock Incentive Plan under which 11,000 shares of restricted stock were issued to 56 employee during 2011 and 10,150 shares of restricted stock were issued to 53 employees and 10,000 shares to 49 employees during 2010 and 2009, respectively. Under the plan, the shares vest 100% in three years. During the 3 year vesting period, the employees received dividends or dividend equivalent compensation on the shares. Due to employee termination, there were 778 and 1,575 shares forfeited during 2011 and 2010, respectively, 350 shares forfeited during 2009. During 2009, 5,450 shares awarded in 2006 were vested 100%. 36 employees were still employed and received the stock which the majority were awarded in 2008 were vested 100% and 47 employees received the stock during 2011. During 2010, 7,425 shares awarded in 2007 were vested 100%. Forty employees were still employed and received the stock. Compensation expense applicable to the restricted stock totaled $202, $191, and $190 thousand for the year ending December 31, 2011, 2010 and 2009, respectively.

The following table summarizes the activity of restricted stock awards:


	Year Ended December 31,
	2011			2010			2009

Beginning of period		28,925			27,775			23,575
Granted		11,000			10,150			10,000
Vested		(9,432	)		(7,425	)		(5,450	)
Forfeited		(778	)		(1,575	)		(350	)

Nonvested, end of period		29,715			28,925			27,775

As of December 31, 2011, there was $564 thousand of unrecognized compensation cost related to the nonvested portion of restricted stock awards under the plan.

- Definition

The entire disclosure for pension and other postretirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-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 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph b
-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 Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph h
-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 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph q
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 8
-Subparagraph m
-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 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 106
-Paragraph 518
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 87
-Paragraph 264
-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 Emerging Issues Task Force (EITF)
-Number 03-2
-Paragraph 8
-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 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 30
-Paragraph 26
-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 FASB Staff Position (FSP)
-Number FAS106-2
-Paragraph 20, 21, 22
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 158
-Paragraph 7, 21, 22
-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 132R
-Paragraph 5, 6, 7, 8
-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 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Implementation Guide (Q and A)
-Number FAS88
-Paragraph 63
-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 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 715
-URI http://asc.fasb.org/topic&trid=2235017

+ Details

Related Party Transactions

12 Months Ended

Dec. 31, 2011

Related Party Transactions

Note 12 - Related Party Transactions

In the ordinary course of business, the Bank has granted loans to senior officers and directors and their affiliated companies amounting to $6.9 and $8.0 million at December 31, 2011 and 2010, respectively. New loans approved during 2011 were $312 thousand. During 2011, subsequent advances totaled $15.2 million and payments of $16.3 million were received. The difference in related borrowings amounted to $1.1 million, net reduction. Deposits of directors, executive officers and companies in which they have a direct or indirect ownership as of December 31, 2011 and 2010, amounted to $4.0 million and $3.8 million, respectively.

- Definition

The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Article 4
-Section 08
-Paragraph k

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Article 3A
-Section 04
-Paragraph b

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 57
-Paragraph 1-4
-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 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39622-107864

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39603-107864

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(k))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39678-107864

+ Details

Off Balance Sheet Activities

12 Months Ended

Dec. 31, 2011

Off Balance Sheet Activities [Abstract]

Off Balance Sheet Activities

Note 13 - Off Balance Sheet Activities

Credit Related Financial Instruments

The Bank is a party to credit related financial instruments with off-balance-sheet risk in the normal course of business to meet the financing need of its customer. These financial instruments include commitments to extend credit, Standby Letters of Credit, and Commercial Letters of Credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

The Bank’s exposure to credit loss is represented by the contractual amount of these commitments. The Bank follows the same credit policies in making commitments as it does for on-balance-sheet instruments. The allowance for credit losses as it relates to unfunded loan commitments (AULC) is included under other liabilities. The AULC as of December 31, 2011 and 2010 was $130 thousand and $153 thousand, respectively. At December 31, 2011 and 2010, the following financial instruments were outstanding whose contract amounts represent credit risk:


	(In Thousands)
	2011		2010
Commitments to extend credit	$	146,598	$	157,935
Credit card arrangements		14,152		14,943
Standby letters of credit		1,038		17,446

Commitments to extend credit, credit card arrangements and Standby Letters of Credit all include exposure to some credit loss in the event of nonperformance of the customer. The Bank’s credit policies and procedures for credit commitments and financial guarantees are the same as those for extensions of credit that are recorded in the financial statements. Due to the fact that these instruments have fixed maturity dates, and because many of them expire without being drawn upon, they generally do not present any significant liquidity risk to the Bank.

Collateral Requirements

To reduce credit risk related to the use of credit-related financial instruments, the Bank might deem it necessary to obtain collateral. The amount and nature of the collateral obtained is based on the Bank’s credit evaluation of the customer. Collateral held varies but may include cash, securities, accounts receivable, inventory, property, plant, and real estate.

Legal Contingencies

Various legal claims also arise from time to time in the normal course of business, which, in the opinion of management, will have no material effect on the Company’s consolidated financial statements.

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-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 5
-Paragraph 9, 10, 11, 12
-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 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.25)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 450
-SubTopic 20
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6952336&loc=d3e14435-108349

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 460
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=6398077&loc=d3e12565-110249

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 440
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6394976&loc=d3e25287-109308

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621

+ Details

Minimum Regulatory Capital Requirements

12 Months Ended

Dec. 31, 2011

Deposits, Securities Sold Under Agreement to Repurchase, Federal Home Loan Bank Advances and Minimum Regulatory Capital Requirements [Abstract]

Minimum Regulatory Capital Requirements

Note 14 - Minimum Regulatory Capital Requirements

The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off balance-sheet items as calculated under regulatory accounting practices.

The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of: total risk-based capital and Tier I capital to risk-weighted assets (as defined in the regulations), and Tier I capital to adjusted total assets (as defined). Management believes, as of December 31, 2011, that the Bank meets all the capital adequacy requirements to which it is subject.

As of December 31, 2011 the most recent notification from the FDIC indicated the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action. To remain categorized as well capitalized, the Bank will have to maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as disclosed in the table to follow. There are no conditions or events since the most recent notification that management believes have changed the Bank’s prompt corrective action category.

The Company and the Bank’s actual and required capital amounts and ratios as of December 31, 2011 and 2010 are as follows:


	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under the Prompt Corrective Action Provisions
	(000’s)					(000’s)					(000’s)
As of December 31, 2011	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Risk-Based Capital
(to Risk Weighted Assets)
Consolidated	$	98,531		16.54	%	$	47,657		8.00	%		N/A		N/A
Farmers & Merchants State Bank		85,618		14.37	%		47,656		8.00	%	$	59,570		10.00	%
Tier 1 Capital
(to Risk Weighted Assets)
Consolidated		93,310		15.66	%		23,829		4.00	%		N/A		N/A
Farmers & Merchants State Bank		77,397		12.99	%		23,828		4.00	%		35,742		6.00	%
Tier 1 Capital
(to Adjusted Total Assets)
Consolidated		93,310		10.25	%		36,398		4.00	%		N/A		N/A
Farmers & Merchants State Bank		77,397		8.48	%		36,509		4.00	%		45,636		5.00	%


	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under the Prompt Corrective Action Provisions
As of December 31, 2010	(000’s) Amount		Ratio			(000’s) Amount		Ratio			(000’s) Amount		Ratio
Total Risk-Based Capital
(to Risk Weighted Assets)
Consolidated	$	94,012		14.95	%	$	50,295		8.00	%		N/A		N/A
Farmers & Merchants State Bank		93,572		14.88	%		50,300		8.00	%	$	62,876		10.00	%
Tier 1 Capital
(to Risk Weighted Assets)
Consolidated		88,153		14.02	%		25,147		4.00	%		N/A		N/A
Farmers & Merchants State Bank		72,713		11.56	%		25,150		4.00	%		37,725		6.00	%
Tier 1 Capital
(to Adjusted Total Assets)
Consolidated		88,153		9.82	%		35,901		4.00	%		N/A		N/A
Farmers & Merchants State Bank		72,713		8.09	%		35,956		4.00	%		44,946		5.00	%

- Definition

The entire disclosure for banks, savings institutions, and credit unions, for regulatory capital requirements imposed by the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS) or for any state imposed capital requirements, as applicable. The disclosure may include (1) a description of regulatory capital requirements (a) for capital adequacy purposes and (b) established by the prompt corrective action provisions of Section 38 of the Federal Depository Insurance Act; (2) the actual or possible material effects of noncompliance with such requirements; (3) whether the entity is in compliance with the regulatory capital requirements including (a) required and actual ratios and amounts of Tier 1 leverage, Tier 1 risk-based, and total risk-based capital, tangible capital (for savings institutions), and Tier 3 capital for market risk (for certain banks and bank holding companies), (b) factors that may significantly affect capital adequacy; (4) the prompt corrective action category in which the entity was classified as of its most recent notification; (5) whether management believes any conditions or events since notification have changed the entity's category. Also may include additional information that might be disclosed in situations where substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Audit and Accounting Guide (AAG)
-Number AAG-DEP
-Chapter 17
-Paragraph 15, 16, 17
-IssueDate 2006-05-01
-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 Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1B
-URI http://asc.fasb.org/extlink&oid=6918689&loc=SL5958570-112826

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1E
-URI http://asc.fasb.org/extlink&oid=6918689&loc=SL5958574-112826

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1D
-URI http://asc.fasb.org/extlink&oid=6918689&loc=SL5958573-112826

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1F
-URI http://asc.fasb.org/extlink&oid=6918689&loc=SL5958575-112826

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=6918689&loc=SL5958569-112826

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1G
-URI http://asc.fasb.org/extlink&oid=6918689&loc=SL5958577-112826

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1C
-URI http://asc.fasb.org/extlink&oid=6918689&loc=SL5958572-112826

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1H
-URI http://asc.fasb.org/extlink&oid=6918689&loc=d3e65071-112826

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6918689&loc=SL5958568-112826

+ Details

Restrictions of Dividends and Inter-company Borrowings

12 Months Ended

Dec. 31, 2011

Restrictions of Dividends and Inter-company Borrowings [Abstract]

Restrictions of Dividends and Inter-company Borrowings

Note 15 - Restrictions of Dividends & Inter-company Borrowings

The Bank is restricted as to the amount of dividends that can be paid. Dividends declared by the Bank that exceed the net income for the current year plus retained income for the preceding two years must be approved by federal and state regulatory agencies. Under this formula dividends of $9.6 million may be paid without prior regulatory approval. Regardless of formal regulatory restrictions, the Bank may not pay dividends that would result in its capital levels being reduced below the minimum requirements shown above. Under current Federal Reserve regulations, the Bank is limited as to the amount and type of loans it may make to the Company. These loans are subject to qualifying collateral requirements on which the amount of the loan may be based.

Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2011

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

Note 16 - Fair Value of Financial Instruments

Fair values of financial instruments are management’s estimate of the values at which the instruments could be exchanged in a transaction between willing parties. These estimates are subjective and may vary significantly from amounts that would be realized in actual transactions. In addition, other significant assets are not considered financial assets including deferred tax assets, premises, equipment and intangibles. Further, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on the fair value estimates and have not been considered in any of the estimates.

The following assumptions and methods were used in estimating the fair value for financial instruments:

Cash and Cash Equivalents

The carrying amounts reported in the balance sheet for cash, cash equivalents and federal funds sold approximate their fair values. Also included in this line item are the carrying amounts of interest-bearing deposits maturing within ninety days which approximate their fair values. Fair values of other interest-bearing deposits are estimated using discounted cash flow analyses based on current rates for similar types of deposits.

Securities and Other Securities

Fair values for securities, excluding Federal Home Loan Bank stock, are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. The carrying value of Federal Home Loan Bank stock approximates fair value based on the redemption provisions of the Federal Home Loan Bank.

Loans

Most commercial and real estate mortgage loans are made on a variable rate basis. For those variable-rate loans that re-price frequently, and with no significant change in credit risk, fair values are based on carrying values. The fair values of the fixed rate and all other loans are estimated using discounted cash flow analysis, using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality.

Deposits

The fair values disclosed for deposits with no defined maturities are equal to their carrying amounts, which represent the amount payable on demand. The carrying amounts for variable-rate, fixed-term money market accounts and certificates of deposit approximate their fair value at the reporting date. Fair value for fixed-rate certificates of deposit are estimated using a discounted cash flow analysis that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Short-Term Borrowings

The carrying value of short-term borrowings approximates fair values.

FHLB Advances

Fair values or FHLB advances are estimated using discounted cash flow analysis based on the Company’s current incremental borrowing rates for similar types or borrowing arrangements.

Accrued Interest Receivable and Payable

The carrying amounts of accrued interest approximate fair values.

Dividends Payable

The carrying amounts of dividends payable approximate their fair values and are generally paid within forty days of declaration.

Off Balance Sheet Financial Instruments

Fair values for off-balance-sheet, credit related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing.

The estimated fair values, and related carrying or notional amounts, for on and off-balance sheet financial instruments as of December 31, 2011 and 2010, are reflected below.


	(In Thousands)
	2011				2010
	Carrying		Fair		Carrying		Fair
Financial Assets:
Cash and Cash Equivalents	$	43,143	$	43,143	$	43,379	$	43,379
Securities - available for sale		327,519		327,519		287,317		287,317
Other Securities		4,365		4,365		4,406		4,406
Loans, net		501,124		504,804		521,883		520,766
Accrued interest receivable		3,481		3,481		4,036		4,036

Financial Liabilities:
Deposits	$	739,382	$	741,975	$	724,513	$	725,270
Short-term debt
Repurchase agreement sold		52,440		52,440		51,241		51,241
Federal Home Loan Bank advances		16,662		16,638		29,874		30,764
Accrued interest payable		342		342		471		471
Dividends payable		890		890		894		894

Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	—	$	—	$	—	$	—
Standby letters of credit		—		—		—		—

Fair Value Measurements

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2011 and 2010, and the valuation techniques used by the Company to determine those fair values.

In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets or liabilities in active markets that the Company has the ability to access.

Available-for-sale securities- When quoted prices are available in an active market, securities are valued using the quoted price and are classified as Level 1. The quoted prices are not adjusted.

Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

Available-for-sale securities classified as Level 2 are valued using the prices obtained from an independent pricing service. The prices are not adjusted. Securities of obligations of state and political subdivisions are valued using a type of matrix, or grid, pricing in which securities are benchmarked against the treasury rate based on credit rating. Substantially all assumptions used by the independent pricing service are observable in the marketplace, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace.

Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset or liability. During 2010, local municipals were purchased that the

Bank evaluates based on the credit strength of the underlying project such as hospital or retirement housing. The fair value is determined by valuing similar credit payment streams at similar rates.

In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset.

The following summarizes financial assets measured at fair value on a recurring basis as of December 31, 2011 and December 31, 2010 segregated by level or the valuation inputs within the fair value hierarchy utilized to measure fair value:


($ in Thousands)	Quoted Prices in Active Active Markets for Identical Assets		Significant Observable Inputs		Significant Observable Inputs
December 31, 2011	(Level 1)		(Level 2)		(Level 3)
Assets-(Securities Available for Sale)
U.S. Treasury	$	26,691	$	—	$	—
U.S. Government agency		0		177,797		—
Mortgage-backed securities		0		55,413		—
State and local governments		—		53,917		13,701

Total Securities Available for Sale	$	26,691	$	287,127	$	13,701


	Quoted Prices in Active Active Markets for Identical Assets		Significant Observable Inputs		Significant Observable Inputs
December 31, 2010	(Level 1)		(Level 2)		(Level 3)
Assets-(Securities Available for Sale)
U.S. Treasury	$	32,279	$	—	$	—
U.S. Government agency		165,703		—		—
Mortgage-backed securities		24,531		—		—
State and local governments		—		53,502		11,302

Total Securities Available for Sale	$	222,513	$	53,502	$	11,302

Most of the Company’s available for sale securities, including any bonds issued by local municipalities, have CUSIP numbers or have similar characteristics of those in the municipal markets, making them marketable and comparable as Level 2.

As of December 31, 2011, the Company classified only US Treasuries as Level 1 and considered all Government Agency and Mortgage-backed securities as Level 2. The Company does not believe the availability of quoted prices in active markets for these securities is any less available than in 2010. The Company is recognizing the interpretation of most other public companies as classifying as Level 2.

The Company also has assets that, under certain conditions, are subject to measurement at fair value on a non-recurring basis. At December 31, 2011 and 2010, such assets consist primarily of impaired loans. Impaired loans categorized as Level 3 assets consist of non-homogeneous loans that are considered impaired. The Company estimates the fair value of the loans based on the present value of expected future cash flows using management’s best estimate of key assumptions. These assumptions include future payment ability, timing of payment streams, and estimated realizable values of available collateral (typically based on outside appraisals).

At December 31, 2011 and 2010, impaired loans categorized as Level 3 were $1.9 and $4.4 million, respectively. The specific allocation for impaired loans was $175 and $632 thousand as of December 31, 2011 and 2010, respectively, which are accounted for in the allowance for loan losses (see Note 4).

Other real estate is reported at the lower of either the fair value of the real estate, minus the estimated costs to sell the asset, or the cost of the asset. The determination of the fair value of the real estate relies primarily on appraisals from third parties. If the fair value of the real estate, minus the estimated costs to sell the asset, is less than the asset’s cost, the deficiency is recognized as a valuation allowance against the asset through a charge to expense. The valuation allowance is therefore increased or decreased, through charges or credits to expense, for changes in the asset’s fair value or estimated selling costs.

The following table presents impaired loans and other real estate owned as recorded at fair value:


	Assets Measured at Fair Value on a Nonrecurring Basis at December 31, 2011
($ in Thousands)	Balance at December 31, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Change in fair value for twelve-month period ended Dec. 31, 2011
Impaired loans	$	1,854	$	—	$	—	$	1,854	$	(150	)

Other real estate owned - residential mortgages	$	958	$	—	$	—	$	958	$	(145	)

Other real estate owned - commercial	$	2,614	$	—	$	—	$	2,614	$	(633	)


Total change in fair value									$	(928	)


	Assets Measured at Fair Value on a Nonrecurring Basis at December 31, 2010
($ in Thousands)	Balance at December 31, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Change in fair value for twelve-month period ended Dec. 31, 2010
Impaired loans	$	4,369	$	—	$	—	$	4,369	$	(850	)

Other real estate owned - residential mortgages	$	2,110	$	—	$	—	$	2,110	$	(64	)

Other real estate owned - commercial	$	2,328	$	—	$	—	$	2,328	$	—


Total change in fair value									$	(914	)

The Company also has other assets, which under certain conditions, are subject to measurement at fair value. These assets include loans held for sale, bank owned life insurance, and mortgage servicing rights. The Company estimated the fair values of these assets utilizing Level 3 inputs, including, the discounted present value of expected future cash flows. At December 31, 2011, the Company estimates that there is no impairment of these assets and therefore, no impairment charge to other expense was required to adjust these assets to their estimated fair values.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44A, 44B
-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 107
-Paragraph 15C, 15D
-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 Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15A
-Subparagraph a-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 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15B
-Subparagraph a, b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 3, 10, 14, 15
-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 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 157
-Paragraph 32, 33, 34
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 159
-Paragraph 17-22, 27, 28
-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 820
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19207-110258

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13537-108611

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 28
-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13433-108611

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 30
-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 16
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13504-108611

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19296-110258

+ Details

Condensed Financial Statements of Parent Company

12 Months Ended

Dec. 31, 2011

Condensed Financial Statements of Parent Company [Abstract]

Condensed Financial Statements of Parent Company

Note 17 - Condensed Financial Statements of Parent Company

Balance Sheet


	(In Thousands)
	2011		2010
Assets
Cash	$	983	$	598
Related party receivables:
Dividends & Accounts receivable from subsidiary		1,214		1,103
Note receivable from Bank subsidiary		15,000		15,000
Investment in subsidiary		89,178		78,963


Total Assets	$	106,375	$	95,664

Liabilities
Accrued expenses	$	394	$	367
Dividends payable		890		894

Total Liabilities		1,284		1,261

Stockholders’ Equity
Total Stockholders’ Equity		105,091		94,403


Total Liabilities and Stockholders’ Equity	$	106,375	$	95,664

Statement of Income


	(In Thousands)
	2011		2010		2009
Income
Dividends from subsidiary	$	4,000	$	4,205	$	3,940
Interest		713		713		713

Total Income		4,713		4,918		4,653

Operating Expenses		499		472		460

Income Before Income Taxes and Equity in Undistributed Earnings (Distributions in excessof earnings) and Subsidiary		4,214		4,446		4,193
Income Taxes		72		82		161

		4,142		4,364		4,032

Equity in undistributed earnings (Distributions inexcess of earnings) of subsidiary		4,372		2,617		2,573

Net Income	$	8,514	$	6,981	$	6,605

Statements of Cash Flows


	(In Thousands)
	2011			2010			2009
Cash Flows from Operating Activities
Net income	$	8,514		$	6,981		$	6,605
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Equity in undistributed net income (Distributions in excess earnings) of subsidiaries		(4,372	)		(2,617	)		(2,573	)
Changes in Assets and Liabilities:
Account receivable		—			—			—
Dividends receivable		(111	)		(42	)		(97	)
Other Liabilities		229			101			193

Net Cash Provided by Operating Activities		4,260			4,423			4,128
Cash Flows from Investing Activities
Return of Capital from Investment in Subsidiary		—			—			—
Cash Flows from Financing Activities
Payment of dividends		(3,566	)		(3,402	)		(3,417	)
Purchase of Treasury Stock		(309	)		(894	)		(555	)

Net Change in Cash and Cash Equivalents		385			127			156
Cash and Cash Equivalents
Beginning of year		598			471			315

Cash and Cash Equivalents
End of year	$	983		$	598		$	471

- Definition

The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

+ References + Details

Quarterly Financial Data

12 Months Ended

Dec. 31, 2011

Quarterly Financial Data [Abstract]

Quarterly Financial Data

Note 18 - Quarterly Financial Data

(000s omitted except per share data)

Quarterly Financial Data - UNAUDITED


	Quarter Ended in 2011
	Mar 31			June 30			Sep 30			Dec 31
Summary of Income:
Interest income	$	9,655		$	8,844		$	8,855		$	9,306
Interest expense		2,221			2,109			1,991			1,835

Net Interest Income		7,434			6,735			6,864			7,471
Provision for loan loss		772			657			93			193

Net interest income after provision for loan loss		6,662			6,078			6,771			7,278
Other income (expense)		(4,235	)		(3,885	)		(3,971	)		(3,291	)

Net income before income taxes		2,427			2,193			2,800			3,987
Income taxes		446			626			719			1,102

Net income	$	1,981		$	1,567		$	2,081		$	2,885

Earnings per Common Share	$	0.42		$	0.34		$	0.44		$	0.62

Average common shares outstanding		4,693,080			4,686,008			4,687,169			4,689,883


	Quarter Ended in 2010
	Mar 31			June 30			Sep 30			Dec 31
Summary of Income:
Interest income	$	10,325		$	9,868		$	10,025		$	9,675
Interest expense		2,920			2,809			2,677			2,457

Net Interest Income		7,405			7,059			7,348			7,218
Provision for loan loss		1,690			1,984			1,200			451

Net interest income after provision for loan loss		5,715			5,075			6,148			6,767
Other income (expense)		(4,128	)		(3,335	)		(3,130	)		(3,749	)

Net income before income taxes		1,587			1,740			3,018			3,018
Income taxes		331			397			820			834

Net income	$	1,256		$	1,343		$	2,198		$	2,184

Earnings per common share	$	0.27		$	0.28		$	0.47		$	0.46

Average common shares outstanding		4,734,674			4,730,309			4,710,402			4,710,098

- Definition

The entire disclosure for the quarterly financial data in the annual financial statements. The disclosure may include a tabular presentation of financial information for each fiscal quarter for the current and previous year, including revenues, gross profit, income or loss before extraordinary items and earnings per share data. It also includes an indication if the information in the note is unaudited, comments on the aggregate effect of year-end adjustments, and an explanation of matters or transactions that affect comparability or are pertinent to an understanding of the information furnished.

+ References + Details