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Document and Entity Information - shares	3 Months Ended
Mar. 31, 2012	Apr. 30, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	FARMERS & MERCHANTS BANCORP INC
Entity Central Index Key	0000792966
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		4,704,923

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2012	Dec. 31, 2011
ASSETS:
Cash and due from banks	$ 12,060	$ 17,563
Interest bearing deposits with banks	16,121	14,046
Federal funds sold	31,056	11,534
Total cash and cash equivalents	59,237	43,143
Securities - available for sale (Note 2)	345,029	327,519
Other Securities, at cost	4,365	4,365
Loans, net (Note 4)	488,090	501,124
Bank premises and equipment	16,883	16,984
Goodwill	4,074	4,074
Mortgage Servicing Rights	2,061	2,071
Other Real Estate Owned	3,567	3,572
Accrued interest and other assets	21,477	20,141
TOTAL ASSETS	944,783	922,993
Deposits:
Noninterest bearing	82,827	84,567
Interest bearing
NOW accounts	202,377	193,137
Savings	183,066	170,052
Time	295,551	291,626
Total deposits	763,821	739,382
Federal funds purchased and securities sold under agreement to repurchase	50,073	52,440
FHLB Advances	16,645	16,662
Dividend Payable	890	890
Accrued expenses and other liabilities	7,879	8,528
Total Liabilities	839,308	817,902
SHAREHOLDERS' EQUITY:
Common stock, no par value - authorized 6,500,000 shares; issued & outstanding 5,200,000 shares	12,677	12,677
Treasury Stock - 495,077 shares 2012, 483,663 shares 2011	(10,134)	(9,898)
Unearned Stock Awards 29,570 shares 2012, 29,715 shares 2011	(561)	(564)
Retained Earnings	97,889	96,495
Accumulated other comprehensive income	5,604	6,381
Total Shareholders' Equity	105,475	105,091
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 944,783	$ 922,993

Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
INTEREST INCOME:
Loans, including fees	$ 6,797	$ 8,023
Debt Securities:
U.S. Treasury securities	81	100
Securities of U.S. Government Agencies	1,025	934
Municipalities	510	532
Dividends	49	49
Federal funds sold	7	6
Other	7	11
Total Interest Income	8,476	9,655
INTEREST EXPENSE:
Deposits	1,439	1,883
Federal Funds purchased and securities sold under agreements to repurchase	61	75
Borrowed funds	124	263
Total Interest Expense	1,624	2,221
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES	6,852	7,434
PROVISION FOR LOAN LOSSES (Note 4)	128	772
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	6,724	6,662
NONINTEREST INCOME
Customer service fees	1,324	883
Other service charges and fees	758	776
Net gain (loss) on sale of other assets owned	(67)	(648)
Net gain on sale of loans	161	75
Net gain on sale of securities	169	339
Total Noninterest Income	2,345	1,425
NONINTEREST EXPENSE
Salaries and wages	2,286	2,253
Pension and other employee benefits	828	815
Occupancy expense (net)	405	313
Furniture and Equipment	352	392
Data processing	265	230
Franchise Taxes	237	218
FDIC Assessment	130	320
Mortgage servicing rights amortization	194	91
Other general and administrative	1,158	1,028
Total Noninterest Expense	5,855	5,660
INCOME BEFORE FEDERAL INCOME TAX	3,214	2,427
FEDERAL INCOME TAXES	930	446
NET INCOME	2,284	1,981
OTHER COMPREHENSIVE INCOME (NET OF TAX):
Unrealized gains on securities	5,605	585
COMPREHENSIVE INCOME	$ 7,889	$ 2,566
NET INCOME PER SHARE	$ 0.48	$ 0.42
Weighted Average Shares Outstanding	4,714,197	4,693,080
DIVIDENDS DECLARED	$ 0.19	$ 0.19

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 2,284	$ 1,981
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation	289	338
Accretion and amortization of securities	785	692
Amortization of servicing rights	194	91
Amortization of core deposit intangible	78	78
Provision for loan loss	128	772
Gain on sale of loans held for sale	(161)	(75)
Originations of loans held for sale	(27,634)	(9,672)
Proceeds from sale of loans held for sale	29,920	11,383
Loss on sale of other assets	67	648
Gain on sale of investment securities	(169)	(339)
Change in Operating Assets and Liabilities, net	(1,749)	(1,403)
Net Cash Provided by Operating Activities	4,032	4,494
Activity in securities:
Maturities, prepayments and calls	12,614	8,848
Sales	24,584	16,361
Purchases	(56,500)	(40,830)
Proceeds from sale of assets		4
Additions to premises and equipment	(188)	(237)
Loan originations and principal collections, net	10,620	11,894
Net Cash (Used) in Investing Activities	(8,870)	(3,960)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits	24,439	15,819
Net change in short-term debt	(2,367)	839
Repayments of long-term debt	(17)	(54)
Purchase of Treasury stock	(233)	(93)
Cash dividends paid on common stock	(890)	(894)
Net Cash Provided by Financing Activities	20,932	15,617
Net Increase (Decrease) in cash and cash equivalents	16,094	16,151
Cash and cash equivalents - Beginning of year	43,143	43,379
Cash and cash equivalents - End of period	59,237	59,530
RECONCILIATION OF CASH AND CASH EQUIVALENTS:
Cash and due from banks	12,060	15,964
Interest bearing deposits with banks	16,121	23,077
Federal funds sold	31,056	20,489
Total cash and cash equivalents	59,237	59,530
Cash paid during the period for:
Interest	1,632	2,265
Income Taxes	426
Noncash investing activities:
Transfer of loans to other real estate owned	$ 150	$ 1,385

Fair Value of Instruments

3 Months Ended

Mar. 31, 2012

Fair Value of Instruments [Abstract]

FAIR VALUE OF INSTRUMENTS

NOTE 2 FAIR VALUE OF INSTRUMENTS

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 elements.

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 price, 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, listed as “other securities”, 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 of 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 their 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 counter-parties’ credit standing.

The estimated fair values, and related carrying or notional amounts, for on and off-balance sheet financial instruments as of March 31, 2012 and December 31, 2011 are reflected below.


	(In Thousands)
	March 2012				December 2011
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial Assets:
Cash and Cash Equivalents	$	59,237	$	59,237	$	43,143	$	43,143
Securities - available for sale		345,029		345,029		327,519		327,519
Other Securities		4,365		4,365		4,365		4,365
Loans, net		488,090		488,709		501,124		504,804
Accrued interest receivable		4,154		4,154		3,481		3,481

Financial Liabilities:
Deposits	$	763,821	$	767,421	$	739,382	$	741,975
Short-term debt
Repurchase agreement sold		50,073		50,073		52,440		52,440
Federal Home Loan Bank advances		16,645		16,625		16,662		16,638
Accrued interest payable		334		334		342		342
Dividends payable		890		890		890		890

Fair Value Measurements

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2012, December 31, 2011, 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 base 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 market place.

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 home. 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 March 31, 2012 and December 31, 2011 segregated by level or the valuation inputs within the fair value hierarchy utilized to measure fair value:


Assets and Liabilities Measured at Fair Value on a Recurring Basis (In Thousands)
	Quoted Prices in Active Markets for Identical		Significant Observable Inputs		Significant Unobservable Inputs
	Assets (Level 1)		(Level 2)		(Level 3)
March 31, 2012
Assets-Securities Available for Sale
U.S. Treasury	$	31,438
U.S. Government agency			$	182,910
Mortgage-backed securities				62,195
State and local governments		—		54,850	$	13,636

Total Securities Available for Sale	$	31,438	$	299,955	$	13,636


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

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

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.

At March 31, 2012 and beginning 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 March 31, 2012 and December 31, 2011, 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 March 31, 2012 and December 31, 2011, impaired loans categorized as Level 3 were $1.87 and $1.85 million, respectively. The specific allocation for impaired loans was $191 and $175 thousand as of March 31, 2012 and December 31, 2011, respectively, which are accounted for in the allowance for loan losses (see Note 4).

Other real estate is reported at 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 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 March 31, 2012 (In Thousands)
	Balance at March 31, 2012		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 three-month period ended Mar. 31, 2012
Impaired loans	$	1,867	$	—	$	—	$	1,867	$	—
Other real estate owned - residential mortgages	$	996	$	—	$	—	$	996	$	(12	)
Other real estate owned - commercial	$	2,571	$	—	$	—	$	2,571	$	—

									$	(12	)


	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	)

									$	(928	)

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 March 31, 2012 and 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

Loans

3 Months Ended

Mar. 31, 2012

Loans [Abstract]

LOANS

NOTE 4 LOANS

Loan balances as of March 31, 2012 and December 31, 2011:


	(In Thousands)
	March 31, 2012			December 31, 2011
Loans:
Commercial real estate	$	200,865		$	201,158
Agricultural real estate		31,814			31,993
Consumer real estate		79,716			81,585
Commercial and industrial		103,915			114,497
Agricultural		54,084			52,598
Consumer		21,839			23,375
Industrial Development Bonds		1,196			1,196

	$	493,429		$	506,402

Less: Net deferred loan fees and costs		(187	)		(187	)

		493,242			506,215
Less: Allowance for loan losses		(5,152	)		(5,091	)

Loans - Net	$	488,090		$	501,124

The following is a maturity schedule by major category of loans as of March 31, 2012:


	(In Thousands)
	Within One Year		After One Year Within Five Years		After Five Years
Commercial Real Estate	$	23,416	$	110,639	$	66,810
Agricultural Real Estate		2,723		10,209		18,882
Consumer Real Estate		6,496		14,788		58,432
Commercial/Industrial		66,676		33,762		3,477
Agricultural		36,670		15,115		2,299
Consumer		4,998		14,693		1,961
Industrial Development Bonds		25		279		892

The distribution of fixed rate loans and variable rate loans by major loan category is as follows as of March 31, 2012. Variable rate loans whose current rates are equal to their floor or ceiling are classified as fixed in this table.


	(In Thousands)
	Fixed Rate		Variable Rate
Commercial Real Estate	$	86,111	$	114,754
Agricultural Real Estate		10,891		20,923
Consumer Real Estate		11,266		68,450
Commercial/Industrial		24,725		79,190
Agricultural		3,595		50,489
Consumer		4,254		17,398
Industrial Development Bonds		—		1,196

As of March 31, 2012 and December 31, 2011 one to four family residential mortgage loans amounting to $66.8 and $67.4 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 .64% as of the end of March 2012. These percentages do not include nonaccrual loans which are not past due (nonaccruals are not considered past due if current). 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 March 31, 2012 and December 31, 2011 net of deferred fees:


	(In Thousands)
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Current		Total Financing Receivables		Recorded Investment > 90 Days and Accruing
March 31, 2012
Consumer real estate	$	292	$	140	$	443	$	875	$	78,841	$	79,716	$	—
Agricultural real estate		97		—		—		97		31,717		31,814		—
Agricultural		—		—		—		—		54,084		54,084		—
Commercial Real Estate		20		—		1,455		1,475		199,390		200,865		—
Commercial and Industrial		97		—		553		650		104,461		105,111		—
Consumer		22		15		—		37		21,615		21,652		—

Total	$	528	$	155	$	2,451	$	3,134	$	490,108	$	493,242	$	—


	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Current		Total Financing Receivables		Recorded Investment > 90 Days and Accruing
December 31, 2011
Consumer real estate	$	753	$	248	$	441	$	1,442	$	80,143	$	81,585	$	—
Agricultural real estate		—		—		—		—		31,993		31,993		—
Agricultural		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	$	—

The following table presents the recorded investment in nonaccrual loans by class or loans as of March 31, 2012 and December 31, 2011:


	(In Thousands)
	March 31 2012		December 31 2011
Consumer real estate	$	841	$	700
Agricultural real estate		—		—
Agricultural		—		7
Commercial Real Estate		1,529		1,003
Commercial and Industrial		553		421
Consumer		—		—

Total	$	2,923	$	2,131

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 March 31, 2012 and December 31, 2011 (in thousands):


	Agriculture Real Estate		Agriculture		Commercial Real Estate		Commercial and Industrial		Industrial Development Bonds
March 31, 2012
1-2	$	922	$	1,505	$	4,171	$	511	$	188
3		11,286		26,824		22,876		25,721		622
4		19,015		25,693		161,944		69,261		386
5		381		55		6,544		3,908		—
6		210		7		4,633		4,021		—
7		—		—		697		493		—
8		—		—		—		—

Total	$	31,814	$	54,084	$	200,865	$	103,915	$	1,196


	Agriculture Real Estate		Agriculture		Commercial Real Estate		Commercial and Industrial		Industrial Development Bonds
December 31, 2011
1-2	$	1,059	$	1,500	$	3,545	$	710	$	188
3		12,613		25,019		23,346		22,506		622
4		17,255		26,008		162,788		82,745		386
5		383		57		6,098		3,897		—
6		683		7		4,677		4,219		—
7		—		7		704		420		—
8		—		—		—		—		—

Total	$	31,993	$	52,598	$	201,158	$	114,497	$	1,196

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 grading as of March 31, 2012 and December 31, 2011.


	(In Thousands)
	Consumer Real Estate		Consumer Real Estate
	March 31 2012		December 31 2011
Grade
Pass	$	79,377	$	81,062
Special Mention (5)		—		—
Substandard (6)		155		240
Doubtful (7)		184		283

Total	$	79,716	$	81,585


	(In Thousands)
	Consumer Credit		Consumer Credit		Consumer Other		Consumer Other
	March 31 2012		December 31 2011		March 31 2012		December 31 2011
Performing	$	3,325	$	3,607	$	18,327	$	19,531
Nonperforming		—		—		—		50

Total	$	3,325	$	3,607	$	18,327	$	19,581

The Bank had approximately $207 thousand of its impaired loans classified as troubled debt restructured as of March 31, 2012 and December 31, 2011.


March 31, 2012 Troubled Debt Restructurings	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial Real Estate		5	$	3,940	$	3,214
Ag Real Estate		2	$	154	$	150
Commercial and Industrial		1	$	148	$	23

Troubled Debt Restructurings That Subsequently Defaulted	Number of Contracts		Recorded Investment
Commercial Real Estate		1	$	207
Ag Real Estate		—	$	—
Commercial and Industrial		—	$	—
December 31, 2011 Troubled Debt Restructurings	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial Real Estate		5	$	3,940	$	3,219
Ag Real Estate		2	$	154	$	150
Commercial and Industrial		1	$	148	$	25

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

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 for 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.

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-off 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 March 31, 2012 and December 31, 2011 (in thousands):


March 31, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Consumer real estate	$	155	$	155	$	—	$	158	$	3
Agriculture real estate		—		—		—		—		—
Agriculture		—		—		—		—		—
Commercial real estate		207		384		—		207		—
Commercial and industrial		—		—		—		—		—
Consumer		—		—		—		—		—
With a specific allowance recorded:								—
Consumer real estate		312		312		65		390		3
Agriculture real estate		—		—		—		—		—
Agriculture		—		—		—		—		—
Commercial real estate		696		846		22		702		—
Commercial and industrial		493		493		104		493		—
Consumer		4		4		—		4		2

Totals:
Consumer real estate	$	467	$	467	$	65	$	548	$	6

Agriculture real estate		—		—		—	$	—		—

Agriculture	$	—	$	—		—	$	—	$	—

Commercial real estate	$	903	$	1,230		22	$	909	$	—

Commercial and industrial		493		493		104	$	493	$	—

Consumer		4		4		—		4		2


December 31, 2011	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Consumer real estate	$	239	$	239	$	—	$	156	$	36
Agriculture real estate		—		—		—		180		15
Agriculture		—		—		—		2,683		1,156
Commercial real estate		207		384		—		1,381		22
Commercial and industrial		—		—		—		485		1
Consumer		—		—		—		1		—
With a specific allowance recorded:
Consumer real estate		283		308		54		431		—
Agriculture real estate		—		—		—		—		—
Agriculture		—		—		—		—		—
Commercial real estate		704		854		29		144		—
Commercial and industrial		420		420		91		402		—
Consumer		—		—		—		—		—

Totals:
Consumer real estate	$	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 and industrial	$	420	$	420	$	91	$	887	$	1

Consumer	$	—	$	—	$	—	$	1	$	—

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.


	(In Thousands)
	March 31, 2012			December 31, 2011
Allowance for Loan Losses
Balance at beginning of year	$	5,091		$	5,706
Provision for loan loss		128			1,715
Loans charged off		(126	)		(2,681	)
Recoveries		59			351

Allowance for Loan & Leases Losses	$	5,152		$	5,091

Allowance for Unfunded Loan Commitments & Letters of Credit	$	140		$	130

Total Allowance for Credit Losses	$	5,292		$	5,221

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 March 31, 2012 and December 31, 2011 is as follows (in thousands):


	Consumer Real Estate			Agriculture Real Estate			Agriculture			Commercial Real Estate			Commercial			Consumer (incl. Credit Cards)			Unfunded Loan Commitment & Letters of Credit		Unallocated		Total
March 31, 2012
ALLOWANCE FOR CREDIT LOSSES:
Beginning balance	$	261		$	140		$	266		$	2,088		$	1,947		$	315		$	130	$	74	$	5,221
Charge Offs		(40	)		—			0			0			0			(86	)					($	126	)
Recoveries		3			—			7			4			15			30						$	59
Provision		209			(51	)		(1	)		(522	)		(103	)		34			—		562	$	128
Other Non-interest expense related to unfunded	$	—			—			—			—			—			—			10		—	$	10

Ending Balance	$	433		$	89		$	272		$	1,570		$	1,859		$	293		$	140	$	636	$	5,292

Ending balance: individually evaluated for impairment	$	65			—			—			22		$	104			—						$	191

Ending balance: collectively evaluated for impairment	$	368		$	89		$	272		$	1,548		$	1,755		$	293		$	140	$	636	$	5,101

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

FINANCING RECEIVABLES:
Ending balance	$	79,716		$	31,814		$	54,084		$	200,865		$	105,111		$	21,652						$	493,242

Ending balance: individually evaluated for impairment	$	467		$	—		$	—		$	903			493			4						$	1,867

Ending balance: collectively evaluated for impairment	$	79,249		$	31,814		$	54,084		$	199,962		$	104,618		$	21,648						$	491,375

Ending balance: loans acquired with deteriorated credit quality	$	709		$	—		$	—		$	—		$	—		$	—						$	709


	Consumer Real Estate			Agriculture Real Estate		Agriculture			Commercial Real Estate			Commercial			Consumer (incl. Credit Cards)			Unfunded Loan Commitment & Letters of Credit			Unallocated			Total
December 31, 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

- 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

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Cover Document and Entity Information Financial Statements Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (Parenthetical) Condensed Consolidated Statements of Income (Unaudited) Condensed Consolidated Statements of Cash Flows Notes to Financial Statements Basis of Presentation Fair Value of Instruments Asset Purchase Loans All Reports Rendering Log

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2012	Dec. 31, 2011
Condensed Consolidated Balance Sheets [Abstract]
Common stock, no 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	495,077	483,663
Unearned stock awards, shares	29,570	29,715