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Note 10 - Fair Value of Financial Instruments - 10Q
9 Months Ended 12 Months Ended
Sep. 30, 2013
Dec. 31, 2012
Disclosure Text Block Supplement [Abstract]    
Financial Instruments Disclosure [Text Block]

10.     FAIR VALUE OF FINANCIAL INSTRUMENTS


The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.


The estimated fair values of financial instruments that are reported at amortized cost in the Company’s statement of financial condition, segregated by the level of valuation inputs within the fair value hierarchy used to measure fair value, are as follows (in thousands):


   

September 30, 2013

 

December 31, 2012

 
   

Carrying

Value

   

Estimated

Fair

Value

   

Carrying

Value

   

Estimated

Fair

Value

 

FINANCIAL ASSETS:

                               

Level 1 inputs:

                               

Cash and cash equivalents

  $ 23,435     $ 23,435     $ 42,607     $ 42,607  

Level 2 inputs:

                               

Interest-bearing time deposits in banks

    25,111       25,653       29,592       30,413  

Federal Home Loan Bank stock

    259       259       375       375  

Loans held for sale

    3,963       3,963       4,435       4,435  

Cash surrender value of life insurance

    23,606       23,606       23,003       23,003  

Accrued interest receivable

    1,505       1,505       1,501       1,501  

Level 3 inputs:

                               

Loans receivable—net

    348,819       358,292       337,328       351,642  
                                 

FINANCIAL LIABILITIES:

                               

Level 2 inputs:

                               

Checking, money market and savings accounts

    197,288       197,288       203,308       203,308  

Other borrowings

    968       1,046       3,109       3,239  

Accrued interest payable

    31       31       23       23  

Advance payments by borrowers for taxes and insurance

    501       501       676       676  

Level 3 inputs:

                               

Certificates of deposit

    258,168       259,472       251,743       255,573  

For cash and cash equivalents, the carrying amount approximates fair value (level 1). For Federal Home Loan Bank stock, loans held for sale, cash surrender value of life insurance and accrued interest receivable, the carrying value is a reasonable estimate of fair value, primarily because of the short-term nature of the instruments or, as to Federal Home Loan Bank stock, the ability to sell the stock back to the Federal Home Loan Bank at cost (level 2). Interest-bearing time deposits in banks were valued using discounted cash flows based on current rates for similar types of deposits (level 2). Fair values of impaired loans are estimated as described in Note 8. Non-impaired loans were valued using discounted cash flows. The discount rates used to determine the present value of these loans were based on interest rates currently being charged by the Bank on comparable loans (level 3).


The fair value of checking accounts, savings accounts and money market deposits is the amount payable on demand at the reporting date (level 2). The fair value for certificates of deposit with stated maturities was calculated by discounting contractual cash flows using current market rates for instruments with similar maturities (Level 3). The fair value of Federal Home Loan Bank advances is estimated using the rates for advances of similar remaining maturities at the reporting date (level 2). For advance payments by borrowers for taxes and insurance and for accrued interest payable the carrying value is a reasonable estimate of fair value, primarily because of the short-term nature of the instruments (level 2).


The fair value estimates presented herein are based on pertinent information available to management as of September 30, 2013 and December 31, 2012. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since the reporting date and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.


18.      FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

The estimated fair values of financial instruments that are reported at amortized cost in the Company’s statement of financial condition, segregated by the level of valuation inputs within the fair value hierarchy used to measure fair value, are as follows (in thousands):

   
December 31, 2012
   
December 31, 2011
 
   
Carrying
Value
   
Estimated
Fair
Value
   
Carrying
Value
   
Estimated
Fair
Value
 
FINANCIAL ASSETS:
       
 
         
 
 
Level 1 inputs:
                       
Cash and cash equivalents
  $ 42,607     $ 42,607     $ 79,799     $ 79,799  
Level 2 inputs:
                               
Interest bearing time deposits in banks
    29,592       30,413       27,113       27,572  
Federal Home Loan Bank stock
    375       375       576       576  
Loans held for sale
    4,435       4,435       3,339       3,339  
Cash surrender value of life insurance
    23,003       23,003       22,213       22,213  
Accrued interest receivable
    1,501       1,501       1,516       1,516  
Level 3 inputs:
                               
Loans receivable—net
    337,328       351,642       331,453       333,006  
                                 
FINANCIAL LIABILITIES:
                               
Level 2 inputs:
                               
Checking, money market and savings accounts
    203,308       203,308       207,015       207,015  
Other borrowings
    3,109       3,239       6,679       6,889  
Accrued interest payable
    23       23       54       54  
Advance payments by borrowers for taxes and insurance
    676       676       816       816  
Level 3 inputs:
                               
Certificates of deposit
    251,743       255,573       291,566       293,198  

For cash and cash equivalents, the carrying amount approximates fair value (level 1).  For FHLB stock, loans held for sale, cash surrender value of life insurance and accrued interest receivable, the carrying value is a reasonable estimate of fair value, primarily because of the short-term nature of the instruments or, as to FHLB stock, the ability to sell the stock back to the FHLB at cost (level 2).  Interest-bearing time deposits in banks were valued using discounted cash flows based on current rates for similar types of deposits (level 2). Fair values of impaired loans are estimated as described in Note 17.  Non-impaired loans were valued using discounted cash flows. The discount rates used to determine the present value of these loans were based on interest rates currently being charged by the Bank on comparable loans (level 3).

The fair value of checking accounts, savings accounts and money market deposits is the amount payable on demand at the reporting date (level 2). The fair value of fixed-maturity certificates of deposit is estimated using the discount rates currently offered by the Bank for deposits of similar terms (level 3).  The fair value of FHLB advances is estimated using the rates for advances of similar remaining maturities at the reporting date (level 2). For advance payments by borrowers for taxes and insurance and for accrued interest payable the carrying value is a reasonable estimate of fair value, primarily because of the short-term nature of the instruments (level 2).

The fair value estimates presented herein are based on pertinent information available to management as of December 31, 2012 and December 31, 2011. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since the reporting date and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.