Fair Value Of Financial Instruments

6 Months Ended

Sep. 30, 2013

Notes

Fair Value Of Financial Instruments

13.    FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosure of the estimated fair value of financial instruments is made in accordance with accounting guidance on the requirements of disclosures about fair value of financial instruments. The Company, using available market information and appropriate valuation methodologies, has determined the estimated fair value amounts. However, considerable judgment is necessary to interpret market data in the development of the estimates of fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

The estimated fair value of financial instruments is as follows at the dates indicated (in thousands):

			Quoted prices in active markets for identical assets		Other observable inputs		Significant unobservable inputs
September 30, 2013	Carry value		(Level 1)		(Level 2)		(Level 3)			Fair value
Assets:
Cash	$	114,337	$	114,337	$	-	$	-	$	114,337
Certificates of deposit held for investment		37,920		-		37,991		-		37,991
Investment securities available for sale		21,899		-		19,972		1,927		21,899
Mortgage-backed securities held to maturity		108		-		110		-		110
Mortgage-backed securities available for sale		17,706		-		17,706		-		17,706
Loans receivable, net		509,447		-		-		475,869		475,869
Loans held for sale		1,571		-		1,571		-		1,571
Federal Home Loan Bank stock		7,023		-		7,023		-		7,023
Liabilities:
Demand – savings deposits		498,001		498,001		-		-		498,001
Time deposits		174,805		-		174,749		-		174,749
Junior subordinated debentures		22,681		-		-		10,501		10,501
March 31, 2013
Assets:
Cash	$	115,415	$	115,415	$	-	$	-	$	115,415
Certificates of deposit held for investment		44,635		-		45,078		-		45,078
Investment securities available for sale		6,216		-		4,978		1,238		6,216
Mortgage-backed securities held to maturity		125		-		129		-		129
Mortgage-backed securities available for sale		431		-		431		-		431
Loans receivable, net		520,369		-		-		495,312		495,312
Loans held for sale		831		-		831		-		831
Federal Home Loan Bank stock		7,154		-		7,154		-		7,154
Liabilities:
Demand – savings deposits		475,688	$	-	$	475,688	$	-	$	475,688
Time deposits		188,118		-		189,289		-		189,289
Junior subordinated debentures		22,681		-		-		9,433		9,433

Fair value estimates were based on existing financial instruments without attempting to estimate the value of anticipated future business. The fair value was not estimated for assets and liabilities that were not considered financial instruments.

Fair value estimates, methods and assumptions are set forth below.

Cash – Fair value approximates the carrying amount.

Certificates of Deposit held for investment – The fair value of certificates of deposit with stated maturity was based on the discounted value of contractual cash flows. The discount rate was estimated using rates currently available in the local market.

Investments and Mortgage-Backed Securities – Fair values were based on quoted market rates and dealer quotes. The fair value of the trust preferred investment was determined using a discounted cash flow method (see also Note 11 – Fair Value Measurement).

Loans Receivable and Loans Held for Sale – Loans were priced using a discounted cash flow analysis. The fair value of loans held for sale was based on the loans carrying value as the agreements to sell these loans are short term fixed rate commitments and no material difference between the carrying value is likely.

Federal Home Loan Bank stock – The carrying amount approximates the estimated fair value of this investment.

Deposits – The fair value of deposits with no stated maturity such as non-interest-bearing demand deposits, interest checking, money market and savings accounts was equal to the amount payable on demand. The fair value of time deposits with stated maturity was based on the discounted value of contractual cash flows. The discount rate was estimated using rates currently available in the local market.

Junior Subordinated Debentures – The fair value of the Debentures was based on the discounted cash flow method. Management believes that the discount rate utilized is indicative of those that would be used by market participants for similar types of debentures.

Off-Balance Sheet Financial Instruments – The estimated fair value of loan commitments approximates fees recorded associated with such commitments. Since the majority of the Company’s off-balance-sheet instruments consist of non-fee producing, variable rate commitments, the Company has determined they do not have a distinguishable fair value.