FAIR VALUE MEASUREMENT

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. For example, investment securities available for sale are recorded at fair value on a recurring basis. Additionally, we may be required to record at fair value other assets on a nonrecurring basis, such as loans held for sale, impaired loans and certain other assets. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets. The following is a description of valuation methodologies used for assets and liabilities recorded at fair value.

Investment Securities. Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market exchange prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include marketable equity securities traded on an active exchange, such as the New York Stock Exchange. Level 2 securities include mortgage-backed securities and collateralized mortgage obligations, both issued by government sponsored entities, private label mortgage-backed securities, municipal bonds and corporate debt securities.

Derivatives. Derivative instruments include interest rate swaps and caps and are valued on a recurring basis using models developed by third-party providers. This type of derivative is classified as Level 2 within the hierarchy.

Loans. Loans are not recorded at fair value on a recurring basis. However, certain loans are determined to be impaired, and those loans are charged down to estimated fair value. The fair value of impaired loans that are collateral dependent is based on collateral value. For impaired loans that are not collateral dependent, estimated value is based on either an observable market price, if available, or the present value of expected future cash flows. Those impaired loans not requiring a charge-off represent loans for which the estimated fair value exceeds the recorded investments in such loans. When the fair value of an impaired loan is based on an observable market price or a current appraised value with no adjustments, we record the impaired loan as nonrecurring Level 2. When an appraised value is not available, or we determine the fair value of the collateral is further impaired below the appraised value, and there is no observable market price, we classify the impaired loan as nonrecurring Level 3.

Interest Rate Lock Commitments. The fair value of interest rate lock commitments is based on servicing rate premium, origination income net of origination costs, fall out rates and changes in loan pricing between the commitment date and period end. The Company classifies interest rate lock commitments as Level 3. There have been no changes in valuation techniques during the three months ended March 31, 2013.

The following table provides the components of the change in fair value of interest rate lock commitments for the periods presented. Interest rate lock commitments are measured at fair value on a recurring basis and classified as Level 3.

	Successor Company						Predecessor Company
Interest Rate Lock Commitments Level 3	Three Months Ended March 31, 2013			Period from February 1 to March 31, 2012			Period from January 1 to January 31, 2012
Balance at beginning of period	$	795		$	268		$	212
Issuances	1,227			386			134
Settlements	(1,526		)	(348		)	(78		)
Balance at end of period	$	496		$	306		$	268

The difference between the gross issuances and settlements for the period is included in mortgage banking income within non-interest income.

Foreclosed Assets. Foreclosed assets are adjusted to fair value upon transfer of loans to foreclosed assets. Subsequently, foreclosed assets are carried at lower of cost or net realizable value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. Given the lack of observable market prices for identical properties, the Company classifies foreclosed assets as nonrecurring Level 3.

The following tables summarize information about assets and liabilities measured at fair value.

				Fair Value Measurements at
				March 31, 2013
	Assets/(Liabilities) Measured at			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
Description	Fair Value			(Level 1)		(Level 2)			(Level 3)
Securities available for sale:
Residential MBS	$	100,192		$	—	$	100,192		$	—
Commercial MBS	19,784			—		19,784			—
Corporate bonds	32,857			—		32,857			—
Municipal – non-taxable	601			—		601			—
Municipal – taxable	—			—		—			—
Other debt securities	1,121			—		1,121			—
Marketable equity securities	79			79		—			—
Impaired loans	5,470			—		—			5,470
Foreclosed assets	4,752			—		—			4,752
Interest rate lock commitments	496			—		—			496
Derivative assets	293			—		293			—
Derivative liabilities	(54		)	—		(54		)	—

				Fair Value Measurements at December 31, 2012
	Assets/(Liabilities) Measured at			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
Description	Fair Value			(Level 1)		(Level 2)			(Level 3)
Securities available for sale:
Residential MBS	$	76,777		$	—	$	76,777		$	—
Commercial MBS	6,885			—		6,885			—
Corporate bonds	32,508			—		32,508			—
Municipal – non-taxable	16,201			—		16,201			—
Municipal – taxable	2,725			—		2,725			—
Other debt securities	1,157			—		1,157			—
Marketable equity securities	58			58		—			—
Impaired loans	5,084			—		—			5,084
Foreclosed assets	5,837			—		—			5,837
Interest rate lock commitments	795			—		—			795
Derivative assets	210			—		—			—
Derivative liabilities	(103		)	—		(103		)	—

Quantitative Information about Level 3 Fair Value Measurements

	Fair Value at March 31, 2013		Valuation Technique	Unobservable Input	Range
Recurring measurements:
Interest rate lock commitments	$	496	Pricing model	Pull through rates	80-85%
Nonrecurring measurements:
Impaired loans	5,470		Discounted Appraisals	Collateral discounts	15-50%
Foreclosed assets	4,752		Discounted appraisals	Collateral discounts	15-50%

The significant unobservable input used in the fair value measurement of the Company’s interest rate lock commitments is the closing ratio, which represents the percentage of loans currently in a lock position which management estimates will ultimately close. Generally, the fair value of an interest rate lock commitment is positive (negative) if the prevailing interest rate is lower (higher) than the interest rate lock commitment rate. Therefore, an increase in the pull through rates (i.e., higher percentage of loans estimated to close) will result in the fair value of the interest rate lock commitments increasing in a gain position, or decreasing in a loss position. The pull through ratio is largely dependent on the loan processing stage that a loan is currently in and the change in prevailing interest rates from the time of the rate lock. The pull through rate is computed based on historical internal data and the ratio is periodically reviewed by the Company’s mortgage banking division.

Due to the nature of the Company’s business, a significant portion of its assets and liabilities consist of financial instruments. Accordingly, the estimated fair values of these financial instruments are disclosed. Quoted market prices, if available, are utilized as an estimate of the fair value of financial instruments. The fair value of such instruments has been derived based on assumptions with respect to future economic conditions, the amount and timing of future cash flows and estimated discount rates. Different assumptions could significantly affect these estimates. Accordingly, the net amounts ultimately collected could be materially different from the estimates presented below. In addition, these estimates are only indicative of the values of individual financial instruments and should not be considered an indication of the fair value of the Company taken as a whole.

Cash and Cash Equivalents. The carrying amounts for cash and cash equivalents are equal to fair value.

Investment Securities Available for Sale. See discussion related to fair value estimates for securities available for sale in the fair value hierarchy section above. There have been no changes in valuation techniques for the three months ended March 31, 2013. Valuation techniques are consistent with techniques used in prior periods.

Investment Securities Held to Maturity. The fair value of the one corporate bond classified as held to maturity is estimated based on recent issuance prices on subordinated debt from companies with a similar credit and liquidity profile. Due to the non-marketable nature of this bond, it is classified as Level 3.

Loans Held For Sale. The fair value of mortgage loans held for sale is based on commitments on hand from investors within the secondary market for loans with similar characteristics. There have been no changes in valuation techniques for the three months ended March 31, 2013. Valuation techniques are consistent with techniques used in prior periods.

Loans.Expected cash flows are forecasted over the remaining life of each loan and are discounted to present value at current market interest rates for similar loans considering loan collateral type and credit quality. There have been no changes in valuation techniques for the three months ended March 31, 2013. Valuation techniques are consistent with techniques used in prior periods.

Federal Home Loan Bank Stock. Given the option to redeem this stock at par through the FHLB, the carrying value of FHLB stock approximates fair value. There have been no changes in valuation techniques for the three months ended March 31, 2013. Valuation techniques are consistent with techniques used in prior periods.

Bank-Owned Life Insurance. Bank-owned life insurance investments are recorded at their cash surrender value, or the amount that can be realized upon surrender. Therefore, carrying value approximates fair value.

Deposits. The fair value of demand deposits, savings, money market and NOW accounts represents the amount payable on demand. The fair value of time deposits is estimated by calculating the present value of cash flows on the time deposit portfolio using interest rates currently offered for instruments of similar remaining maturities as the discount rate. There have been no changes in valuation techniques for the three months ended March 31, 2013. Valuation techniques are consistent with techniques used in prior periods.

Short-term Borrowings and Long-term Debt.The fair value of short-term borrowings and long-term debt are based upon the discounted value when using current rates at which borrowings of similar maturity could be obtained. There have been no changes in valuation techniques for the three months ended March 31, 2013. Valuation techniques are consistent with techniques used in prior periods.

Accrued Interest Receivable and Accrued Interest Payable. The carrying amounts of accrued interest receivable and payable approximate fair value due to the short maturities of these instruments. There have been no changes in valuation techniques for the three months ended March 31, 2013. Valuation techniques are consistent with techniques used in prior periods.

Derivative Instruments. See discussion related to fair value estimates for derivative instruments in the fair value hierarchy section above. There have been no changes in valuation techniques for the three months ended March 31, 2013. Valuation techniques are consistent with techniques used in prior periods.

The following tables summarize the carrying amounts and estimated fair values of the Company’s financial instruments.

	March 31, 2013
	Carrying amount		Estimated fair value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	44,237	$	44,237	$	44,237	$	—	$	—
Investment securities available for sale	154,634		154,634		79		154,555		—
Investment securities held to maturity	194		408		—		—		408
Federal Home Loan Bank stock	2,382		2,382		—		2,382		—
Loans held for sale	8,671		8,671		—		8,671		—
Loans, net	789,096		794,105		—		—		794,105
Bank-owned life insurance	20,138		20,138		—		20,138		—
Interest rate caps	293		293		—		293		—
Accrued interest receivable	5,153		5,153		—		5,153		—
Financial liabilities:
Deposits	903,923		907,224		—		907,224		—
Short-term borrowings	6,000		5,987		—		—		5,987
Long-term debt	28,902		28,868		—		—		28,868
Interest rate swaps	54		54		—		54		—
Accrued interest payable	466		466		—		466		—

	December 31, 2012
	Carrying amount		Estimated fair value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	50,463	$	50,463	$	50,463	$	—	$	—
Investment securities available for sale	136,311		136,311		58		136,253		—
Investment securities held to maturity	180		410		—		—		410
Federal Home Loan Bank stock	2,307		2,307		—		2,307		—
Loans held for sale	16,439		16,439		—		16,439		—
Loans, net	759,418		763,572		—		—		763,572
Bank-owned life insurance	19,976		19,976		—		19,976		—
Interest rate caps	210		210		—		210		—
Accrued interest receivable	5,154		5,154		—		5,154		—
Financial liabilities:
Deposits	873,222		876,674		—		876,674		—
Short-term borrowings	7,500		7,456		—		—		7,456
Long-term debt	19,864		19,821		—		—		19,821
Interest rate swaps	258		258		—		258		—
Accrued interest payable	476		476		—		476		—