Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2014

Summary of significant assets and liabilities carried at fair value and placement in the fair value hierarchy

	September 30, 2014
(Dollars in thousands)	Level 1		Level 2		Level 3
Assets measured on a recurring basis:
Derivative loan commitments	$	—	$	—	$	120
Liabilities measured on a recurring basis:
Forward loan sale commitments	—		—		8
Assets measured on a non-recurring basis:
Impaired loans (collateral dependent)	—		—		1,379
Foreclosed real estate	—		—		735
Real estate held for sale	—		1,887		3,831

	December 31, 2013
(Dollars in thousands)	Level 1		Level 2		Level 3
Assets measured on a recurring basis:
Forward loan sale commitments	$	—	$	—	$	248
Liabilities measured on a recurring basis:
Derivative loan commitments	—		—		4
Assets measured on a non-recurring basis:
Impaired loans (collateral dependent)	—		—		987
Foreclosed real estate	—		—		1,170
Real estate held for sale	—		—		3,515

Schedule of change in Level 3 assets and liabilities that are measured on a recurring basis

	Derivative Loan Commitments and Forward Loan Sale Commitments
	Three months ended September 30,
(Dollars in thousands)	2014			2013
Balance at beginning of period	$	96		$	1,370
Total realized and unrealized gains (losses) included in net income	(103		)	(198		)
Settlements and closed loans	119			(1,093		)
Balance at end of period	$	112		$	79
Total unrealized gains (losses) relating to instruments still held at period end	$	112		$	79

	Derivative Loan Commitments and Forward Loan Sale Commitments
	Nine months ended September 30,
(Dollars in thousands)	2014			2013
Balance at beginning of period	$	244		$	201
Total realized and unrealized gains included in net income	95			(81		)
Settlements and closed loans	(227		)	(41		)
Balance at end of period	$	112		$	79
Total unrealized gains relating to instruments still held at period end	$	112		$	79

Schedule of additional quantitative information about assets and liabilities measured at fair value on a recurring and non-recurring basis for which the bank utilized Level 3 inputs to determine fair value

September 30, 2014

(Dollars in thousands)	Fair Value		Valuation Technique	Unobservable Input	Unobservable Input Value or Range
Assets measured on a recurring basis:

Derivative loan commitments	$	120	Investor pricing	Pull-through rate	82.5-100%
				Pricing spreads	99.14-107.96%
Liabilities measured on a recurring basis:

Forward loan sale commitments	8		Investor pricing	Pull-through rate	82.5-100%
				Pricing spreads	99.13-108.35%
Assets measured on a non-recurring basis:

Impaired loans (collateral dependent)	1,379		Appraisal of collateral	Collateral discounts/selling costs	5% - 30%

Foreclosed real estate	735		Appraisal of collateral	Collateral discounts/selling costs	5% - 30%

Real estate held for sale	3,831		Appraisal of collateral	Selling costs	5-6%

December 31, 2013

Assets measured on a recurring basis:

Forward loan sale commitments	$	248	Investor pricing	Pull-through rate	82.5-100%
				Pricing spreads	94.55-106.16%
Liabilities measured on a recurring basis:

Derivative loan commitments	4		Investor pricing	Pull-through rate	82.5-100%
				Pricing spreads	95.28-106.16%
Assets measured on a non-recurring basis:

Impaired loans (collateral dependent)	987		Appraisal of collateral	Collateral discounts/selling costs	5% - 30%

Foreclosed real estate	1,170		Appraisal of collateral	Collateral discounts/selling costs	5% - 30%

Real estate held for sale	3,515		Appraisal of collateral	Selling costs	5%

Summary of carrying values, estimated fair values and placement in the fair value hierarchy of the Company's financial instruments

	September 30, 2014 (unaudited)				Fair value measurement
(Dollars in thousands)	Carrying Amount		Fair Value		Level 1 inputs		Level 2 Inputs		Level 3 Inputs
Financial assets:
Loans, net	$	367,667	$	369,931	$	—	$	—	$	369,931
Loans held for sale	13,596		13,638		—		—		13,638
FHLB stock	2,363		2,363		—		—		2,363
Financial liabilities:
Certificates of deposit	119,793		121,793		—		121,793		—
Borrowed funds	33,300		33,314		—		33,314		—

	December 31, 2013				Fair value measurement
(Dollars in thousands)	Carrying Amount		Fair Value		Level 1 inputs		Level 2 Inputs		Level 3 Inputs
Financial assets:
Loans, net	$	328,576	$	327,618	$	—	$	—	$	327,618
Loans held for sale	8,648		8,690		—		—		8,690
FHLB stock	2,694		2,694		—		—		2,694
Financial liabilities:
Certificates of deposit	125,410		127,528		—		127,528		—
Borrowed funds	28,000		28,021		—		28,021		—

(1)

Excluded from this table are certain financial instruments that approximate fair value, as they were short-term in nature or payable on demand. These include cash and cash equivalents, certificates of deposit, accrued interest receivable, non-term deposit accounts, and accrued interest payable.

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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