FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2013

Carrying Value and Estimated Fair Value of Financial Instruments

The following tables present the carrying values and fair value estimates of financial instruments as of June 30, 2013 and December 31, 2012:


		June 30, 2013
(Dollars in thousands)	Fair Value Hierarchy	Carrying Amount		Estimated Fair Value
ASSETS
Continuing operations:
Cash and cash equivalents	Level 1	$	76,190	$	76,190
Loans receivable, net	Level 3		3,735		4,203
Preferred stock (other assets)	Level 3		800		3,000
Common stock (other assets)	Level 3		1,940		1,940
Discontinued operations:
Cash and cash equivalents	Level 1	$	116	$	116
FHLB stock	Level 1		2,051		2,051
Commercial real estate investments, net:
CRA Investment - nonmarketable equity securities	Level 1		32		1,035
CRA Investment - commercial loan participation interest	Level 3		19		19
LIABILITIES
Continuing operations:
Lines of credit	Level 3	$	4,250	$	4,250
Long-term debt:
Notes Payable	Level 1		37,246		35,477
Term loan	Level 3		6,300		6,300
Seller notes	Level 3		1,750		1,750
Common stock warrant liability	Level 3		7,500		7,500


		December 31, 2012
(Dollars in thousands)	Fair Value Hierarchy	Carrying Amount		Estimated Fair Value
ASSETS
Continuing operations:
Cash and cash equivalents	Level 1	$	53,699	$	53,699
Investment securities, available for sale	Level 1		3,060		3,060
Loans receivable, net	Level 3		24,372		24,850
Preferred stock (other assets)	Level 3		800		2,000
Common stock (other assets)	Level 3		1,940		1,940
Discontinued operations:
Cash and cash equivalents	Level 1	$	162	$	162
FHLB stock	Level 1		2,051		2,051
Commercial real estate investments, net	Level 3		51		51
LIABILITIES
Continuing operations:
Lines of credit	Level 3	$	1,000	$	1,000
Long-term debt:
Notes Payable	Level 1		37,246		34,732
Term loan	Level 3		6,900		6,900
Seller notes	Level 3		2,906		2,906
Common stock warrant liability	Level 3		2,350		2,350

Assets and Liabilities Measured at Fair Value on Recurring and Non-Recurring Basis Based on Fair Value Hierarchy

The following table presents the Company’s assets and liabilities measured at estimated fair value based on the fair value hierarchy on a recurring and nonrecurring basis:


(Dollars in thousands)	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Recurring fair value measurements:
June 30, 2013
Liabilities:
Common stock warrant liability	$	—	$	—	$	7,500	$	7,500
December 31, 2012
Assets:
Investment securities, available for sale	$	3,060	$	—	$	—	$	3,060
Liabilities:
Common stock warrant liability	$	—	$	—	$	2,350	$	2,350
Nonrecurring fair value measurements:
June 30, 2013
Assets:
Real estate owned, net (discontinued operations)	$	—	$	—	$	95	$	95
December 31, 2012
Assets:
Real estate owned, net (discontinued operations)	$	—	$	—	$	830	$	830
Commercial real estate investments, net		—		—		51		51

Reconciliation for Liabilities Measured at Fair Value on Recurring Basis using Significant Unobservable Inputs (Level Three)

The following table presents a reconciliation of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2013 and 2012:


(Dollars in thousands)	Beginning Balance		Income (Expense) Realized in Earnings			Transfers In/Out of Level 3		Purchases		Issuances		Settlements		Ending Balance
Three Months Ended June 30, 2013
Common stock warrant liability	$	3,800	$	(3,700	)	$	—	$	—	$	—	$	—	$	7,500
Three Months Ended June 30, 2012
Contingent consideration	$	3,671	$	(75	)	$	—	$	—	$	—	$	—	$	3,746
Common stock warrant liability		1,400		(600	)		—		—		—		—		2,000
Six Months Ended June 30, 2013
Common stock warrant liability	$	2,350	$	(5,150	)	$	—	$	—	$	—	$	—	$	7,500
Six Months Ended June 30, 2012
Contingent consideration	$	3,597	$	(149	)	$	—	$	—	$	—	$	—	$	3,746
Common stock warrant liability		1,403		(597	)		—		—		—		—		2,000

Total Gains (Losses) on Assets and Liabilities Measured on Fair Values on Non-Recurring Basis

The following table summarizes the total gains (losses) on assets and liabilities recorded on a nonrecurring basis for the periods indicated:


	Three Months Ended June 30,					Six Months Ended June 30,
(Dollars in thousands)	2013		2012			2013			2012
Loans held for sale, net⁽¹⁾ :
Continuing operations	$	—	$	—		$	—		$	2,776
Discontinued operations		—		14			—			(1,062	)
Real estate owned, net		—		(275	)		(283	)		(689	)
Commercial real estate investments, net		—		—			—			(121	)

	$	—	$	(261	)	$	(283	)	$	904

(1)

Loans held for sale, net were measured at fair value as of March 31, 2012, however, they do not appear in the table presenting financial and nonfinancial assets and liabilities measured using nonrecurring fair value measurements at June 30, 2013 and December 31, 2012 above, as there were no loans classified as held for sale as of those dates.

Valuation Techniques and Unobservable Inputs Applied to Level Three Fair Value Measurements

The following tables presents quantitative information about the valuation techniques and unobservable inputs applied to Level 3 fair value measurements as of June 30, 2013 and December 31, 2012:

(Dollars in thousands)

Estimated Fair Value
June 30, 2013

Valuation Technique

Unobservable Input

Range (Weighted Average)

Assets:

Real estate owned, net

Market approach

Marketability discounts

20.0% (20.0

(discontinued operations)

Estimated selling costs

8.0% (8.0

Liabilities:

Common stock warrant liability

7,500

Lattice option
pricing model

Exercise multiple
Volatility

Expected term

2.8x (2.8x

53.0% (53.0

5.1 - 5.3 years (5.2 years

)

(Dollars in thousands)

Estimated Fair Value
December 31, 2012

Valuation Technique

Unobservable Input

Range (Weighted Average)

Assets:

Real estate owned, net
(discontinued operations)

830

Market approach

Marketability discounts

Estimated selling costs

20.0% (20.0

8.0% (8.0

Commercial real estate investments
(discontinued operations)

Market approach

Marketability discounts

Control Discount

60.0% - 90.0% (85.0

25.0% (25.0

Liabilities:

Common stock warrant liability

2,350

Lattice option pricing model

Exercise multiple

Volatility

Expected term

2.8x (2.8x

51.0% (51.0

7.1 - 7.2 years (7.1 years

)

- 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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- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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