Fair Value Measurements (Tables)

9 Months Ended

Sep. 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 September 30, 2013 and December 31, 2012:

			September 30, 2013
(Dollars in thousands)	Fair Value Hierarchy		Carrying Amount		Estimated Fair Value
ASSETS
Continuing operations:
Cash and cash equivalents		Level 1	$	71,367	$	71,367
Restricted cash		Level 1		2,805		2,805
Loans receivable, net		Level 3		4,325		4,771
Preferred stock (other noncurrent assets)		Level 3		800		3,000
Common stock (other current assets)		Level 2		1,359		1,359
Discontinued operations:
Cash and cash equivalents		Level 1		114		114
Commercial real estate investments, net (other current assets)		Level 1		32		1,000
LIABILITIES
Continuing operations:
Lines of credit		Level 3	$	500	$	500
Long-term debt:
Notes Payable		Level 1		37,246		35,477
Term loan		Level 3		6,000		6,000
Seller notes		Level 3		1,173		1,173
Common stock warrant liability		Level 3		10,800		10,800

			December 31, 2012
(Dollars in thousands)	Fair Value Hierarchy		Carrying Amount		Estimated Fair Value
ASSETS
Continuing operations:
Cash and cash equivalents		Level 1	$	50,894	$	50,894
Restricted cash		Level 1		2,805		2,805
Investment securities, available for sale		Level 1		3,060		3,060
Loans receivable, net		Level 3		24,372		24,850
Preferred stock (other noncurrent assets)		Level 3		800		2,000
Common stock (other noncurrent 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 (other assets)		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)
Recurring fair value measurements:
September 30, 2013
Liabilities:
Common stock warrant liability	$	—	$	—	$	10,800	$	10,800
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:
September 30, 2013
Assets:
Common stock (other current assets)	$	—	$	1,359	$	—	$	1,359
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 (other current assets – discontinued operations)		—		—		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 nine months ended September 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 September 30, 2013
Common stock warrant liability	$	7,500	$	(3,300	)	$	—	$	—	$	—	$	—	$	10,800
Three Months Ended September 30, 2012
Contingent consideration	$	3,746	$	(76	)	$	—	$	—	$	—	$	—	$	3,822
Common stock warrant liability		2,000		(850	)		—		—		—		—		2,850
Nine Months Ended September 30, 2013
Common stock warrant liability	$	2,350	$	(8,450	)	$	—	$	—	$	—	$	—	$	10,800
Nine Months Ended September 30, 2012
Contingent consideration	$	3,597	$	(225	)	$	—	$	—	$	—	$	—	$	3,822
Common stock warrant liability		1,403		(1,447	)		—		—		—		—		2,850

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 September 30,							Nine Months Ended September 30,
(Dollars in thousands)	2013			2012				2013				2012
Loans held for sale, net(1):
Continuing operations	$	—		$	—		$		—		$		2,776
Discontinued operations		—			14				—				(1,062	)
Common stock (other current assets)		(581	)		—				(581	)			—
Real estate owned, net (discontinued operations)		—			(22	)			(283	)			(711	)
Commercial real estate investments, net (other current assets – discontinued operations)		—			—				—				(121	)
	$	(581	)	$	(8	)	$		(864	)	$		882

(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 September 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 2 and Level 3 recurring and nonrecurring fair value measurements as of September 30, 2013 and December 31, 2012:

(Dollars in thousands)	Estimated Fair Value September 30, 2013
Assets:
Common stock (other current assets)	$	1,359	Market approach	Broker sales data	$5.00 ‑ $5.75 per share ($5.04)
Common stock (other current assets)	$	1,359	Market approach	Estimated selling costs	0.6% ‑ 2.8% (0.7%)
Real estate owned, net (discontinued operations)		95	Market approach	Marketability discounts	20.0% (20.0%)
Real estate owned, net (discontinued operations)		95	Market approach	Estimated selling costs	8.0% (8.0%)
Liabilities:
Common stock warrant liability	$	10,800	Lattice option pricing model	Exercise multiple	2.8x (2.8x)
				Volatility	55.0% (53.0%)
				Expected term	3.9 ‑ 4.1 years (4.1 years)

(Dollars in thousands)	Estimated Fair Value December 31, 2012
Assets:
Real estate owned, net (discontinued operations)	$	830	Market approach	Marketability discounts	20.0% (20.0%)
Real estate owned, net (discontinued operations)	$	830	Market approach	Estimated selling costs	8.0% (8.0%)
Commercial real estate investments, net (other current assets - discontinued operations)		51	Market approach	Marketability discounts	60.0% ‑ 90.0% (85.0%)
		51	Market approach	Control discount	25.0% (25.0%)
Liabilities:
Common stock warrant liability	$	2,350	Lattice option pricing model	Exercise multiple	2.8x (2.8x)
				Volatility	51.0% (51.0%)
				Expected term	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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