Fair Values (Tables)

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Summary of Fair Values of Financial Instruments

The following table presents estimated fair values of the Company’s financial instruments as of December 31, 2013 and 2012, whether or not recognized or recorded at fair value in the Consolidated Balance Sheets.

(Dollars in thousands)	December 31, 2013				December 31, 2012
	Carrying Amounts		Fair Value		Carrying Amounts		Fair Value
Financial assets – Continued operations
Cash and cash equivalents	$	58,515	$	58,515	$	45,068	$	45,068
Securities available-for-sale		216,640		216,640		197,354		197,354
Securities held-to-maturity		36,696		34,025		31,483		31,493
Portfolio loans, net		584,126		591,315		653,260		664,119
Promissory note due from the former mortgage subsidiary		2,607		2,607		3,592		3,592
Federal Home Loan Bank Stock		4,531		4,531		5,875		5,875
Financial liabilities – Continued operations
Deposits	$	746,293	$	746,332	$	701,052	$	702,817
Securities sold under agreements to repurchase		0		0		13,095		13,095
Federal Home Loan Bank advances		75,000		75,000		125,000		125,231
Subordinated debenture		15,465		8,754		15,465		8,109
Derivatives		2,890		2,890		4,085		4,085
	Contract Amount				Contract Amount
Off balance sheet financial instruments:
Commitments to extend credit	$	192,351			$	144,333
Standby letters of credit	$	4,583			$	3,012
Guaranteed commitments outstanding	$	1,871			$	1,290

Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value, as of December 31, 2013 and December 31, 2012.

(Dollars in thousands)	Fair Value at December 31, 2013
Recurring basis	Total		Level 1		Level 2		Level 3
Available-for-sale securities
U.S. government and agencies	$	6,264	$	0	$	6,264	$	0
Obligations of states and political subdivisions		59,209		0		59,209		0
Residential mortgage backed securities and collateralized mortgage obligations		62,991		0		62,991		0
Corporate securities		48,230		0		48,230		0
Commercial mortgage backed securities		10,472		0		10,472		0
Other investment securities (1)		29,474		0		29,474		0
Total assets measured at fair value	$	216,640	$	0	$	216,640	$	0
Derivatives – forward starting interest rate swap	$	2,890	$	0	$	2,890	$	0
Total liabilities measured at fair value	$	2,890	$	0	$	2,890	$	0
	Fair Value at December 31, 2012
Recurring basis	Total		Level 1		Level 2		Level 3
Available-for-sale securities
U.S. government and agencies	$	2,946	$	0	$	2,946	$	0
Obligations of states and political subdivisions		58,484				57,353		1,131
Residential mortgage backed securities and collateralized mortgage obligations		51,530				51,530		0
Corporate securities		61,556		0		61,556		0
Commercial mortgage backed securities		4,324		0		4,324		0
Other investment securities (1)		18,514		0		4,767		13,747
Total assets measured at fair value	$	197,354	$	0	$	182,476	$	14,878
Derivatives – forward starting interest rate swap	$	4,085	$	0	$	4,085	$	0
Total liabilities measured at fair value	$	4,085	$	0	$	4,085	$	0

(1) Principally represents residential mortgage backed securities issued by both by governmental and nongovernmental agencies, and other asset backed securities.

Quantitative Information about Level 3 Fair Value Measurements

The following tables provide certain significant quantitative information about Level 3 fair value measurements for the year ended December 31, 2012:

December 31, 2012	Fair Value		Valuation Techniques(s)		Unobservable Input
Obligations of states and political subdivisions	$	1,131		Discounted cash flow		Risk adjusted discount rate
Other investment securities	$	13,747		Discounted cash flow		Constant prepayment rate Probability of default Loss Severity

Reconciliation of Assets and Liabilities Measured at Fair Value Significant Unobservable Inputs Recurring Basis

The following table provides a reconciliation of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis for the years ended December 31, 2013, and 2012. The amount included in the “Beginning balance” column represents the beginning balance of an item in the period for which it was designated as a Level 3 fair value measure.

(Dollars in thousands)	Beginning balance		Transfers into Level 3		Change included in earnings		Purchases and issuances		Sales and settlements (1)			Transfers out			Ending balance		Net change in unrealized gains or (losses) relating to items held at end of period
2013
Obligations of states and political subdivisions	$	1,131		0		0		0		0		$	1,131		$	0	$	0
Mortgage backed securities	$	13,747		0		0		0		(749	)	$	(12,998	)	$	0	$	0
2012
Obligations of states and political subdivisions	$	0		1,131		0		0		0			0		$	1,131	$	0
Mortgage backed securities	$	0		13,747		0		0		0			0		$	13,747	$	0
Derivatives – interest rate lock commitments (1)	$	179		0		0		52		231			0		$	0	$	0
Earn out payable(1)(2)	$	600		0		0		0		600			0		$	0	$	0

(1) Pursuant to the sale of the Mortgage Company effective June 30, 2012, the Company no longer has interest rate lock commitments, and has settled the earn out payable. See Note 8, Discontinued Operations in these Notes to Consolidated Financial Statements for further detail on the sale of the Mortgage Company. The changes included in earnings have been reclassified and are included in income from discontinued operations in the Consolidated Statement of Operations.

(2) The earn out payable amount represents the fair value of the Company’s earn out incentive agreement with the Company’s former mortgage subsidiary. The non-controlling shareholder’s of the mortgage subsidiary earned certain cash payments from the Company, based on targeted results. The fair value of the earn out payable was estimated by using a discounted cash flow model whereby discounting the contractual cash flows expected to be paid out, under the assumption the mortgage subsidiary meets targeted results. During 2012, the remaining earn out incentive proceeds were netted with consideration received by the Company as part of the sales transaction of the mortgage subsidiary, and the liability was terminated as of July 1, 2012. The changes included in earnings have been reclassified and are included in income from discontinued operations in the Consolidated Statement of Operations.

Assets and Liabilities Measured at Fair Value on Nonrecurring Basis

The amounts disclosed below represent the fair values at the time the nonrecurring fair value measurements were made, and not necessarily the fair values as of the date reported upon.

(Dollars in thousands)	Fair Value at December 31, 2013
Nonrecurring basis	Total		Level 1		Level 2		Level 3
Collateral dependent impaired loans	$	2,317	$	0	$	0	$	2,317
Total assets measured at fair value	$	2,317	$	0	$	0	$	2,317
	Fair Value at December 31, 2012
Nonrecurring basis	Total		Level 1		Level 2		Level 3
Collateral dependent impaired loans	$	12,865	$	0	$	0	$	12,865
Other real estate owned		931		0		0		931
Total assets measured at fair value	$	13,796	$	0	$	0	$	13,796

Losses Resulting from Nonrecurring Fair Value

The following table presents the losses resulting from nonrecurring fair value adjustments for the years ended December 31, 2013, 2012 and 2011:

(Dollars in thousands)	December 31,
	2013		2012		2011
Collateral dependent impaired loans	$	745	$	5,296	$	3,873
Other real estate owned		0		435		557
Total	$	745	$	5,731	$	4,430