Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value of Financial Instruments [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2013 and December 31, 2012 were as follows:

(dollars in thousands)	Total		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable  Inputs		(Level 3) Significant Unobservable Inputs
September 30, 2013
Collateralized mortgage obligations	$	120,418	$	-	$	120,418	$	-
Mortgage-backed securities		15,586		-		15,586		-
Municipal securities		8,002		-		8,002		-
Corporate bonds		32,993		-		29,987		3,006
Asset-backed securities		19,558		-		19,558		-
Trust Preferred Securities		3,048		-		-		3,048
Other securities		117		-		117		-
Securities Available for Sale	$	199,722	$	-	$	193,668	$	6,054

December 31, 2012
Collateralized mortgage obligations	$	99,783	$	-	$	99,783	$	-
Mortgage-backed securities		21,640		-		21,640		-
Municipal securities		12,101		-		12,101		-
Corporate bonds		32,685		-		29,678		3,007
Asset-backed securities		19,729		-		19,729		-
Trust Preferred Securities		3,187		-		-		3,187
Other securities		134		-		134		-
Securities Available for Sale	$	189,259	$	-	$	183,065	$	6,194

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The following table presents a reconciliation of the securities available for sale 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:

	Three Months Ended September 30, 2013					Three Months Ended September 30, 2012
Level 3 Investments Only (dollars in thousands)	Trust Preferred Securities			Corporate Bonds		Trust Preferred Securities			Corporate Bonds
Balance,  July 1st	$	3,162		$	3,006	$	3,175		$	3,007
Unrealized gains		308			-		255			1
Paydowns		(422	)		-		(314	)		-
Impairment charges on Level 3		-			-		-			-
Balance,  September 30th	$	3,048		$	3,006	$	3,116		$	3,008

	Nine Months Ended September 30, 2013						Nine Months Ended September 30, 2012
Level 3 Investments Only (dollars in thousands)	Trust Preferred Securities			Corporate Bonds			Trust Preferred Securities			Corporate Bonds
Balance,  January 1st	$	3,187		$	3,007		$	3,410		$	3,004
Unrealized gains (losses)		301			(1	)		144			4
Paydowns		(440	)		-			(407	)		-
Impairment charges on Level 3		-			-			(31	)		-
Balance, September 30th	$	3,048		$	3,006		$	3,116		$	3,008

Fair Value Measurements, Nonrecurring

For assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2013 and December 31, 2012 were as follows:

(dollars in thousands)	Total		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
September 30, 2013:
Impaired loans	$	8,356	$	-	$	-	$	8,356
Other real estate owned		3,323		-		-		3,323
SBA servicing assets		3,075		-		-		3,075
December 31, 2012:
Impaired loans	$	19,876	$	-	$	-	$	19,876
Other real estate owned		3,642		-		-		3,642
SBA servicing assets		2,340		-		-		2,340

Fair Value Inputs, Assets, Quantitative Information

The table below presents additional quantitative information about level 3 assets measured at fair value on a nonrecurring basis (dollars in thousands):

	Quantitative Information about Level 3 Fair Value Measurements September 30, 2013
Asset Description	Fair Value		Valuation Technique	Unobservable Input	Range Weighted Average
Impaired loans	$	8,356	Fair Value of Collateral (1)	Appraised Value (2)	0% - 42% (26%) (4)
Other real estate owned	$	3,323	Fair Value of Collateral (1)	Appraised Value (2) Sales Price	7% - 26% (20%) (4)
SBA Servicing Assets	$	3,075	Fair Value	Individual Loan Valuation (3)	(3)

(1)   Fair value is generally determined through independent appraisals of the underlying collateral, which include Level 3 inputs that are not identifiable.

(2)   Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.

(3)   There is a lack of transactional data in this market place for the non-guaranteed portion of SBA loans.

(4)   The range and weighted average of qualitative factors such as economic conditions and estimated liquidation expenses are presentedas a percent of the appraised value.

Schedule of Servicing Assets at Fair Value

The following table presents an analysis of the activity in the SBA servicing assets for the three and nine months ended September 30, 2013 and 2012:

	Three Months Ended September 30,					Nine Months Ended September 30,
(dollars in thousands)	2013			2012		2013			2012
Beginning balance	$	2,904		$	1,630	$	2,340		$	1,102
Additions		283			263		911			741
Fair value adjustments		(112	)		18		(176	)		68
Ending balance	$	3,075		$	1,911	$	3,075		$	1,911

Schedule of Sensitivity Analysis of Fair Value, Transferor's Interests in Transferred Financial Assets [Table Text Block]

At June 30, 2013 and December 31, 2012, the sensitivity of the current fair value of the SBA loan servicing rights to immediate 10% and 20% adverse changes in key assumptions are included in the accompanying table.

(dollars in thousands)	September 30, 2013				December 31, 2012
SBA Servicing Asset
Fair Value of SBA Servicing Asset		$	3,075			$	2,340
Composition of SBA Loans Serviced for Others
Fixed-rate SBA loans			0	%			0	%
Adjustable-rate SBA loans			100	%			100	%
Total			100	%			100	%
Weighted Average Remaining Term	21.3 years				21.4 years
Prepayment Speed			6.42	%			6.59	%
Effect on fair value of a 10% increase		$	(71	)		$	(55	)
Effect on fair value of a 20% increase			(139	)			(107	)
Weighted Average Discount Rate			14.01	%			14.23	%
Effect on fair value of a 10% increase		$	(146	)		$	(115	)
Effect on fair value of a 20% increase			(282	)			(222	)

Fair Value, by Balance Sheet Grouping

The estimated fair values of the Company’s financial instruments were as follows at September 30, 2013 and December 31, 2012:

	Fair Value Measurements at September 30, 2013
(dollars in thousands)	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs  (Level 2)		Significant Unobservable Inputs  (Level 3)
Balance Sheet Data
Financial assets:
Cash and cash equivalents	$	44,305	$	44,305		$	44,305	$	-	$	-
Investment securities available for sale		199,722		199,722			-		193,668		6,054
Investment securities held to maturity		69		69			-		69		-
Restricted stock		1,570		1,570			-		1,570		-
Loans held for sale		7,130		7,728			-		-		7,728
Loans receivable, net		641,533		634,657			-		-		634,657
SBA servicing assets		3,075		3,075			-		-		3,075
Accrued interest receivable		2,920		2,920			-		2,920		-
Financial liabilities:
Deposits
Demand, savings and money market	$	761,926	$	761,926		$	-	$	761,926	$	-
Time		83,577		84,036			-		84,036		-
Subordinated debt		22,476		17,960			-		-		17,960
Accrued interest payable		309		309			-		309		-
Off-Balance Sheet Data
Commitments to extend credit		-		-
Standby letters-of-credit		-		-

	Fair Value Measurements at December 31, 2012
(dollars in thousands)	Carrying Amount		Fair Value		Quoted Prices  in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs  (Level 2)		Significant Unobservable Inputs  (Level 3)
Balance Sheet Data
Financial assets:
Cash and cash equivalents	$	128,004	$	128,004		$	128,004	$	-	$	-
Investment securities available for sale		189,259		189,259			-		183,065		6,194
Investment securities held to maturity		67		69			-		69		-
Restricted stock		3,816		3,816			-		3,816		-
Loans held for sale		82		82			-		-		82
Loans receivable, net		608,359		603,237			-		-		603,237
SBA servicing assets		2,340		2,340			-		-		2,340
Accrued interest receivable		3,128		3,128			-		3,128		-
Financial liabilities:
Deposits
Demand, savings and money market	$	765,967	$	765,967		$	-	$	765,967	$	-
Time		123,234		124,044			-		124,044		-
Subordinated debt		22,476		20,187			-		-		20,187
Accrued interest payable		301		301			-		301		-
Off-Balance Sheet Data
Commitments to extend credit		-		-
Standby letters-of-credit		-		-