Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2014

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, 2014 and December 31, 2013 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, 2014
Collateralized mortgage obligations	$	83,125	$	-	$	83,125	$	-
Mortgage-backed securities		13,387		-		13,387		-
Municipal securities		12,553		-		12,553		-
Corporate bonds		27,726		-		24,720		3,006
Asset-backed securities		18,736		-		18,736		-
Trust Preferred Securities		3,179		-		-		3,179
Other securities		124		-		124		-
Securities Available for Sale	$	158,830	$	-	$	152,645	$	6,185

December 31, 2013
Collateralized mortgage obligations	$	123,440	$	-	$	123,440	$	-
Mortgage-backed securities		16,181		-		16,181		-
Municipal securities		9,643		-		9,643		-
Corporate bonds		33,253		-		30,247		3,006
Asset-backed securities		19,407		-		19,407		-
Trust Preferred Securities		2,850		-		-		2,850
Other securities		117		-		117		-
Securities Available for Sale	$	204,891	$	-	$	199,035	$	5,856

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, 2014 and 2013:

	Three Months Ended September 30, 2014					Three Months Ended September 30, 2013
Level 3 Investments Only (dollars in thousands)	Trust Preferred Securities			Corporate Bonds		Trust Preferred Securities			Corporate Bonds
Balance,  July 1st	$	2,977		$	3,006	$	3,162		$	3,006
Unrealized gains  (losses)		212			-		308			-
Paydowns		(10	)		-		(422	)		-
Impairment charges on Level 3		-			-		-			-
Balance,  September 30th	$	3,179		$	3,006	$	3,048		$	3,006

	Nine Months Ended September 30, 2014					Nine Months Ended September 30, 2013
Level 3 Investments Only (dollars in thousands)	Trust Preferred Securities			Corporate Bonds		Trust Preferred Securities			Corporate Bonds
Balance,  January 1st	$	2,850		$	3,006	$	3,187		$	3,007
Unrealized gains (losses)		346			-		301			(1	)
Paydowns		(10	)		-		(440	)		-
Impairment charges on Level 3		(7	)		-		-			-
Balance,  September 30th	$	3,179		$	3,006	$	3,048		$	3,006

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, 2014 and December 31, 2013 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, 2014:
Impaired loans	$	15,529	$	-	$	-	$	15,529
Other real estate owned		1,560		-		-		1,560
SBA servicing assets		4,040		-		-		4,040
December 31, 2013:
Impaired loans	$	17,474	$	-	$	-	$	17,474
Other real estate owned		3,921		-		-		3,921
SBA servicing assets		3,477		-		-		3,477

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
Asset Description		Fair Value		Valuation Technique	Unobservable Input	Range Weighted  Average
September 30, 2014:
Impaired loans		$	15,529	Fair Value of Collateral (1)	Appraised Value (2)		0% - 78%(30%) (4)
Other real estate owned		$	1,560	Fair Value of Collateral (1)	Appraised Value (2) Sales Price		8% - 38%(27%)(4)
SBA Servicing Assets		$	4,040	Fair Value	Individual Loan Valuation (3)		(3)
December 31, 2013:
Impaired loans		$	17,474	Fair Value of Collateral (1)	Appraised Value (2)		0% - 40%(23%) (4)
Other real estate owned		$	3,921	Fair Value of Collateral (1)	Appraised Value (2) Sales Price		4% - 77%(17%) (4)
SBA Servicing Assets		$	3,477	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 presented as 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, 2014 and 2013:

	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in thousands)	2014			2013			2014			2013
Beginning balance	$	4,067		$	2,904		$	3,477		$	2,340
Additions		158			283			733			911
Fair value adjustments		(185	)		(112	)		(170	)		(176	)
Ending balance	$	4,040		$	3,075		$	4,040		$	3,075

Schedule of Sensitivity Analysis of Fair Value, Transferor's Interests in Transferred Financial Assets

(dollars in thousands)	September 30, 2014			December 31, 2013
SBA Servicing Asset
Fair Value of SBA Servicing Asset	$	4,040		$	3,477
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	21.0 years			21.4 years
Prepayment Speed		7.28	%		6.72	%
Effect on fair value of a 10% increase	$	(117	)	$	(83	)
Effect on fair value of a 20% increase		(227	)		(163	)
Weighted Average Discount Rate		11.18	%		13.59	%
Effect on fair value of a 10% increase	$	(203	)	$	(162	)
Effect on fair value of a 20% increase		(392	)		(316	)

Fair Value, by Balance Sheet Grouping

	Fair Value Measurements at September 30, 2014
(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	$	105,844	$	105,844	$	105,844	$	-	$	-
Investment securities available for sale		158,830		158,830		-		152,645		6,185
Investment securities held to maturity		68,991		68,446		-		68,646		-
Restricted stock		1,725		1,725		-		1,725		-
Loans held for sale		789		830		-		-		830
Loans receivable, net		739,817		731,133		-		-		731,133
SBA servicing assets		4,040		4,040		-		-		4,040
Accrued interest receivable		3,282		3,282		-		3,282		-
Financial liabilities:
Deposits
Demand, savings and money market	$	911,943	$	911,943	$	-	$	911,943	$	-
Time		78,132		78,450		-		78,450		-
Subordinated debt		22,476		18,312		-		-		18,312
Accrued interest payable		300		300		-		300		-
Off-Balance Sheet Data
Commitments to extend credit		-		-
Standby letters-of-credit		-		-

	Fair Value Measurements at December 31, 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	$	35,880	$	35,880	$	35,880	$	-	$	-
Investment securities available for sale		204,891		204,891		-		199,035		5,856
Investment securities held to maturity		21		21		-		21		-
Restricted stock		1,570		1,570		-		1,570		-
Loans held for sale		4,931		5,225		-		-		5,225
Loans receivable, net		667,048		660,237		-		-		660,237
SBA servicing assets		3,477		3,477		-		-		3,477
Accrued interest receivable		3,049		3,049		-		3,049		-
Financial liabilities:
Deposits
Demand, savings and money market	$	790,698	$	790,698	$	-	$	790,698	$	-
Time		78,836		79,323		-		79,323		-
Subordinated debt		22,476		17,835		-		-		17,835
Accrued interest payable		237		237		-		237		-
Off-Balance Sheet Data
Commitments to extend credit		-		-
Standby letters-of-credit		-		-