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FAIR VALUES OF FINANCIAL INSTRUMENTS | 12 Months Ended
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Dec. 31, 2013
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FAIR VALUES OF FINANCIAL INSTRUMENTS | NOTE 14 – FAIR VALUES OF FINANCIAL INSTRUMENTS Carrying amount, estimated fair value and level within the fair value hierarchy of financial instruments were as follows at year-end (dollars in thousands):
|  | Level in |  | 2013 |  |  | 2012 |
|  | Fair Value |  | Carrying |  |  | Fair |  |  | Carrying |  |  | Fair |
|  | Hierarchy |  | Amount |  |  | Value |  |  | Amount |  |  | Value |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash |  | Level 1 |  | $ | 1,464 |  |  | $ | 1,464 |  |  | $ | 1,576 |  |  | $ | 1,576 |
Cash equivalents |  | Level 2 |  |  | 145,501 |  |  |  | 145,501 |  |  |  | 134,427 |  |  |  | 134,427 |
Securities available for sale |  | (1) |  |  | 131,178 |  |  |  | 131,178 |  |  |  | 138,314 |  |  |  | 138,314 |
Federal Home Loan Bank stock |  | (2) |  |  | 11,961 |  |  |  | 11,961 |  |  |  | 11,961 |  |  |  | 11,961 |
Loans, net |  | Level 3 |  |  | 1,030,422 |  |  |  | 1,027,300 |  |  |  | 1,012,512 |  |  |  | 1,004,541 |
Bank owned life insurance |  | Level 2 |  |  | 51,377 |  |  |  | 51,377 |  |  |  | 50,048 |  |  |  | 50,048 |
Accrued interest receivable |  | Level 2 |  |  | 3,649 |  |  |  | 3,649 |  |  |  | 3,874 |  |  |  | 3,874 |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | Level 2 |  |  | 1,118,911 |  |  |  | 1,120,576 |  |  |  | 1,135,204 |  |  |  | 1,135,614 |
Securities sold under agreements to repurchase |  | Level 2 |  |  | 69,305 |  |  |  | 69,305 |  |  |  | 64,765 |  |  |  | 64,765 |
Federal Home Loan Bank advances |  | Level 2 |  |  | 45,000 |  |  |  | 45,139 |  |  |  | 35,000 |  |  |  | 35,000 |
Subordinated debentures |  | Level 2 |  |  | 32,990 |  |  |  | 32,974 |  |  |  | 32,990 |  |  |  | 32,943 |
Accrued interest payable |  | Level 2 |  |  | 2,041 |  |  |  | 2,041 |  |  |  | 2,314 |  |  |  | 2,314 |
Interest rate swap |  | (1) |  |  | 264 |  |  |  | 264 |  |  |  | 1,113 |  |  |  | 1,113 |
(1) | See Note 15 for a description of the fair value hierarchy as well as a disclosure of levels for classes of financial assets and liabilities.
(2) | It is not practical to determine the fair value of FHLB stock due to transferability restrictions.
Carrying amount is the estimated fair value for cash and cash equivalents, Federal Home Loan Bank stock, accrued interest receivable and payable, bank owned life insurance, demand deposits, securities sold under agreements to repurchase, and variable rate loans and deposits that reprice frequently and fully. Security fair values are based on market prices or dealer quotes, and if no such information is available, on the rate and term of the security and information about the issuer. For fixed rate loans and deposits and for variable rate loans and deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. Fair value of subordinated debentures and Federal Home Loan Bank advances is based on current rates for similar financing. Fair value of the interest rate swap is determined primarily utilizing market-consensus forecasted yield curves. Fair value of off-balance sheet items is estimated to be nominal.

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