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Fair Value Of Financial Instruments
 3 Months Ended
Jun. 30, 2012
Notes  
Fair Value Of Financial Instruments

 

13.  

FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The following disclosure of the estimated fair value of financial instruments is made in accordance with applicable accounting standards. The Company, using available market information and appropriate valuation methodologies, has determined the estimated fair value amounts. However, considerable judgment is necessary to interpret market data in the development of the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in the future. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

 

The estimated fair value of financial instruments is as follows (in thousands):

 

 

 

 

Quoted prices

in active

markets for

identical assets

 

Other

observable

inputs

 

Significant

unobservable

inputs

 

 

 

June 30, 2012

Carry value

 

(Level 1)

  

(Level 2)

  

(Level 3)

 

 

Fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

$

71,362

 

$

71,362

 

$

-

 

$

-

 

$

71,362

Certificates of deposit held for investment

 

40,975

 

 

-

 

 

41,213

 

 

-

 

 

41,213

Investment securities held to maturity

 

487

 

 

-

 

 

534

 

 

-

 

 

534

Investment securities available for sale

 

6,291

 

 

-

 

 

5,164

 

 

1,127

 

 

6,291

Mortgage-backed securities held to maturity

 

168

 

 

-

 

 

173

 

 

-

 

 

173

Mortgage-backed securities available for sale

 

813

 

 

-

 

 

813

 

 

-

 

 

813

Loans receivable, net

 

597,138

 

 

-

 

 

-

 

 

539,201

 

 

539,201

Loans held for sale

 

100

 

 

100

 

 

-

 

 

-

 

 

100

Federal Home Loan Bank stock

 

7,350

 

 

-

 

 

7,350

 

 

-

 

 

7,350

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand – savings deposits

$

491,586

 

$

-

 

$

491,586

 

$

-

 

$

491,586

Time deposits

 

214,306

 

 

-

 

 

215,899

 

 

-

 

 

215,899

    Junior subordinated debentures

 

22,681

 

 

-

 

 

-

 

 

8,573

 

 

8,573

 

 

 

    

 

 

 

 

March 31, 2012

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

$

46,393

 

$

46,393

 

$

-

 

$

-

 

$

46,393

Certificates of deposit held for investment

 

41,473

 

 

-

 

 

41,767

 

 

-

 

 

41,767

Investment securities held to maturity

 

493

 

 

-

 

 

542

 

 

-

 

 

542

Investment securities available for sale

 

6,314

 

 

-

 

 

5,148

 

 

1,166

 

 

6,314

Mortgage-backed securities held to maturity

 

171

 

 

-

 

 

177

 

 

-

 

 

177

Mortgage-backed securities available for sale

 

974

 

 

-

 

 

974

 

 

-

 

 

974

Loans receivable, net

 

664,888

 

 

-

 

 

-

 

 

596,552

 

 

596,552

Loans held for sale

 

480

 

 

480

 

 

-

 

 

-

 

 

480

Federal Home Loan Bank stock

 

7,350

 

 

-

 

 

7,350

 

 

-

 

 

7,350

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand – savings deposits

$

514,446

 

$

-

 

$

514,446

 

$

-

 

$

514,446

Time deposits

 

230,009

 

 

-

 

 

231,631

 

 

-

 

 

231,631

    Junior subordinated debentures

 

22,681

 

 

-

 

 

-

 

 

9,831

 

 

9,831

 

Fair value estimates were based on existing financial instruments without attempting to estimate the value of anticipated future business. The fair value has not been estimated for assets and liabilities that were not considered financial instruments.

 

Fair value estimates, methods and assumptions are set forth below.

 

Cash – Fair value approximates the carrying amount.

 

Certificates of Deposit held for investment – The fair value of certificates of deposit with stated maturity was based on the discounted value of contractual cash flows. The discount rate was estimated using rates currently available in the local market.

 

Investments and Mortgage-Backed Securities – Fair values were based on quoted market rates and dealer quotes. The fair value of the trust preferred security was determined using a discounted cash flow method (see also Note 11 – Fair Value Measurement).

 

Loans Receivable and Loans Held for Sale – Performing and noncriticized loans were priced using a discounted cash flow analysis. Nonperforming and criticized loans were priced using comparable market statistics. The nonperforming and criticized loan portfolio was segregated and a weighted average valuation discount that approximated similar loan sales was applied to each of these categories. The fair value of loans held for sale was based on the loans carrying value as the agreements to sell these loans are short term fixed rate commitments and no material difference between the carrying value is likely.

 

Federal Home Loan Bank stock – The carrying amount approximates the estimated fair value of this investment.

 

Deposits – The fair value of deposits with no stated maturity such as non-interest-bearing demand deposits, interest checking, money market and savings accounts was equal to the amount payable on demand. The fair value of time deposits with stated maturity was based on the discounted value of contractual cash flows. The discount rate was estimated using rates currently available in the local market.

 

Junior Subordinated Debentures – The fair value of the Debentures was based on the discounted cash flow method. Management believes that the discount rate utilized is indicative of those that would be used by market participants for similar types of debentures.

 

Off-Balance Sheet Financial Instruments – The estimated fair value of loan commitments approximates fees recorded associated with such commitments. Since the majority of the Company’s off-balance-sheet instruments consist of non-fee producing, variable rate commitments, the Bank has determined they do not have a distinguishable fair value.