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Fair Value Of Financial Instruments

9 Months Ended

Dec. 31, 2014

15. 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 at the dates indicated (in thousands):

			Quoted prices in active markets for identical assets		Other observable inputs		Significant unobservable inputs
December 31, 2014	Carry value		(Level 1)		(Level 2)		(Level 3)			Fair value

Assets:
Cash	$	21,981	$	21,981	$	-	$	-	$	21,981
Certificates of deposit held for investment		27,214		-		27,408		-		27,408
Investment securities available for sale		17,150		-		15,290		1,860		17,150
Mortgage-backed securities held to maturity		88		-		90		-		90
Mortgage-backed securities available for sale		101,216		-		101,216		-		101,216
Loans receivable, net		567,398		-		-		524,376		524,376
Loans held for sale		724		-		724		-		724
Federal Home Loan Bank stock		6,120		-		6,120		-		6,120

Liabilities:
Demand – savings deposits		548,301		548,301		-		-		548,301
Time deposits		141,029		-		140,681		-		140,681
Federal Home Loan Bank advances		2,100		-		2,100		-		2,100
Junior subordinated debentures		22,681		-		-		10,255		10,255

			Quoted prices in active markets for identical assets		Other observable inputs		Significant unobservable inputs
March 31, 2014	Carry value		(Level 1)		(Level 2)		(Level 3)			Fair value

Assets:
Cash	$	68,577	$	68,577	$	-	$	-	$	68,577
Certificates of deposit held for investment		36,925		-		37,176		-		37,176
Investment securities available for sale		23,394		-		21,491		1,903		23,394
Mortgage-backed securities held to maturity		101		-		104		-		104
Mortgage-backed securities available for sale		78,575		-		78,575		-		78,575
Loans receivable, net		520,937		-		-		480,454		480,454
Loans held for sale		1,024		-		1,024		-		1,024
Federal Home Loan Bank stock		6,744		-		6,744		-		6,744

Liabilities:
Demand – savings deposits	$	527,813		527,813		-		-		527,813
Time deposits		162,253		-		162,020		-		162,020
Junior subordinated debentures		22,681		-		-		11,233		11,233

Fair value estimates were based on existing financial instruments without attempting to estimate the value of anticipated future business. The fair value was not 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 investment was determined using a discounted cash flow method (see also Note 13 – Fair Value Measurement).

Loans Receivable and Loans Held for Sale – Loans were priced using a discounted cash flow analysis. 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.

Federal Home Loan Bank Advances – The fair value of FHLB advances was based on the carrying value as the advances are overnight (short-term) advances.

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 Company has determined they do not have a distinguishable fair value.

- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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