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Fair Value Of Financial Instruments

6 Months Ended

Sep. 30, 2015

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 GAAP. 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):

September 30, 2015	Carry value			Level 1			Level 2			Level 3				Fair value

Assets:
Cash and cash equivalents	$	68,865		$	68,865		$	-		$	-		$	68,865
Certificates of deposit held for investment		21,247			-			21,422			-			21,422
Loans held for sale		950			-			950			-			950
Investment securities available for sale		15,750			-			13,982			1,768			15,750
Mortgage-backed securities held to maturity		80			-			82			-			82
Mortgage-backed securities available for sale		118,821			-			118,821			-			118,821
Loans receivable, net		585,784			-			-			534,881			534,881
Federal Home Loan Bank stock		988			-			988			-			988

Liabilities:
Demand – savings deposits		626,146			626,146			-			-			626,146
Time deposits		130,850			-			130,678			-			130,678
Junior subordinated debentures		22,681			-			-			8,300			8,300

March 31, 2015

Assets:
Cash and cash equivalents	$	58,659		$	58,659		$	-		$	-		$	58,659
Certificates of deposit held for investment		25,969			-			26,256			-			26,256
Loans held for sale		778			-			778			-			778
Investment securities available for sale		15,751			-			13,939			1,812			15,751
Mortgage-backed securities held to maturity		86			-			88			-			88
Mortgage-backed securities available for sale		96,712			-			96,712			-			96,712
Loans receivable, net		569,010			-			-			548,908			548,908
Federal Home Loan Bank stock		5,924			-			5,924			-			5,924

Liabilities:
Demand – savings deposits		582,011			582,011			-			-			582,011
Time deposits		138,839			-			138,744			-			138,744
Junior subordinated debentures		22,681			-			-			9,769			9,769

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 and cash equivalents – Fair value approximates the carrying amount.

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

Investment securities 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 11 – Fair Value Measurements).

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 values as the agreements to sell these loans are short term fixed rate commitments and no material difference between the carrying value and expected sales price is deemed likely.

FHLB stock – The carrying amount approximates the estimated fair value of this investment.

Deposits – The fair value of deposits with no stated maturities 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 maturities 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 Company has determined they do not have a distinguishable fair value.