Fair Value of Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2013

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and Liabilities Measured on a Recurring Basis

The assets and liabilities measured at fair value on a recurring basis at June 30, 2013, are summarized below:


Description	Total carrying value in the consolidated balance sheet at June 30, 2013		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Available for sale securities	$	338,936		—		337,447		1,489
Bank owned life insurance	$	9,486		—		9,486		—

Liabilities
Interest rate swap	$	913		—		913		—

The assets and liabilities measured at fair value on a recurring basis at December 31, 2012, are summarized below:


Description	Total carrying value in the consolidated balance sheet at December 31, 2012		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Available for sale securities	$	356,345		—		354,856		1,489
Bank owned life insurance	$	9,323		—		9,323		—

Liabilities
Interest rate swap	$	1,126		—		1,126		—

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

The assets and liabilities measured at fair value on a non-recurring basis are summarized below for June 30, 2013:


Description	Total carrying value in the consolidated balance sheet at June 30, 2013		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Assets

Other real estate owned	$	1,632		—		—	$	1,632

Impaired loans, net of reserve of $3,549	$	36,895		—		—	$	36,895

The assets and liabilities measured at fair value on a non-recurring basis are summarized below for December 31, 2012:


Description	Total carrying value in the consolidated balance sheet at December 31, 2012		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets

Other real estate owned	$	1,544		—		—	$	1,544

Other assets owned	$	4		—		—	$	4

Impaired loans, net of reserve of $3,841	$	62,763		—		—	$	62,763

Roll-Forward of the Consolidated Condensed Statement of Financial Condition Items

The table below includes a roll-forward of the consolidated condensed statement of financial condition items for the six month periods ended June 30, 2013, and June 30, 2012, (including the change in fair value) for assets and liabilities classified by HopFed Bancorp, Inc. within level 3 of the valuation hierarchy for assets and liabilities measured at fair value on a recurring basis. When a determination is made to classify an asset or liability within level 3 of the valuation hierarchy, the determination is based upon the significance of the unobservable factors to the overall fair value measurement. However, since level 3 assets and liabilities typically include, in addition to the unobservable or level 3 components, observable components (that is components that are actively quoted and can be validated to external sources), the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology.


Six month period ended June 30,	2013				2012
	Other Assets		Other Liabilities		Other Assets		Other Liabilities
	(Dollars in Thousands)
Fair value, January 1,	$	1,489		—		993		—
Change in unrealized losses included in other comprehensive income for assets and liabilities still held at June 30,		—		—		429		—
Purchases, issuances and settlements, net		—		—		—		—
Transfers in and/or out of Level 3		—		—		—		—

Fair value, June 30,	$	1,489		—		1,422		—

Estimated Fair Values of Financial Instruments

The estimated fair values of financial instruments were as follows at June 30, 2013:


	Carrying Amount		Estimated Fair Value		Quoted Prices In Active Markets for Identical Assets Level 1		Using Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
	(Dollars in Thousands)
Financial Assets:
Cash and due from banks	$	20,070		20,070	$	20,070		—		—
Interest-earning deposits		9,633		9,633		9,633		—		—
Securities available for sale		338,936		338,936		—		337,447		1,489
Federal Home Loan Bank stock		4,428		4,428		—		4,428		—
Loans receivable		528,282		527,365		—		—		527,365
Accrued interest receivable		4,919		4,919		—		4,919		—
Bank owned life insurance		9,486		9,486		—		9,486		—
Financial liabilities:
Deposits		742,664		743,829				743,829		—
Advances from borrowers for taxes and insurance		697		697		—		697		—
Advances from Federal Home Loan Bank		45,768		46,711		—		46,711		—
Repurchase agreements		47,072		48,311		—		48,311		—
Subordinated debentures		10,310		10,091		—		—		10,091
Off-balance-sheet liabilities:
Commitments to extend credit		—		—
Commercial letters of credit		—		—
Market value of interest rate swap		913		913		—		913		—

The estimated fair values of financial instruments were as follows at December 31, 2012:


	Carrying Amount		Estimated Fair Value		Quoted Prices In Active Markets for Identical Assets Level 1		Using Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
	(Dollars in Thousands)
Financial Assets:
Cash and due from banks	$	31,563		31,563	$	31,563		—		—
Interest-earning deposits		5,613		5,613		5,613		—		—
Securities available for sale		356,345		356,345		—		354,856		1,489
Federal Home Loan Bank stock		4,428		4,428		—		4,428		—
Loans receivable		524,985		532,040		—		—		532,040
Accrued interest receivable		5,398		5,398		—		5,398		—
Bank owned life insurance		9,323		9,323		—		9,323		—
Financial liabilities:
Deposits		759,865		756,426		—		756,426		—
Advances from borrowers for taxes and insurance		396		396		—		396		—
Advances from Federal Home Loan Bank		43,741		49,293		—		49,293		—
Repurchase agreements		43,508		44,779		—		44,779		—
Subordinated debentures		10,310		10,092		—		—		10,092
Off-balance-sheet liabilities:
Commitments to extend credit		—		—		—		—		—
Commercial letters of credit		—		—		—		—		—
Market value of interest rate swap		1,126		1,126		—		1,126		—

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- 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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