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Note 11 - Fair Values of Financial Instruments

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

11.

FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying amounts, estimated fair values and level within the fair value hierarchy of financial instruments were as follows as of September 30, 2014 and December 31, 2013 (dollars in thousands):

	Level in		September 30, 2014								December 31, 2013
	Fair Value		Carrying				Fair				Carrying				Fair
	Hierarchy		Values				Values				Values				Values

Financial assets:
Cash	Level 1		$	14,296			$	14,296			$	1,464			$	1,464
Cash equivalents	Level 2			117,956				117,956				145,501				145,501
Securities available for sale	(1)			454,009				454,009				131,178				131,178
FHLB stock	(2)			19,226				19,226				11,961				11,961
Loans, net	Level 3			2,047,891				2,042,291				1,030,422				1,027,300
Bank owned life insurance	Level 2			55,992				55,992				51,377				51,377
Accrued interest receivable	Level 2			8,292				8,292				3,649				3,649

Financial liabilities:
Deposits	Level 2			2,271,708				2,258,113				1,118,911				1,120,576
Repurchase agreements	Level 2			142,869				142,869				69,305				69,305
FHLB advances	Level 2			57,033				57,418				45,000				45,139
Subordinated debentures	Level 2			54,301				54,301				32,990				32,974
Accrued interest payable	Level 2			1,832				1,832				2,041				2,041
Interest rate swap	(1)			135				135				264				264

(1)

See Note 12 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, accrued interest receivable and payable, bank owned life insurance, noninterest checking 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.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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