FAIR VALUE MEASUREMENT (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Measurement Tables

Schedule of assets and liabilities measured at fair value on a recurring basis

Assets measured at fair value on a recurring basis as of June 30, 2013 were:

(Dollars in thousands)			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
Description	June 30, 2013		(Level 1)		(Level 2)		(Level 3)
Recurring:
US government agencies	$	1,892	$	—	$	1,892	$	—
Government sponsored MBS
Residential		52,751		—		52,751		—
Non-Government sponsored MBS
North Carolina		1,490		—		1,490		—
Total	$	56,133	$	—	$	56,133	$	—

Assets measured at fair value on a recurring basis as of December 31, 2012 were:

(Dollars in thousands)			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
Description	December 31, 2012		(Level 1)		(Level 2)		(Level 3)
Recurring:
US government agencies	$	1,327	$	—	$	1,327	$	—
Government sponsored MBS
Residential		57,931		—		57,931		—
Municipal securities
North Carolina		1,553		—		1,553		—
Total	$	60,811	$	—	$	60,811	$	—

Schedule of assets and liabilities measured at fair value on a non recurring basis

Assets measured at fair value on a nonrecurring basis as of June 30, 2013 and December 31, 2012 were:

(Dollars in thousands)			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
Description	June 30, 2013		(Level 1)		(Level 2)		(Level 3)
Nonrecurring:
OREO	$	2,895	$	—	$	—	$	2,895
Repossessed collateral		590		—		—		590
Impaired loans:
Commercial		5,797		—		—		5,797
Faith-based non-profit		15,831		—		—		15,831
Residential real estate		2,813		—		—		2,813
Consumer		13		—		—		13
Mortgage Servicing Rights		27		—		—		27
Total	$	27,966	$	—	$	—	$	27,966

(Dollars in thousands)			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
Description	December 31, 2012		(Level 1)		(Level 2)		(Level 3)
Nonrecurring:
OREO	$	3,055	$	—	$	—	$	3,055
Repossessed collateral		590		—		—		590
Impaired loans:
Commercial		—		—		—		—
Commercial real estate		4,749		—		—		4,749
Faith-based non-profit		14,863		—		—		14,863
Residential real estate		3,916		—		—		3,916
Consumer		16		—		—		16
Mortgage Servicing Rights		36		—		—		36
Total	$	27,225	$	—	$	—	$	27,225

Quantitative Information about Level 3 Fair Value Measurements

(Dollars in thousands)				Significant	Significant
			Valuation	Unobservable	Unobservable
Description	June 30, 2013		Technique	Inputs	Input Value
Nonrecurring:
OREO	$	2,895	discounted appraisals	collateral discounts	6-20%
Repossessed collateral		590	discounted appraisals	collateral discounts	20-50%
Impaired loans		24,454	discounted appraisals	collateral discounts	6-20%
Mortgage Servicing Rights		27	discounted cash flows	PSA speed	426%
Total	$	27,966		cost to service	6.00%
				discount rate	10.00%

(Dollars in thousands)				Significant	Significant
			Valuation	Unobservable	Unobservable
Description	December 31, 2012		Technique	Inputs	Input Value
Nonrecurring:
OREO	$	3,055	discounted appraisals	collateral discounts	6-20%
Repossessed collateral		590	discounted appraisals	collateral discounts	20-50%
Impaired loans		23,544	discounted appraisals	collateral discounts	6-20%
Mortgage Servicing Rights		36	discounted cash flows	PSA speed	426%
Total	$	27,225		cost to service	6.00%
				discount rate	10.00%

Schedule of carrying amount and fair value of financial instruments

As of June 30, 2013 and December 31, 2012, the carrying amounts and associated estimated fair value of financial assets and liabilities of the Company are as follows:

	June 30, 2013
(Dollars in thousands)	Carrying		Estimated
(Unaudited)	Amount		Fair Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	30,326	$	30,326	$	30,326	$	—	$	—
Marketable securities		56,133		56,133		—		56,133		—
Loans, net of allowances for loan losses		170,603		173,406						173,406
Accrued interest receivable		847		847		847		—
Liabilities:
Non-maturity deposits	$	117,731	$	117,731		117,731		—		—
Maturity deposits		122,730		122,269		—		122,269		—
Other borrowings		887		818		—		—		818
Accrued interest payable		101		101		101		—		—

	December 31, 2012
(Dollars in thousands)	Carrying		Estimated
	Amount		Value		Level 1		Level 2			Level 3
Assets:
Cash and cash equivalents	$	42,586	$	42,586	$	42,586	$	—		$	—
Marketable securities		60,811		60,811		—		60,811			—
Loans, net of allowances for loan losses		171,723		175,041		—		—			175,041
Accrued interest receivable		858		858		858		—			—
Liabilities:
Non-maturity deposits	$	116,276	$	116,276		116,276		—			—
Maturity deposits		134,603		134,322		—		134,322	#		—
Other borrowings		2,937		2,871		—		—			2,871
Accrued interest payable		119		119		119		—			—