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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2014
Fair Value Measurements [Abstract] |
Fair Value Measurements | Note 12: Fair Value Measurements The Company measures fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The Companys fair value measurements employ valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the servicing capacity of an asset (replacement cost). Valuation techniques are consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The Company uses a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets (Level 1 measurements) for identical assets or liabilities and the lowest priority to unobservable inputs (Level 3 measurements). The fair value hierarchy is as follows: Level 1 Valuation is based on unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 Valuation is based on quoted prices for similar instruments in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and model-based techniques for which all significant assumptions are observable in the market. Level 3 Valuation is principally generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates that market participants would use in pricing the asset or liability. Valuation techniques include use of discounted cash flow models and similar techniques. The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The most significant instruments that the Company values are securities, all of which fall into Level 2 in the fair value hierarchy. The securities in the available for sale portfolio are priced by independent providers. In obtaining such valuation information from third parties, the Company has evaluated their valuation methodologies used to develop the fair values in order to determine whether valuations are appropriately placed within the fair value hierarchy and whether the valuations are representative of an exit price in the Companys principal markets. The Companys principal markets for its securities portfolios are the secondary institutional markets, with an exit price that is predominantly reflective of bid level pricing in those markets. Additionally, the Company periodically tests the reasonableness of the prices provided by these third parties by obtaining fair values from other independent providers and by obtaining desk bids from a variety of institutional brokers. A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. Securities Available for Sale: All securities and major categories of securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from independent pricing providers. The fair value measurements used by the pricing providers consider observable data that may include dealer quotes, market maker quotes and live trading systems. If quoted prices are not readily available, fair values are determined using matrix pricing models, or other model-based valuation techniques requiring observable inputs other than quoted prices such as market pricing spreads, credit information, callable features, cash flows, the U.S. Treasury yield curve, trade execution data, market consensus prepayment speeds, default rates, and the securities terms and conditions, among other things. The foregoing valuation methodologies may produce fair value calculations that may not be fully indicative of net realizable value or reflective of future fair values. While Company management believes these valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2014, and December 31, 2013, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total Fair
September 30, 2014 |  | Inputs |  | Inputs |  | Inputs |  | Value
Securities available for sale: |  |  |  |  |  |  |  |
Mortgage-backed securities: |  |  |  |  |  |  |  |
US Government-sponsored enterprises | $ | --- | $ | 282,009 | $ | --- | $ | 282,009
US Government agencies | $ | --- | $ | 84,898 | $ | --- | $ | 84,898
Private label | $ | --- | $ | 4,770 | $ | --- | $ | 4,770
Obligations of states and political |  |  |  |  |  |  |  |
subdivisions thereof | $ | --- | $ | 95,257 | $ | --- | $ | 95,257
Derivative assets | $ | --- | $ | 2,633 | $ | --- | $ | 2,633
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total Fair
December 31, 2013 |  | Inputs |  | Inputs |  | Inputs |  | Value
Securities available for sale: |  |  |  |  |  |  |  |
Mortgage-backed securities: |  |  |  |  |  |  |  |
US Government-sponsored enterprises | $ | --- | $ | 273,632 | $ | --- | $ | 273,632
US Government agencies | $ | --- | $ | 81,529 | $ | --- | $ | 81,529
Private label | $ | --- | $ | 6,170 | $ | --- | $ | 6,170
Obligations of states and political |  |  |  |  |  |  |  |
subdivisions thereof | $ | --- | $ | 88,839 | $ | --- | $ | 88,839
The following tables present the carrying value of certain financial assets and financial liabilities measured at fair value on a non-recurring basis, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value.
For the Nine Months |  | Level 1 |  | Level 2 |  | Level 3 |  | Fair Value |  |
Ended 9/30/14 |  | Inputs |  | Inputs |  | Inputs |  | as of 9/30/14 |  | Loss
Other real estate owned | $ | --- | $ | --- | $ | 1,686 | $ | 1,686 | $ | 173
Collateral dependent impaired loans | $ | --- | $ | --- | $ | 1,490 | $ | 1,490 | $ | ---
For the Year |  | Level 1 |  | Level 2 |  | Level 3 |  | Fair Value |  |
Ended 12/31/13 |  | Inputs |  | Inputs |  | Inputs |  | as of 12/31/13 |  | Loss
Other real estate owned | $ | --- | $ | --- | $ | 1,625 | $ | 1,625 | $ | 338
Collateral dependent impaired loans | $ | --- | $ | $ --- | $ | 2,699 | $ | 2,699 | $ | ---
The Company had total collateral dependent impaired loans with carrying values of approximately $1,490 and $2,699 which had specific reserves included in the allowance of $68 and $120, at September 30, 2014 and December 31, 2013, respectively. The Company measures the value of collateral dependent impaired loans using Level 3 inputs. Specifically, the Company uses the appraised value of the collateral, which is then discounted for estimated costs to dispose and other considerations. These discounts generally range from 10% to 30% of appraised value. In estimating the fair value of OREO, the Company generally uses market appraisals less estimated costs to dispose of the property, which generally range from 10% to 30% of appraised value. Management may also make adjustments to reflect estimated fair value declines, or may apply other discounts to appraised values for unobservable factors resulting from its knowledge of the property or consideration of broker quotes. The appraisers use a market, income, and/or a cost approach in determining the value of the collateral. Therefore they have been categorized as a Level 3 measurement. There were no transfers between levels during the periods presented.

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- Definition Tabular disclosure of the inputs and valuation techniques used to measure fair value, and a discussion of changes in valuation techniques and related inputs, if any, applied during the period to each separate class of assets, liabilities, and financial instruments classified in shareholders' equity that are measured on a recurring and/or nonrecurring basis. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (bbb) -URI http://asc.fasb.org/extlink&oid=25499696&loc=d3e19207-110258 + Details
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