Financial Instruments

Certain financial assets and liabilities are accounted for at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy prioritizes the inputs used to measure fair value:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies.

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value from the perspective of a market participant.

The following table represents cash and the available-for-sale securities adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or investment securities as of June 30, 2014 and December 31, 2013:

	June 30, 2014
	Cost		Unrealized Gains		Unrealized Losses		Accrued Interest		Estimated Fair Value		Cash & Cash Equivalents		Investment Securities

Cash	$	30,971,000	$	-	$	-	$	-	$	30,971,000	$	30,971,000		-

Level 1:
Money Market Accounts		1,048,000		-		-		-		1,048,000		1,048,000		-
Mutual Funds		9,917,000		212,000		(52,000)		-		10,077,000		-		10,077,000
Corporate Equity Securities		4,776,000		1,122,000		(52,000)		-		5,846,000		-		5,846,000
Government & Agency Securities		7,669,000		94,000		(13,000)		29,000		7,779,000		-		7,779,000
		23,410,000		1,428,000		(117,000)		29,000		24,750,000		1,048,000		23,702,000

Level 2:
Municipal Bonds		4,412,000		104,000		(6,000)		37,000		4,547,000		-		4,547,000
Corporate Bonds		8,167,000		87,000		(8,000)		57,000		8,303,000		-		8,303,000
		12,579,000		191,000		(14,000)		94,000		12,850,000		-		12,850,000

Total	$	66,960,000	$	1,619,000	$	(131,000)	$	123,000	$	68,571,000	$	32,019,000	$	36,552,000

	December 31, 2013
	Cost		Unrealized Gains		Unrealized Losses		Accrued Interest		Estimated Fair Value		Cash & Cash Equivalents		Investment Securities

Cash	$	30,958,000	$	-	$	-	$	-	$	30,958,000	$	30,958,000		-

Level 1:
Money Market Accounts		5,424,000		-		-		-		5,424,000		5,424,000		-
Mutual Funds		7,887,000		127,000		(164,000)		-		7,850,000		-		7,850,000
Corporate Equity Securities		4,614,000		1,076,000		(9,000)		-		5,681,000		-		5,681,000
Government & Agency Securities		6,112,000		62,000		(43,000)		26,000		6,157,000		-		6,157,000
		24,037,000		1,265,000		(216,000)		26,000		25,112,000		5,424,000		19,688,000

Level 2:
Municipal Bonds		3,524,000		103,000		-		25,000		3,652,000		-		3,652,000
Corporate Bonds		7,995,000		74,000		(47,000)		58,000		8,080,000		-		8,080,000
		11,519,000		177,000		(47,000)		83,000		11,732,000		-		11,732,000

Total	$	66,514,000	$	1,442,000	$	(263,000)	$	109,000	$	67,802,000	$	36,382,000	$	31,420,000