Fair Value Measurements

9 Months Ended

Sep. 30, 2011

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 9. Fair Value Measurements

The following table summarizes financial assets and financial liabilities measured at fair value as of September 30, 2011 and December 31, 2010, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):

			Fair Value Measurements at Reporting Date Using:
September 30, 2011	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Items measured on a recurring basis:
Investment securities available for sale:
U.S. agency obligations	$	97,673	$	97,673	$	—	$	—
State and municipal obligations		17,761		—		17,761		—
Corporate debt securities		41,379		—		41,379		—
Equity investments		222		222		—		—
Mortgage-backed securities available for sale		346,292		—		346,292		—
Items measured on a non-recurring basis:
Real estate owned		690		—		—		690
Loans measured for impairment based on the fair value of the underlying collateral		8,688		—		—		8,688

			Fair Value Measurements at Reporting Date Using:
December 31, 2010	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Items measured on a recurring basis:
Investment securities available for sale:
U.S. agency obligations	$	41,132	$	41,132	$	—	$	—
State and municipal obligations		10,615		—		10,615		—
Corporate debt securities		39,856		—		39,856		—
Equity investments		315		315		—		—
Mortgage-backed securities available for sale		341,175		—		341,175		—
Items measured on a non-recurring basis:
Real estate owned		2,295		—		—		2,295
Loans measured for impairment based on the fair value of the underlying collateral		4,673		—		—		4,673

Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis, that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

Transfers between levels are recognized at the end of the reporting period. Securities classified as available for sale are reported at fair value utilizing Level 1 and Level 2 inputs. Most of the Company's investment and mortgage-backed securities are fixed income instruments that are not quoted on an exchange, but are bought and sold in active markets. Prices for these instruments are obtained through third party pricing vendors or security industry sources that actively participate in the buying and selling of securities. Prices obtained from these sources include market quotation and matrix pricing. Matrix pricing is a mathematical technique used principally to value certain securities without relying exclusively on quoted prices for the specific securities, but comparing the securities to benchmark or comparable securities.

The Company utilizes third party pricing services to obtain estimated market values for its corporate bonds. Management's policy is to obtain and review all available documentation from the third party pricing service relating to their market and value determinations, including their methodology and summary of inputs. Management reviews this documentation, makes inquiries of the third party pricing service and makes a determination as to the level of valuation inputs. Based on the Company's review of available documentation and discussions with the third party pricing service, management concluded that Level 2 inputs were utilized. The significant observable inputs include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities and observations of equity and credit default swap curves related to the issuer.

Real estate owned and loans measured for impairment based on the fair value of the underlying collateral are recorded at estimated fair value, less estimated selling costs. Fair value is based on independent appraisals.