Fair Value Measurements

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The following disclosures show the hierarchal disclosure framework associated with the level of pricing observations utilized in measuring assets and liabilities at fair value.

Level I:	Quoted prices are available in active markets for identical assets or liabilities as of the reported date.
Level II:	Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities include items for which quoted prices are available but traded less frequently, and items that are fair valued using other financial instruments, the parameters of which can be directly observed.
Level III:	Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

This hierarchy requires the use of observable market data when available.

The following table presents the assets reported on the balance sheet at their fair value on a recurring basis as of September 30, 2014 and December 31, 2013, by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	September 30, 2014
(In Thousands)	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Investment securities, available for sale:
U.S. Government and agency securities	$	—	$	5,796	$	—	$	5,796
Mortgage-backed securities	—		11,135		—		11,135
Asset-backed securities	—		2,571		—		2,571
State and political securities	—		111,782		—		111,782
Other debt securities	—		89,736		—		89,736
Financial institution equity securities	9,221		—		—		9,221
Other equity securities	3,393		—		—		3,393
Total assets measured on a recurring basis	$	12,614	$	221,020	$	—	$	233,634

	December 31, 2013
(In Thousands)	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Investment securities, available for sale:
U.S. Government and agency securities	$	—	$	9,923	$	—	$	9,923
Mortgage-backed securities	—		10,592		—		10,592
Asset-backed securities	—		6,564		—		6,564
State and political securities	—		141,795		—		141,795
Other debt securities	—		106,773		—		106,773
Financial institution equity securities	10,662		—		—		10,662
Other equity securities	2,303		—		—		2,303
Total assets measured on a recurring basis	$	12,965	$	275,647	$	—	$	288,612

The following table presents the assets reported on the consolidated balance sheet at their fair value on a non-recurring basis as of September 30, 2014 and December 31, 2013, by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. 

	September 30, 2014
(In Thousands)	Level I		Level II		Level III		Total
Assets measured on a non-recurring basis:
Impaired loans	$	—	$	—	$	13,261	$	13,261
Other real estate owned	—		—		1,555		1,555
Total assets measured on a non-recurring basis	$	—	$	—	$	14,816	$	14,816

	December 31, 2013
(In Thousands)	Level I		Level II		Level III		Total
Assets measured on a non-recurring basis:
Impaired loans	$	—	$	—	$	8,473	$	8,473
Other real estate owned	—		—		1,898		1,898
Total assets measured on a non-recurring basis	$	—	$	—	$	10,371	$	10,371

The following tables present a listing of significant unobservable inputs used in the fair value measurement process for items valued utilizing level III techniques as of September 30, 2014 and December 31, 2013: 

	September 30, 2014
	Quantitative Information About Level III Fair Value Measurements
(In Thousands)	Fair Value		Valuation Technique(s)	Unobservable Inputs	Range	Weighted Average
Impaired loans	$	13,261	Discounted cash flow	Temporary reduction in payment amount	0 to -91%	14%
				Probability of default	—%	—%
			Appraisal of collateral	Appraisal adjustments (1)	0 to -32%	19%
Other real estate owned	$	1,555	Appraisal of collateral (1)

(1) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.

	December 31, 2013
	Quantitative Information About Level III Fair Value Measurements
(In Thousands)	Fair Value		Valuation Technique(s)	Unobservable Inputs	Range	Weighted Average
Impaired loans	$	8,473	Discounted cash flow	Temporary reduction in payment amount	0 to -91%	-18%
				Probability of default	—%	—%
			Appraisal of collateral	Appraisal adjustments (1)	0 to -44%	-21%
Other real estate owned	$	1,898	Appraisal of collateral (1)

(1) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.

The significant unobservable inputs used in the fair value measurement of the Company’s impaired loans using the discounted cash flow valuation technique include temporary changes in payment amounts and the probability of default.  Significant increases (decreases) in payment amounts would result in significantly higher (lower) fair value measurements.  The probability of default is 0% for impaired loans using the discounted cash flow valuation technique because all defaulted impaired loans are valued using the appraisal of collateral valuation technique.

The significant unobservable input used in the fair value measurement of the Company’s impaired loans using the appraisal of collateral valuation technique include appraisal adjustments, which are adjustments to appraisals by management for qualitative factors such as economic conditions and estimated liquidation expenses.  The significant unobservable input used in the fair value measurement of the Company’s other real estate owned are the same inputs used to value impaired loans using the appraisal of collateral valuation technique.