Fair Value Measures and Disclosures

3 Months Ended

Sep. 30, 2011

Fair Value Measures and Disclosures

Fair Value Disclosures [Text Block]

9.  Fair Value Measurements and Disclosures (In Thousands)

                  FASB ASC Subtopic 820-10 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP) and requires certain disclosures about fair value measurements.  We do not have any nonfinancial assets or liabilities measured at fair value. The only assets or liabilities that Arrow measured at fair value on a recurring basis at September 30, 2011, December 31, 2010 and September 30, 2010 were securities available-for-sale.  Arrow held no securities or liabilities for trading on such date. 

We determine the fair value of financial instruments under the following hierarchy:

•Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

•Level 2 – Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

•     Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). 

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. 

9.  Fair Value Measurements and Disclosures, continued

The fair value measurement of securities available-for-sale on such date was as follows:

		Fair Value Measurements at Reporting Date Using:
Description	Total	Quoted Prices In Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
September 30, 2011:
Securities Available-for Sale:
U.S. Agency Securities	$  43,416	$---	$  43,416	$    ---
State and Municipal Obligations	48,850	---	48,850	---
Collateralized Mortgage Obligations - Residential	138,633	---	138,633	---
Mortgage-Backed Securities - Residential	238,742	---	238,742	---
Corporate and Other Debt Securities	1,318	---	1,001	317
Mutual Funds and Equity Securities	1,381	207	1,174	---
Total Securities Available-for-Sale	$472,340	$207	$471,816	$317
December 31, 2010:
Securities Available-for Sale:
U.S. Agency Securities	$  98,173	$  ---	$  98,173	$    ---
State and Municipal Obligations	89,528	---	89,528	---
Collateralized Mortgage Obligations - Residential	166,964	---	166,964	---
Mortgage-Backed Securities - Residential	159,926	---	159,926	---
Corporate and Other Debt Securities	1,417	---	1,134	283
Mutual Funds and Equity Securities	1,356	421	935	---
Total Securities Available-for-Sale	$517,364	$421	$516,660	$283
September 30, 2010:
Securities Available-for Sale:
U.S. Agency Securities	$167,655	$---	$167,655	$    ---
State and Municipal Obligations	66,148	---	66,148	---
Collateralized Mortgage Obligations - Residential	154,196	---	154,196	---
Mortgage-Backed Securities - Residential	78,154	---	78,154	---
Corporate and Other Debt Securities	1,390	---	1,063	327
Mutual Funds and Equity Securities	1,398	---	1,398	---
Total Securities Available-for-Sale	$468,941	$---	$468,614	$327

Fair value for securities available-for-sale was determined utilizing an independent bond pricing service for identical assets or significantly similar securities.  The pricing service uses a variety of techniques to arrive at fair value including market maker bids, quotes and pricing models.  Inputs to the pricing models include recent trades, benchmark interest rates, spreads and actual and projected cash flows.  There were no assets or liabilities measured at fair value on a nonrecurring basis at September 30, 2011.