The following is a description of the valuation methodologies used for assets measured at fair value. There have been changes in the methodologies used at and

 

Where quoted market prices are available in an active market, securities are classified within Level of the valuation hierarchy. Level securities include highly-liquid government bonds, mortgage products and exchange-traded equities. If quoted market prices are available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level securities include certain collateralized mortgage and debt obligations and certain municipal securities. In certain cases, where Level or Level inputs are available, securities are classified within Level of the hierarchy and include certain residual municipal securities and other less liquid securities.

The fair value of loans held for sale is based on quoted market prices from the Federal Home Loan Mortgage Corp ("FHLMC"). FHLMC quotes are updated daily and represent prices at which loans are exchanged in high volumes and in a liquid market.

Other real estate is fair valued under Level based on property appraisals less estimated disposition costs, which include both observable and unobservable inputs, at the time of transfer and as appropriate thereafter.

 

 

 Periodically, the Bank records nonrecurring adjustments to the carrying value of loans held for investment based on fair value measurements for loans subject to impairment. The fair value of impaired loans is typically determined using a combination of observable inputs, such as interest rates, contract terms, appraisals of collateral supporting the loan and recent comparable sales of similar properties, and unobservable inputs such as creditworthiness, disposition costs and underlying cash flows associated with the loan. Since the estimates of fair value utilized for loans also involve unobservable inputs, valuations of impaired loans have been classified as Level

The following table sets forth by level, within the fair value hierarchy, the Company’s assets at fair value:

 

 

The fair values of certain of these instruments were calculated by discounting expected cash flows, which involves significant judgments by management and uncertainties. Fair value is the estimated amount at which financial assets or liabilities could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Because market exists for certain of these financial instruments and because management does intend to sell these financial instruments, the Bank does know whether the fair values shown represent values at which the respective financial instruments could be sold individually or in the aggregate.

The following table presents the significant unobservable inputs used in the fair value measurements for Level financial assets measured on a non-recurring basis:

 

 

In addition, derivative Interest Rate Lock Commitment ("IRLC") fair values are derived using internal pricing models. Such models use pull-through rates (which are considered significant unobservable inputs), the weighted average of which was and as of and respectively.

The following tables present estimated fair values of the Company’s financial instruments at and

 

 

 

The following methods and assumptions were used to estimate the fair value of the additional classes of financial instruments shown:

– The carrying amount approximates fair value.

 

– Deposits include demand deposits, savings accounts, NOW accounts and money market deposits. The carrying amount approximates fair value. The fair value of fixed-maturity time deposits and FHLB advances is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits and advances of similar remaining maturities.