CASH 2017 Annual Report

142 Level 2 Inputs –Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which significant assumptions are observable in the market. Level 3 Inputs – Valuation is generated from model-based techniques that use significant assumptions not observable in the market and are used only to the extent that observable inputs are not available. These unobservable assumptions reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. There were no transfers between levels of the fair value hierarchy for the years ended September 30, 2017 or 2016. Securities Available for Sale and Held to Maturity . Securities available for sale are recorded at fair value on a recurring basis and securities held to maturity are carried at amortized cost. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using an independent pricing service. For both Level 1 and Level 2 securities, management uses various methods and techniques to corroborate prices obtained from the pricing service, including but not limited to reference to dealer or other market quotes, and by reviewing valuations of comparable instruments. The Company’s Level 1 securities include equity securities and mutual funds. The Company’s Level 2 securities include U.S. Government agency and instrumentality securities, U.S. Government agency and instrumentality mortgage-backed securities, municipal bonds, corporate debt securities and trust preferred securities. The Company had no Level 3 securities at September 30, 2017, or 2016. The fair values of securities are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs), or valuation based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model based valuation techniques for which significant assumptions are observable in the market (Level 2 inputs). The Company considers these valuations supplied by a third-party provider which utilizes several sources for valuing fixed-income securities. These sources include Interactive Data Corporation, Reuters, Standard and Poor’s, Bloomberg Financial Markets, Street Software Technology and the third party provider’s own matrix and desk pricing. The Company, no less than annually, reviews the third party’s methods and source’s methodology for reasonableness and to ensure an understanding of inputs utilized in determining fair value. Sources utilized by the third-party provider include but are not limited to pricing models that vary based on asset class and include available trade, bid, and other market information. This methodology includes but is not limited to broker quotes, proprietary models, descriptive terms and conditions databases, as well as extensive quality control programs. Monthly, the Company receives and compares prices provided by multiple securities dealers and pricing providers to validate the accuracy and reasonableness of prices received from the third-party provider. On a monthly basis, the Investment Committee reviews mark-to-market changes in the securities portfolio for reasonableness. The following table summarizes the fair values of securities available for sale and held to maturity at September 30, 2017 and 2016. Securities available for sale are measured at fair value on a recurring basis, while securities held to maturity are carried at amortized cost in the consolidated statements of financial condition. Fair Value At September 30, 2017 Available For Sale Held to Maturity (Dollars in Thousands) Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Debt securities Small business administration securities 57,871 — 57,871 — — — — — Obligations of states and political subdivisions — — — — 19,368 — 19,368 — Non-bank qualified obligations of states and political subdivisions 950,829 — 950,829 — 432,361 — 432,361 — Asset-backed securities 96,832 — 96,832 — — — — — Mortgage-backed securities 586,454 — 586,454 — 112,456 — 112,456 — Total debt securities 1,691,986 — 1,691,986 — 564,185 — 564,185 — Common equities and mutual funds 1,445 1,445 — — — — — — Total securities $1,693,431 $ 1,445 $1,691,986 $ — $ 564,185 $ — $ 564,185 $ —