FAS 157 Guidance

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In addition to providing valuations, we have classified tens of thousands of securities as Level I, II and III. Our classification system utilizes volume statistics, aging of the most recent transactions, and other publicly available price information.

FASB 157 Clarifications

Valuation methodologies with the most observable inputs should be given priority over those that have unobservable inputs.  Generally SFAS 157 seeks to elevate the three-level hierarchy as high as possible and asks the financial statement preparer to obtain the most observable and reliable market inputs for the fair value measurement process.  Should some valuation methodology prove to be a better representation of fair value than another method, then that valuation methodology should be used.  The preparer is allowed to use a combination of methods to value a security.  The financial statement preparer can apply his or her judgment in the weighting of each valuation method.  Consistent use of designated methodologies is a best practice.  A change in method is allowed, if it delivers a better result in determining fair value.  The effect of change in methodology flows through the income statement as a one time period change due to accounting estimates.  Some material changes may require a financial statement footnote disclosure.