FAIR VALUE MEASUREMENTS

3 Months Ended

Dec. 31, 2012

NOTE 7 – FAIR VALUE MEASUREMENTS

On October 1, 2008, the Company adopted the FASB guidance on fair value measurements, codified into ASC Topic 820, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The guidance applies to other accounting pronouncements that require or permit fair value measurements. ASC Topic 820 clarifies that fair value is the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, rather than an entry price that would be paid to acquire an asset or liability. It also establishes a fair value hierarchy that distinguishes between assumptions developed based on market data obtained from independent sources (observable inputs), and assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy levels are summarized as follows:

Level 1:

Quoted prices in active markets for identical 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 inactive markets; or observable market data.

Level 3:

Unobservable inputs where there is little, if any, market activity and that are developed based on the best information available under the circumstances.

Determination of the appropriate level within the fair value hierarchy is based on the lowest level input that is significant to the fair value measurement.

Assets and liabilities measured at fair value on a recurring basis, segregated by fair value hierarchy level, are summarized below:

	Level 1		Level 2		Level 3		Total
	(Dollars in thousands)
December 31, 2012
Securities available for sale:
U.S. government and agency securities	$	-	$	25,106	$	-	$	25,106
Mortgage-backed securities		-		21,945		-		21,945

September 30, 2012
Securities available for sale:
U.S. government and agency securities	$	-	$	20,171	$	-	$	20,171
Mortgage-backed securities		-		23,830		-		23,830

Assets and liabilities measured at fair value on a non-recurring basis, segregated by fair value hierarchy level, are summarized below:

	Level 1		Level 2		Level 3		Total
	(Dollars in thousands)
December 31, 2012
Impaired loans	$	-	$	-	$	764	$	764
Real estate owned		-		-		-		-

September 30, 2012
Impaired loans	$	-	$	-	$	724	$	724
Real estate owned		-		-		444		444

A loan is deemed to be impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loan impairment is measured based on discounted cash flows or collateral value. If a valuation adjustment is required, a portion of the general valuation allowance is allocated equal to the impairment amount. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly.

Real estate owned represents properties that have been acquired in foreclosure or by deed-in-lieu of foreclosure. The assets are written down to fair value less estimated costs to sell at the time of foreclosure. Fair value is based on the appraised value, which may be adjusted based on management's review and market conditions. Subsequent valuations are periodically performed and if the value has declined, an allowance would be established with a charge to operations. Additional impairments of $0 and $95,100 on REO properties were recorded during the three months ended December 31, 2012 and 2011, respectively, as a provision for REO losses.

Roebling Financial Corp, Inc. 10-Q