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Note 12 - Fair Value of Financial Instruments | 9 Months Ended
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Sep. 30, 2016
Notes to Financial Statements |
Fair Value Disclosures [Text Block] | 1 2 . Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of each class of financial instruments. Cash and Cash Equivalents. For cash and cash equivalents, the carrying amount was assumed to be a reasonable estimate of fair value, a Level 1 measurement. Short-term Investments. For short-term investments, the carrying amount was assumed to be a reasonable estimate of fair value, a Level 1 measurement. Securities Purchased under Agreements to Resell. The fair value of securities purchased under agreements to resell is based on dealer quotes, a Level 2 measurement. Securities. For securities, including securities held-to-maturity, available-for-sale, and for trading, fair values were based on quoted market prices at the reporting date. If a quoted market price was not available, fair value was estimated using quoted market prices for similar securities or dealer quotes. For certain actively traded agency preferred stock and U.S. Treasury securities, the Company measures the fair value based on quoted market prices in active exchange markets at the reporting date, a Level 1 measurement. The Company also measures securities by using quoted market prices for similar securities or dealer quotes, a Level 2 measurement. This category generally includes U.S. Government agency securities, state and municipal securities, mortgage-backed securities (“MBS”), commercial MBS, collateralized mortgage obligations, asset-backed securities, and corporate bonds. Loans Held for Sale . The Company records loans held for sale at fair value based on quoted prices from third party sources, or appraisal reports adjusted by sales commission assumptions. Loans. Fair values were estimated for portfolios of loans with similar financial characteristics. Each loan category was further segmented into fixed and adjustable rate interest terms and by performing and non-performing categories. The fair value of performing loans was calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the loan, a Level 3 measurement. The fair value of impaired loans was calculated based on the net realizable fair value of the collateral or the observable market price of the most recent sale or quoted price from loans held for sale. The Company does not record loans at fair value on a recurring basis. Nonrecurring fair value adjustments to collateral dependent impaired loans are recorded based on the current appraised value or adjusted appraised value of the collateral, a Level 2 or Level 3 measurement. Deposit Liabilities. The fair value of demand deposits, savings accounts, and certain money market deposits was assumed to be the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit was estimated using the rates currently offered for deposits with similar remaining maturities, a Level 3 measurement. Securities Sold under Agreements to Repurchase. The fair value of securities sold under agreements to repurchase is based on dealer quotes, a Level 2 measurement. Advances from Federal Home Loan Bank (“FHLB”) . The fair value of the advances is based on quotes from the FHLB to settle the advances, a Level 2 measurement. Other Borrowings. This category includes borrowings from other financial institutions. The fair value of other borrowings is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk, a Level 3 measurement. Long-term Debt. The fair value of long-term debt is estimated based on the quoted market prices or dealer quotes, a Level 2 measurement. Foreign Exchange Contracts . The Company measures the fair value of foreign exchange contracts based on dealer quotes, a Level 2 measurement. Interest Rate Swaps . Fair value of interest rate swaps is derived from third party models with observable market data, a Level 2 measurement. Off-Balance-Sheet Financial Instruments. The fair value of commitments to extend credit, standby letters of credit, and financial guarantees written were estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. The fair value of guarantees and letters of credit was based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date. The fair value of off-balance-sheet financial instruments was based on the assumptions that a market participant would use, a Level 3 measurement. Fair value was estimated in accordance with ASC Topic 825. Fair value estimates were made at specific points in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Bank’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Bank’s financial instruments, fair value estimates were based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates were subjective in nature and involved uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. The following table presents the carrying and notional amounts and estimated fair value of financial instruments as of September 30, 2016, and as of December 31, 2015:
|  | September 30, 2016 |  |  | December 31, 2015 |
|  | Carrying |  |  |  |  |  |  | Carrying |  |  |  |  |
|  | Amount |  |  | Fair Value |  |  | Amount |  |  | Fair Value |
|  | (In thousands) |
Financial Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from banks |  | $ | 203,877 |  |  | $ | 203,877 |  |  | $ | 180,130 |  |  | $ | 180,130 |
Short-term investments |  |  | 791,757 |  |  |  | 791,757 |  |  |  | 536,880 |  |  |  | 536,880 |
Securities available-for-sale |  |  | 1,298,469 |  |  |  | 1,298,469 |  |  |  | 1,586,352 |  |  |  | 1,586,352 |
Loans held for sale |  |  | 4,750 |  |  |  | 4,750 |  |  |  | 6,676 |  |  |  | 6,676 |
Loans, net |  |  | 10,886,996 |  |  |  | 10,825,059 |  |  |  | 10,016,227 |  |  |  | 9,938,810 |
Investment in Federal Home Loan Bank stock |  |  | 18,900 |  |  |  | 18,900 |  |  |  | 17,250 |  |  |  | 17,250 |
Warrants |  |  | 75 |  |  |  | 75 |  |  |  | 62 |  |  |  | 62 |
|  | Notional |  |  |  |  |  |  | Notional |  |  |  |  |
|  | Amount |  |  | Fair Value |  |  | Amount |  |  | Fair Value |
Foreign exchange contracts. |  | $ | 107,064 |  |  | $ | 1,711 |  |  | $ | 100,602 |  |  | $ | 3,339 |
|  | Carrying |  |  |  |  |  |  | Carrying |  |  |  |  |
|  | Amount |  |  | Fair Value |  |  | Amount |  |  | Fair Value |
Financial Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 10,938,696 |  |  | $ | 10,946,853 |  |  | $ | 10,509,087 |  |  | $ | 10,509,879 |
Securities sold under agreements to repurchase |  |  | 350,000 |  |  |  | 355,422 |  |  |  | 400,000 |  |  |  | 413,417 |
Advances from Federal Home Loan Bank |  |  | 700,000 |  |  |  | 700,130 |  |  |  | 275,000 |  |  |  | 274,488 |
Other borrowings |  |  | 17,705 |  |  |  | 15,903 |  |  |  | 18,593 |  |  |  | 16,684 |
Long-term debt |  |  | 119,136 |  |  |  | 62,628 |  |  |  | 119,136 |  |  |  | 58,420 |
|  | Notional |  |  |  |  |  |  | Notional |  |  |  |  |
|  | Amount |  |  | Fair Value |  |  | Amount |  |  | Fair Value |
Option contracts |  | $ | - |  |  | $ | - |  |  | $ | 9,396 |  |  | $ | 28 |
Foreign exchange contracts |  |  | 44,985 |  |  |  | 712 |  |  |  | 115,418 |  |  |  | 4,124 |
Interest rate swaps |  |  | 477,479 |  |  |  | 15,186 |  |  |  | 459,416 |  |  |  | 6,496 |
|  | Notional |  |  |  |  |  |  | Notional |  |  |  |  |
|  | Amount |  |  | Fair Value |  |  | Amount |  |  | Fair Value |
Off-Balance Sheet Financial Instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commitments to extend credit |  | $ | 1,950,756 |  |  | $ | (5,844 | ) |  | $ | 1,971,848 |  |  | $ | (5,570 | )
Standby letters of credit |  |  | 74,612 |  |  |  | (839 | ) |  |  | 49,081 |  |  |  | (194 | )
Other letters of credit |  |  | 31,331 |  |  |  | (69 | ) |  |  | 38,131 |  |  |  | (22 | )
Bill of lading guarantees |  |  | - |  |  |  | - |  |  |  | 454 |  |  |  | (1 | )
The following tables present the level in the fair value hierarchy for the estimated fair values of financial instruments as of September 30, 2016, and December 31, 2015.
|  | September 30, 2016 |
|  | Estimated |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Fair Value |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Measurements |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
|  | (In thousands) |
Financial Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from banks |  | $ | 203,877 |  |  | $ | 203,877 |  |  | $ | - |  |  | $ | - |
Short-term investments |  |  | 791,757 |  |  |  | 791,757 |  |  |  | - |  |  |  | - |
Securities available-for-sale |  |  | 1,298,469 |  |  |  | 395,935 |  |  |  | 902,534 |  |  |  | - |
Loans held-for-sale |  |  | 4,750 |  |  |  | - |  |  |  | - |  |  |  | 4,750 |
Loans, net |  |  | 10,825,059 |  |  |  | - |  |  |  | - |  |  |  | 10,825,059 |
Investment in Federal Home Loan Bank stock |  |  | 18,900 |  |  |  | - |  |  |  | 18,900 |  |  |  | - |
Warrants |  |  | 75 |  |  |  | - |  |  |  | - |  |  |  | 75 |
Financial Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  |  | 10,946,853 |  |  |  | - |  |  |  | - |  |  |  | 10,946,853 |
Securities sold under agreements to repurchase |  |  | 355,422 |  |  |  | - |  |  |  | 355,422 |  |  |  | - |
Advances from Federal Home Loan Bank |  |  | 700,130 |  |  |  | - |  |  |  | 700,130 |  |  |  | - |
Other borrowings . |  |  | 15,903 |  |  |  | - |  |  |  | - |  |  |  | 15,903 |
Long-term debt |  |  | 62,628 |  |  |  | - |  |  |  | 62,628 |  |  |  | - |
|  | December 31, 2015 |
|  | Estimated |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Fair Value |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Measurements |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
|  | (In thousands) |
Financial Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from banks |  | $ | 180,130 |  |  | $ | 180,130 |  |  | $ | - |  |  | $ | - |
Short-term investments |  |  | 536,880 |  |  |  | 536,880 |  |  |  | - |  |  |  | - |
Securities available-for-sale |  |  | 1,586,352 |  |  |  | 290,121 |  |  |  | 1,296,231 |  |  |  | - |
Loans held-for-sale |  |  | 6,676 |  |  |  | - |  |  |  | - |  |  |  | 6,676 |
Loans, net |  |  | 9,938,810 |  |  |  | - |  |  |  | - |  |  |  | 9,938,810 |
Investment in Federal Home Loan Bank stock |  |  | 17,250 |  |  |  | - |  |  |  | 17,250 |  |  |  | - |
Warrants |  |  | 62 |  |  |  | - |  |  |  | - |  |  |  | 62 |
Financial Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  |  | 10,509,879 |  |  |  | - |  |  |  | - |  |  |  | 10,509,879 |
Securities sold under agreements to repurchase |  |  | 413,417 |  |  |  | - |  |  |  | 413,417 |  |  |  | - |
Advances from Federal Home Loan Bank |  |  | 274,488 |  |  |  | - |  |  |  | - |  |  |  | 274,488 |
Other borrowings |  |  | 16,684 |  |  |  | - |  |  |  | - |  |  |  | 16,684 |
Long-term debt |  |  | 58,420 |  |  |  | - |  |  |  | 58,420 |  |  |  | - |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=66048111&loc=d3e19207-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=73719730&loc=d3e13537-108611 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=73719730&loc=d3e13504-108611 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=73719730&loc=d3e13433-108611 + Details
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