XML 28 R17.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Note 12 - Fair Value Measurements | 9 Months Ended
--- | ---
Sep. 30, 2018
Notes to Financial Statements |
Fair Value Measurement and Measurement Inputs, Recurring and Nonrecurring [Text Block] | 1 2 . Fair Value Measurement s The Company determined the fair values of our financial instruments based on the following:
| ● | Level 1 - Quoted prices in active markets for identical assets or liabilities.
| ● | Level 2 - Observable prices in active markets for similar assets or liabilities; prices for identical or similar assets or liabilities in markets that are not active; directly observable market inputs for substantially the full term of the asset and liability; market inputs that are not directly observable but are derived from or corroborated by observable market data.
| ● | Level 3 – Unobservable inputs based on the Company’s own judgment about the assumptions that a market participant would use.
The Company uses the following methodologies to measure the fair value of its financial assets and liabilities on a recurring basis: Securities Available for Sale . For certain 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, corporate bonds and trust preferred securities. Warrants . The Company measures the fair value of warrants based on unobservable inputs based on assumptions and management judgment, a Level 3 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. Assets measured at estimated fair value on a non-recurring basis: Certain assets or liabilities are required to be measured at estimated fair value on a nonrecurring basis subsequent to initial recognition. Generally, these adjustments are the result of lower-of-cost-or-fair value or other impairment write-downs of individual assets. In determining the estimated fair values during the period, the Company determined that substantially all the changes in estimated fair value were due to declines in market conditions versus instrument specific credit risk. For the nine months ended September 30, 2018 and December 31, 2017, there were no material adjustments to fair value for the Company’s assets and liabilities measured at fair value on a nonrecurring basis in accordance with GAAP. The following tables present the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of September 30, 2018, and December 31, 2017:
September 30, 2018 |  | Fair Value Measurements Using |  |  | Total at |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Fair Value |
|  | (In thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt securities available-for-sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 199,374 |  |  | $ | - |  |  | $ | - |  |  | $ | 199,374 |
U.S. government agencies |  |  | - |  |  |  | 6,511 |  |  |  | - |  |  |  | 6,511 |
U.S. government sponsored entities |  |  | - |  |  |  | 383,447 |  |  |  | - |  |  |  | 383,447 |
Mortgage-backed securities |  |  | - |  |  |  | 626,639 |  |  |  | - |  |  |  | 626,639 |
Collateralized mortgage obligations |  |  | - |  |  |  | 1,086 |  |  |  | - |  |  |  | 1,086 |
Corporate debt securities |  |  | - |  |  |  | 66,003 |  |  |  | - |  |  |  | 66,003 |
Total debt securities available-for-sale |  |  | 199,374 |  |  |  | 1,083,686 |  |  |  | - |  |  |  | 1,283,060 |
Equity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Preferred stock of government sponsored entities |  |  | 6,397 |  |  |  | - |  |  |  | - |  |  |  | 6,397 |
Mutual funds |  |  | 6,034 |  |  |  | - |  |  |  | - |  |  |  | 6,034 |
Other equity securities |  |  | 11,091 |  |  |  | - |  |  |  | - |  |  |  | 11,091 |
Total equity securities |  |  | 23,522 |  |  |  | - |  |  |  | - |  |  |  | 23,522 |
Warrants |  |  | - |  |  |  | - |  |  |  | 168 |  |  |  | 168 |
Interest rate swaps |  |  | - |  |  |  | 18,419 |  |  |  | - |  |  |  | 18,419 |
Foreign exchange contracts |  |  | - |  |  |  | 400 |  |  |  | - |  |  |  | 400 |
Total assets |  | $ | 222,896 |  |  | $ | 1,102,505 |  |  | $ | 168 |  |  | $ | 1,325,569 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Option contracts |  | $ | - |  |  | $ | 4 |  |  | $ | - |  |  | $ | 4 |
Foreign exchange contracts |  |  | - |  |  |  | 1,648 |  |  |  | - |  |  |  | 1,648 |
Total liabilities |  | $ | - |  |  | $ | 1,652 |  |  | $ | - |  |  | $ | 1,652 |
December 31, 2017 |  | Fair Value Measurements Using |  |  | Total at |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Fair Value |
|  | (In thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities available-for-sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 249,520 |  |  | $ | - |  |  | $ | - |  |  | $ | 249,520 |
U.S. government agency entities |  |  | - |  |  |  | 8,988 |  |  |  | - |  |  |  | 8,988 |
U.S. government sponsored entities |  |  | - |  |  |  | 390,336 |  |  |  | - |  |  |  | 390,336 |
State and municipal securities |  |  | - |  |  |  | 1,914 |  |  |  | - |  |  |  | 1,914 |
Mortgage-backed securities |  |  | - |  |  |  | 571,969 |  |  |  | - |  |  |  | 571,969 |
Collateralized mortgage obligations |  |  | - |  |  |  | 1,516 |  |  |  | - |  |  |  | 1,516 |
Corporate debt securities |  |  | - |  |  |  | 81,281 |  |  |  | - |  |  |  | 81,281 |
Mutual funds |  |  | 6,230 |  |  |  | - |  |  |  | - |  |  |  | 6,230 |
Preferred stock of government sponsored entities |  |  | 10,102 |  |  |  | - |  |  |  | - |  |  |  | 10,102 |
Other equity securities |  |  | 11,770 |  |  |  | - |  |  |  | - |  |  |  | 11,770 |
Total securities available-for-sale |  |  | 277,622 |  |  |  | 1,056,004 |  |  |  | - |  |  |  | 1,333,626 |
Warrants |  |  | - |  |  |  | - |  |  |  | 91 |  |  |  | 91 |
Interest rate swaps |  |  | - |  |  |  | 5,218 |  |  |  | - |  |  |  | 5,218 |
Foreign exchange contracts |  |  | - |  |  |  | 1,832 |  |  |  | - |  |  |  | 1,832 |
Total assets |  | $ | 277,622 |  |  | $ | 1,063,054 |  |  | $ | 91 |  |  | $ | 1,340,767 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Option contracts |  | $ | - |  |  | $ | 9 |  |  | $ | - |  |  | $ | 9 |
Interest rate swaps |  |  | - |  |  |  | 2,699 |  |  |  | - |  |  |  | 2,699 |
Foreign exchange contracts |  |  | - |  |  |  | 453 |  |  |  | - |  |  |  | 453 |
Total liabilities |  | $ | - |  |  | $ | 3,161 |  |  | $ | - |  |  | $ | 3,161 |
The Company measured the fair value of its warrants on a recurring basis using significant unobservable inputs. The fair value of warrants was $168,000 as of September 30, 2018, compared to $91,000 as of December 31, 2017. The fair value adjustment of warrants was included in other operating income in the third quarter of 2018. The significant unobservable inputs in the Black-Scholes option pricing model for the fair value of warrants are their expected life ranging from 1 to 6 years, risk-free interest rate from 2.73% to 3.27%, and stock volatility from 8.3% to 12.09%. For financial assets measured at fair value on a nonrecurring basis that were still reflected in the condensed consolidated balance sheet as of September 30, 2018, the following tables provide the level of valuation assumptions used to determine each adjustment, the carrying value of the related individual assets as of September 30, 2018, and December 31, 2017, and the total losses for the periods indicated:
|  | As of September 30, 2018 |  |  |  |  |  |  | Total Losses |
|  | Fair Value Measurements Using |  |  | Total at |  |  | For the Three Months Ended |  |  | For the Nine Months Ended |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Fair Value |  |  | September 30, 2018 |  |  | September 30, 2017 |  |  | September 30, 2018 |  |  | September 30, 2017 |
|  | (In thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans by type: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  | $ | - |  |  | $ | - |  |  | $ | 3,209 |  |  | $ | 3,209 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 25 |
Commercial mortgage loans |  |  | - |  |  |  | - |  |  |  | 26,606 |  |  |  | 26,606 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Residential mortgage loans and equity lines |  |  | - |  |  |  | - |  |  |  | 6,323 |  |  |  | 6,323 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total impaired loans |  |  | - |  |  |  | - |  |  |  | 36,138 |  |  |  | 36,138 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 25 |
Other real estate owned (1) |  |  | - |  |  |  | 4,918 |  |  |  | 4,343 |  |  |  | 9,261 |  |  |  | - |  |  |  | 405 |  |  |  | - |  |  |  | 654 |
Investments in venture capital and private company stock |  |  | - |  |  |  | - |  |  |  | 2,188 |  |  |  | 2,188 |  |  |  | 62 |  |  |  | 12 |  |  |  | 326 |  |  |  | 365 |
Total assets |  | $ | - |  |  | $ | 4,918 |  |  | $ | 42,669 |  |  | $ | 47,587 |  |  | $ | 62 |  |  | $ | 417 |  |  | $ | 326 |  |  | $ | 1,044 |
( 1 ) Other real estate owned balance of $8.7 million in the condensed consolidated balance sheet is net of estimated disposal costs.
|  | As of December 31, 2017 |  |  | Total Losses |
|  | Fair Value Measurements Using |  |  | Total at |  |  | For the Twelve Months Ended |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Fair Value |  |  | December 31, 2017 |  |  | December 31, 2016 |
|  | (In thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans by type: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial loans |  | $ | - |  |  | $ | - |  |  | $ | 18,097 |  |  | $ | 18,097 |  |  | $ | 25 |  |  | $ | 322 |
Commercial mortgage loans |  |  | - |  |  |  | - |  |  |  | 31,459 |  |  |  | 31,459 |  |  |  | - |  |  |  | - |
Residential mortgage loans and equity lines |  |  | - |  |  |  | - |  |  |  | 11,355 |  |  |  | 11,355 |  |  |  | - |  |  |  | - |
Total impaired loans |  |  | - |  |  |  | - |  |  |  | 60,911 |  |  |  | 60,911 |  |  |  | 25 |  |  |  | 322 |
Other real estate owned (1) |  |  | - |  |  |  | 5,677 |  |  |  | 4,322 |  |  |  | 9,999 |  |  |  | 457 |  |  |  | 9 |
Investments in venture capital and private company stock |  |  | - |  |  |  | - |  |  |  | 2,583 |  |  |  | 2,583 |  |  |  | 392 |  |  |  | 976 |
Total assets |  | $ | - |  |  | $ | 5,677 |  |  | $ | 67,816 |  |  | $ | 73,493 |  |  | $ | 874 |  |  | $ | 1,307 |
( 1 ) Other real estate owned balance of $9.4 million in the Consolidated Balance Sheets is net of estimated disposal costs. The significant unobservable (Level 3 ) inputs used in the fair value measurement of collateral for collateral-dependent impaired loans was primarily based on the appraised value of collateral adjusted by estimated sales cost and commissions. The Company generally obtains new appraisal reports every twelve months. As the Company’s primary objective in the event of default would be to monetize the collateral to settle the outstanding balance of the loan, less marketable collateral would receive a larger discount. During the reported periods, collateral discounts ranged from 55% in the case of accounts receivable collateral to 65% in the case of inventory collateral. The significant unobservable inputs used in the fair value measurement of loans held for sale was primarily based on the quoted price or sale price adjusted by estimated sales cost and commissions. The significant unobservable inputs used in the fair value measurement of other real estate owned (“OREO”) was primarily based on the appraised value of OREO adjusted by estimated sales cost and commissions. The Company applies estimated sales cost and commissions ranging from 3% to 6% of the collateral value of impaired loans, quoted price, or loan sale price of loans held for sale, and appraised value of OREO.

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure of the fair value measurement of assets and liabilities, which includes financial instruments measured at fair value that are classified in shareholders' equity, which may be measured on a recurring or nonrecurring basis. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
Name: | us-gaap_FairValueMeasurementInputsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration