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Fair Value Information | 3 Months Ended
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Mar. 31, 2016
Fair Value Disclosures [Abstract] |
Fair Value Information |
9. | FAIR VALUE INFORMATION
Fair Value Hierarchy Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The following disclosure provides the fair value information for financial assets and liabilities as of March 31, 2016. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels (Level 1, Level 2 and Level 3).
| • |  | Level 1- includes assets and liabilities that have an active market that provides an objective quoted value for each unit. Here the active market quoted value is used to measure the fair value. Level 1 has the most objective measurement of fair value. Level 2 is less objective and Level 3 is the least objective (most subjective) in estimating fair value.
| • |  | Level 2- assets and liabilities are ones where there is no active market in the same assets, but where there are parallel markets or alternative means to estimate fair value using observable information inputs such as the value placed on similar assets or liability that were recently traded.
| • |  | Level 3 -fair values are based on information from the entity that reports these values in their financial statements. Such data are referred to as unobservable, in that the valuations are not based on data available to parties outside the entity.
Observable and unobservable inputs are the key elements that separate the levels in the fair value hierarchy. Inputs here refer explicitly to the types of information used to obtain the fair value of the asset or liability. Observable inputs include data sources and market prices available and visible outside of the entity. While there will continue to be judgments required when an active market price is not available, these inputs are external to the entity and observable outside the entity; they are consequently considered more objective than internal unobservable inputs used for Level 3 fair value. Unobservable inputs are data and analyses that are developed within the entity to assess the fair value, such as management estimates of future benefits from use of assets. There were no transfers in and out of Level 1 and Level 2 during the three months ended March 31, 2016 and 2015. Determination of Fair Value The following is a description of valuation methodologies used for assets and liabilities recorded at fair value and for estimating fair value for financial instruments not recorded at fair value. Cash and Cash Equivalents— The carrying amount of cash and cash equivalents is considered to approximate fair value due to the liquidity of these instruments. Interest-Bearing Balances Due from Depository Institutions — The carrying value of due from depository institutions is considered to approximate fair value due to the short-term nature of these deposits. FHLB Stock — The carrying amount of FHLB stock approximates fair value, as the stock may be sold back to the FHLB at carrying value. Investment Securities Available-for-Sale — Investment securities available-for-sale are generally valued based upon quotes obtained from an independent third-party pricing service, which uses evaluated pricing applications and model processes. Observable market inputs, such as, benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data are considered as part of the evaluation. The inputs are related directly to the security being evaluated, or indirectly to a similarly situated security. Market assumptions and market data are utilized in the valuation models. The Company reviews the market prices provided by the third-party pricing service for reasonableness based on the Company’s understanding of the market place and credit issues related to the securities. The Company has not made any adjustments to the market quotes provided by them and, accordingly, the Company categorized its investment portfolio within Level 2 of the fair value hierarchy. Investment Securities Held–to-Maturity — Investment securities held-to-maturity are generally valued based upon quotes obtained from an independent third-party pricing service, which uses evaluated pricing applications and model processes. Observable market inputs, such as, benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data are considered as part of the evaluation. The inputs are related directly to the security being evaluated, or indirectly to a similarly situated security. Market assumptions and market data are utilized in the valuation models. The Company reviews the market prices provided by the third-party pricing service for reasonableness based on the Company’s understanding of the market place and credit issues related to the securities. The Company has not made any adjustments to the market quotes provided by them and, accordingly, the Company categorized its investment portfolio within Level 2 of the fair value hierarchy. The held-to-maturity CMO investment is valued based upon quotes obtained from an independent third-party pricing service. The Company categorized its held-to-maturity CMO investment as Level 3. Loans — The carrying amount of loans and lease finance receivables is their contractual amounts outstanding, reduced by deferred net loan origination fees, purchase price discounts and the allocable portion of the allowance for loan losses. The fair value of loans, other than loans on nonaccrual status, was estimated by discounting the remaining contractual cash flows using the estimated current rate at which similar loans would be made to borrowers with similar credit risk characteristics and for the same remaining maturities, reduced by deferred net loan origination fees and the allocable portion of the allowance for loan losses. Accordingly, in determining the estimated current rate for discounting purposes, no adjustment has been made for any change in borrowers’ specific credit risks since the origination or purchase of such loans. Rather, the allocable portion of the allowance for loan losses and the purchase price discounts are considered to provide for such changes in estimating fair value. As a result, this fair is not necessarily the value which would be derived using an exit price. These loans are included within Level 3 of the fair value hierarchy. Impaired loans and OREO are generally measured using the fair value of the underlying collateral, which is determined based on the most recent appraisal information received, less costs to sell. Appraised values may be adjusted based on factors such as the changes in market conditions from the time of valuation or discounted cash flows of the property. As such, these loans and OREO fall within Level 3 of the fair value hierarchy. The majority of our commitments to extend credit carry current market interest rates if converted to loans. Because these commitments are generally unassignable by either the borrower or us, they only have value to the borrower and us. The estimated fair value approximates the recorded deferred fee amounts and is excluded from the following table because it is not material. Swaps — The fair value of the interest rate swap contracts are provided by our counterparty using a system that constructs a yield curve based on cash LIBOR rates, Eurodollar futures contracts, and 3-year through 30-year swap rates. The yield curve determines the valuations of the interest rate swaps. Accordingly, each swap is categorized as a Level 2 valuation. Deposits & Borrowings — The amounts payable to depositors for demand, savings, and money market accounts, and short-term borrowings are considered to approximate fair value. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities. The fair value of long-term borrowings and junior subordinated debentures is estimated using the rates currently offered for borrowings of similar remaining maturities. Interest-bearing deposits and borrowings are included within Level 2 of the fair value hierarchy. Assets and Liabilities Measured at Fair Value on a Recurring Basis The tables below present the balances of assets and liabilities measured at fair value on a recurring basis for the periods presented.
|  | Carrying Value at March 31, 2016 |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
|  | (Dollars in thousands) |
Description of assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment securities - AFS: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government agency/GSEs |  | $ | 5,760 |  |  | $ | - |  |  | $ | 5,760 |  |  | $ | - |
Residential mortgage-backed securities |  |  | 1,759,050 |  |  |  | - |  |  |  | 1,759,050 |  |  |  | - |
CMOs/REMICs - residential |  |  | 368,535 |  |  |  | - |  |  |  | 368,535 |  |  |  | - |
Municipal bonds |  |  | 156,225 |  |  |  | - |  |  |  | 156,225 |  |  |  | - |
Other securities |  |  | 5,089 |  |  |  | - |  |  |  | 5,089 |  |  |  | - |
Total investment securities - AFS |  |  | 2,294,659 |  |  |  | - |  |  |  | 2,294,659 |  |  |  | - |
Interest rate swaps |  |  | 13,132 |  |  |  | - |  |  |  | 13,132 |  |  |  | - |
Total assets |  | $ | 2,307,791 |  |  | $ | - |  |  | $ | 2,307,791 |  |  | $ | - |
Description of liability |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | 13,132 |  |  | $ | - |  |  | $ | 13,132 |  |  | $ | - |
Total liabilities |  | $ | 13,132 |  |  | $ | - |  |  | $ | 13,132 |  |  | $ | - |
|  | Carrying Value at December 31, 2015 |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
|  | (Dollars in thousands) |
Description of assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment securities - AFS: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government agency/GSEs |  | $ | 5,745 |  |  | $ | - |  |  | $ | 5,745 |  |  | $ | - |
Residential mortgage-backed securities |  |  | 1,813,097 |  |  |  | - |  |  |  | 1,813,097 |  |  |  | - |
CMOs/REMICs - residential |  |  | 383,781 |  |  |  | - |  |  |  | 383,781 |  |  |  | - |
Municipal bonds |  |  | 160,973 |  |  |  | - |  |  |  | 160,973 |  |  |  | - |
Other securities |  |  | 5,050 |  |  |  | - |  |  |  | 5,050 |  |  |  | - |
Total investment securities - AFS |  |  | 2,368,646 |  |  |  | - |  |  |  | 2,368,646 |  |  |  | - |
Interest rate swaps |  |  | 9,344 |  |  |  | - |  |  |  | 9,344 |  |  |  | - |
Total assets |  | $ | 2,377,990 |  |  | $ | - |  |  | $ | 2,377,990 |  |  | $ | - |
Description of liability |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | 9,344 |  |  | $ | - |  |  | $ | 9,344 |  |  | $ | - |
Total liabilities |  | $ | 9,344 |  |  | $ | - |  |  | $ | 9,344 |  |  | $ | - |
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis We may be required to measure certain assets at fair value on a non-recurring basis in accordance with GAAP. These adjustments to fair value usually result from application of lower of cost or fair value accounting or write-downs of individual assets. For assets measured at fair value on a non-recurring basis that were held on the balance sheet at March 31, 2016 and December 31, 2015, respectively, the following tables provide the level of valuation assumptions used to determine each adjustment and the carrying value of the related assets that had losses during the period.
|  | Carrying Value at March 31, 2016 |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |  |  | Total Losses For the Three Months Ended March 31, 2016 |
|  | (Dollars in thousands) |
Description of assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans, excluding PCI Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 110 |  |  | $ | - |  |  | $ | - |  |  | $ | 110 |  |  | $ | 13 |
SBA |  |  | 213 |  |  |  | - |  |  |  | - |  |  |  | 213 |  |  |  | 48 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Construction |  |  | 7,651 |  |  |  | - |  |  |  | - |  |  |  | 7,651 |  |  |  | 35 |
SFR mortgage |  |  | 504 |  |  |  | - |  |  |  | - |  |  |  | 504 |  |  |  | 102 |
Dairy & livestock and agribusiness |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Consumer and other loans |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Other real estate owned |  |  | 1,611 |  |  |  | - |  |  |  | - |  |  |  | 1,611 |  |  |  | 248 |
Total assets |  | $ | 10,089 |  |  | $ | - |  |  | $ | - |  |  | $ | 10,089 |  |  | $ | 446 |
|  | Carrying Value at December 31, 2015 |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |  |  | Total Losses For the Year Ended December 31, 2015 |
|  | (Dollars in thousands) |
Description of assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans, excluding PCI Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 228 |  |  | $ | - |  |  | $ | - |  |  | $ | 228 |  |  | $ | 228 |
SBA |  |  | 41 |  |  |  | - |  |  |  | - |  |  |  | 41 |  |  |  | 15 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Construction |  |  | 7,651 |  |  |  | - |  |  |  | - |  |  |  | 7,651 |  |  |  | 13 |
SFR mortgage |  |  | 588 |  |  |  | - |  |  |  | - |  |  |  | 588 |  |  |  | 20 |
Dairy & livestock and agribusiness |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Consumer and other loans |  |  | 258 |  |  |  | - |  |  |  | - |  |  |  | 258 |  |  |  | 101 |
Other real estate owned |  |  | 948 |  |  |  | - |  |  |  | - |  |  |  | 948 |  |  |  | 162 |
Total assets |  | $ | 9,714 |  |  | $ | - |  |  | $ | - |  |  | $ | 9,714 |  |  | $ | 539 |
Fair Value of Financial Instruments The following disclosure presents estimated fair value of our financial instruments. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to develop the estimates of fair value. Accordingly, the estimates presented below are not necessarily indicative of the amounts the Company may realize in a current market exchange as of March 31, 2016 and December 31, 2015, respectively. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
|  | March 31, 2016 |
|  |  |  |  | Estimated Fair Value |
|  | Carrying Amount |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | (Dollars in thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total cash and cash equivalents |  | $ | 239,586 |  |  | $ | 239,586 |  |  | $ | - |  |  | $ | - |  |  | $ | 239,586 |
Interest-earning balances due from depository institutions |  |  | 90,718 |  |  |  | - |  |  |  | 90,718 |  |  |  | - |  |  |  | 90,718 |
FHLB stock |  |  | 18,501 |  |  |  | - |  |  |  | 18,501 |  |  |  | - |  |  |  | 18,501 |
Investment securities available-for-sale |  |  | 2,294,659 |  |  |  | - |  |  |  | 2,294,659 |  |  |  | - |  |  |  | 2,294,659 |
Investment securities held-to-maturity |  |  | 812,893 |  |  |  | - |  |  |  | 824,203 |  |  |  | 1,725 |  |  |  | 825,928 |
Total loans, net of allowance for loan losses |  |  | 4,114,073 |  |  |  | - |  |  |  | - |  |  |  | 4,166,203 |  |  |  | 4,166,203 |
Swaps |  |  | 13,132 |  |  |  | - |  |  |  | 13,132 |  |  |  | - |  |  |  | 13,132 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noninterest-bearing |  | $ | 3,352,128 |  |  |  | 3,352,128 |  |  |  | - |  |  |  | - |  |  | $ | 3,352,128 |
Interest-bearing |  |  | 2,864,150 |  |  |  | - |  |  |  | 2,863,784 |  |  |  | - |  |  |  | 2,863,784 |
Borrowings |  |  | 631,860 |  |  |  | - |  |  |  | 631,749 |  |  |  | - |  |  |  | 631,749 |
Junior subordinated debentures |  |  | 25,774 |  |  |  | - |  |  |  | 27,284 |  |  |  | - |  |  |  | 27,284 |
Swaps |  |  | 13,132 |  |  |  | - |  |  |  | 13,132 |  |  |  | - |  |  |  | 13,132 |
|  | December 31, 2015 |
|  |  |  |  | Estimated Fair Value |
|  | Carrying Amount |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | (Dollars in thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total cash and cash equivalents |  | $ | 106,097 |  |  | $ | 106,097 |  |  | $ | - |  |  | $ | - |  |  | $ | 106,097 |
Interest-earning balances due from depository institutions |  |  | 32,691 |  |  |  | - |  |  |  | 32,691 |  |  |  | - |  |  |  | 32,691 |
FHLB stock |  |  | 17,588 |  |  |  | - |  |  |  | 17,588 |  |  |  | - |  |  |  | 17,588 |
Investment securities available-for-sale |  |  | 2,368,646 |  |  |  | - |  |  |  | 2,368,646 |  |  |  | - |  |  |  | 2,368,646 |
Investment securities held-to-maturity |  |  | 850,989 |  |  |  | - |  |  |  | 851,186 |  |  |  | 1,853 |  |  |  | 853,039 |
Total loans, net of allowance for loan losses |  |  | 3,957,781 |  |  |  | - |  |  |  | - |  |  |  | 3,971,329 |  |  |  | 3,971,329 |
Swaps |  |  | 9,344 |  |  |  | - |  |  |  | 9,344 |  |  |  | - |  |  |  | 9,344 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noninterest-bearing |  | $ | 3,250,174 |  |  |  | 3,250,174 |  |  |  | - |  |  |  | - |  |  | $ | 3,250,174 |
Interest-bearing |  |  | 2,667,086 |  |  |  | - |  |  |  | 2,666,186 |  |  |  | - |  |  |  | 2,666,186 |
Borrowings |  |  | 736,704 |  |  |  | - |  |  |  | 736,575 |  |  |  | - |  |  |  | 736,575 |
Junior subordinated debentures |  |  | 25,774 |  |  |  | - |  |  |  | 27,210 |  |  |  | - |  |  |  | 27,210 |
Swaps |  |  | 9,344 |  |  |  | - |  |  |  | 9,344 |  |  |  | - |  |  |  | 9,344 |
The fair value estimates presented herein are based on pertinent information available to management as of March 31, 2016 and December 31, 2015. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date, and therefore, current estimates of fair value may differ significantly from the amounts presented above.

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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=36462937&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=49121117&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=49121117&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=49121117&loc=d3e13433-108611 + Details
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