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Fair Value | 12 Months Ended
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Dec. 31, 2011
Fair Value [Abstract] |
Fair Value | 13. FAIR VALUE FASB ASC 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability. Securities Available for Sale The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities relationship to other benchmark quoted securities (Level 2 inputs). Impaired Loans The fair values of impaired loans are generally measured for impairment using the practical expedients permitted by FASB ASC 310-10-35 including impaired loans measured at an observable market price (if available), or at the fair value of the loan's collateral (if the loan is collateral dependent). Fair value of the loan's collateral, when the loan is dependent on collateral, is determined by appraisals or independent valuation, which is then adjusted for the cost related to liquidation of the collateral. These are considered Level 3 inputs. Derivatives The fair value of our derivative financial instruments, including interest rate swaps and caps, is based on derivative valuation models using market data inputs as of the valuation date that can generally be verified and do not typically involve significant management judgments. (Level 2 inputs). Other Real Estate Owned Other real estate owned is valued at the time the loan is foreclosed upon and the asset is transferred to other real estate owned. The value is based primarily on third party appraisals, less costs to sell and result in a Level 3 classification of the inputs for determining fair value. Other real estate owned is reviewed and evaluated on at least an annual basis for additional impairment and adjusted accordingly, based on the same factors identified above. Loans held for sale Loans held for sale are carried at the lower of cost or fair value, as determined by outstanding commitments from investors, or based on recent comparable sales, if available, and if not available, are based on discounted cash flows using current market rates applied to the estimated life and credit risk (Level 2 inputs) or may be assessed based upon the fair value of the collateral which is obtained from recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in Level 3 classification of the inputs for determining fair value. Assets and liabilities measured at fair value on a recurring basis are summarized below:
|  |  |  |  | Fair Value Measurements Using |
|  | At December 31, 2011 |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
|  | (In thousands) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities available for sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury |  | $ | 300 |  |  | $ | 0 |  |  | $ | 300 |  |  | $ | 0 |
GSE collateralized mortgage obligations |  |  | 227,836 |  |  |  | 0 |  |  |  | 227,836 |  |  |  | 0 |
GSE mortgage-backed securities |  |  | 487,754 |  |  |  | 0 |  |  |  | 487,754 |  |  |  | 0 |
Corporate note |  |  | 4,348 |  |  |  | 0 |  |  |  | 4,348 |  |  |  | 0 |
Municipal bonds |  |  | 5,764 |  |  |  | 0 |  |  |  | 5,764 |  |  |  | 0 |
Mutual funds |  |  | 14,918 |  |  |  | 14,918 |  |  |  | 0 |  |  |  | 0 |
Derivatives—Interest rate caps |  |  | 9 |  |  |  | 0 |  |  |  | 9 |  |  |  | 0 |
There were no significant transfers between Level 1 and 2 during 2011.
|  |  |  |  | Fair Value Measurements Using |
|  | At December 31, 2010 |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
|  | (In thousands) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities available for sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
GSE bonds |  | $ | 125,718 |  |  | $ | 0 |  |  | $ | 125,718 |  |  | $ | 0 |
GSE collateralized mortgage obligations |  |  | 103,201 |  |  |  | 0 |  |  |  | 103,201 |  |  |  | 0 |
GSE mortgage-backed securities |  |  | 284,834 |  |  |  | 0 |  |  |  | 284,834 |  |  |  | 0 |
Corporate note |  |  | 3,708 |  |  |  | 0 |  |  |  | 3,708 |  |  |  | 0 |
Municipal bonds |  |  | 5,258 |  |  |  | 0 |  |  |  | 5,258 |  |  |  | 0 |
Mutual funds |  |  | 5,519 |  |  |  | 5,519 |  |  |  | 0 |  |  |  | 0 |
Derivatives—Interest rate caps |  |  | 167 |  |  |  | 0 |  |  |  | 167 |  |  |  | 0 |
Fair value adjustments for interest rate caps resulted in a net expense of $157 thousand and $901 thousand for 2011 and 2010, respectively. Assets measured at fair value on a non-recurring basis are summarized below:
|  |  |  |  | Fair Value Measurements at Using |
|  | At December 31, 2011 |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
|  | (In thousands) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans at fair value: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans |  | $ | 15,456 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 15,456 |
Commercial business |  |  | 4,245 |  |  |  | 0 |  |  |  | 0 |  |  |  | 4,245 |
Loans held for sale, net |  |  | 24,408 |  |  |  | 0 |  |  |  | 24,408 |  |  |  | 0 |
Other real estate owned* |  |  | 6,505 |  |  |  | 0 |  |  |  | 0 |  |  |  | 6,505 |
* | The balance consists of real estate portfolio segment only.
|  |  |  |  | Fair Value Measurements at Using |
|  | At December 31, 2010 |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
|  | (In thousands) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans at fair value: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate loans |  | $ | 35,009 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 35,009 |
Commercial business |  |  | 6,611 |  |  |  | 0 |  |  |  | 0 |  |  |  | 6,611 |
Loans held for sale, net |  |  | 3,225 |  |  |  | 0 |  |  |  | 3,225 |  |  |  | 0 |
Other real estate owned* |  |  | 675 |  |  |  | 0 |  |  |  | 0 |  |  |  | 675 |
* | The balance consists of real estate portfolio segment only.
Impaired loans, which are measured for impairment using the fair value of the loan collateral, had a carrying amount of $30.4 million at December 31, 2011, after partial charge-offs of $7.3 million. In addition, these loans had a specific valuation allowance of $8.2 million at December 31, 2011. Of this $30.4 million, $28.0 million were carried at their fair value of $19.7 million as a result of the aforementioned charge-offs and specific valuation allowances. The remaining $2.4 million were carried at cost at December 31, 2011, as the fair value of the collateral on these loans exceeded the book value for each individual credit. The Company also has impaired loans totaling $51.7 million at December 31, 2011 which are measured based on the present value of expected cash flows and are not included in the above table as this is not a measurement of fair value. Of these, $45.8 million were carried below cost as a result of charge-offs or assigned specific reserves of $9.9 million at December 31, 2011. The remaining $5.9 million of impaired loans measured based on the present value of expected cash flows are carried at cost. Charge-offs and changes in specific valuation allowances during 2011 on impaired loans carried at the fair value of loan collateral at December 31, 2011 resulted in additional provision for loan losses of $19.6 million. Impaired loans, which are measured for impairment using the fair value of the loan collateral, had a loan principal balance $94.6 million at December 31, 2010, after partial charge-offs of $20.0 million. In addition, these loans had a specific valuation allowance of $11.2 million at December 31, 2010. Of this $94.6 million, $52.8 million were carried at their fair value of $41.6 million as a result of the aforementioned charge-offs and specific valuation allowances. The remaining $41.8 million were carried at cost at December 31, 2010, as the fair value of the collateral on these loans exceeded the book value for each individual credit. The Company also has impaired loans totaling $28.1 million at December 31, 2010 which are measured based on the present value of expected cash flows and are not included in the above table as this is not a measurement of fair value. Of these, $27.8 million were carried below cost as a result of charge-offs of $4.1 million or assigned specific reserves of $9.9 million at December 31, 2010. The remaining $231 thousand of impaired loans measured based on the present value of expected cash flows are carried at cost. Charge-offs and changes in specific valuation allowances during 2010 on impaired loans carried at the fair value of loan collateral at December 31, 2010 resulted in additional provision for loan losses of $ 43.2 million. Other real estate owned carried at its fair value had a carrying amount of $6.5 million at December 31, 2011, which is made up of an outstanding balance of $7.5 million, with a valuation allowance of $1.0 million. Changes in the valuation allowance on other real estate owned outstanding at December 31, 2011 resulted in a write-down of $3.2 million during 2011. Other real estate owned carried at its fair value had a carrying amount of $675 thousand at December 31, 2010, which is made up of an outstanding balance of $1.1 million, with a valuation allowance of $439 thousand. Changes in the valuation allowance on other real estate owned outstanding at December 31, 2010 resulted in a write-down of $2.2 million during 2010. Loans held for sale, which were carried at their fair value, approximated $24.4 million, after partial charge-offs of $3.0 million and a valuation allowance of $0. Total charge-offs on loans held for sale were $16.1 million during 2011. Loans held for sale, which were carried at their fair value, approximated $3.2 million, after partial charge-offs of $1.3 million and a valuation allowance of $100 thousand. Total charge-offs on loans held for sale were $33.8 million during 2010. Fair Value of Financial Instruments Carrying amounts and estimated fair values of financial instruments, not previously presented, at years ended December 31 were as follows:,
|  | December 31, 2011 |
|  | Carrying Amount |  |  | Estimated Fair Value |
|  | (In thousands) |
Financial Assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 300,110 |  |  | $ | 300,110 |
Term federal funds sold |  |  | 40,000 |  |  |  | 40,000 |
Loans held for sale |  |  | 18,000 |  |  |  | 19,374 |
Loans receivable—net |  |  | 3,657,173 |  |  |  | 3,909,721 |
Federal Home Loan Bank stock |  |  | 27,373 |  |  |  | N/A |
Accrued interest receivable |  |  | 13,439 |  |  |  | 13,439 |
Customers' liabilities on acceptances |  |  | 10,515 |  |  |  | 10,515 |
FDIC loss share receivable |  |  | 10,819 |  |  |  | 10,819 |
Financial Liabilities: |  |  |  |  |  |  |  |
Noninterest-bearing deposits |  | $ | (984,350 | ) |  | $ | (984,350 | )
Saving and other interest bearing demand deposits |  |  | (1,435,441 | ) |  |  | (1,435,441 | )
Time deposits |  |  | (1,521,101 | ) |  |  | (1,532,152 | )
Borrowings from Federal Home Loan Bank |  |  | (344,402 | ) |  |  | (349,311 | )
Subordinated debentures |  |  | (52,102 | ) |  |  | (53,757 | )
Accrued interest payable |  |  | (6,519 | ) |  |  | (6,519 | )
Bank's liabilities on acceptances outstanding |  |  | (10,515 | ) |  |  | (10,515 | )
|  | December 31, 2010 |
|  | Carrying Amount |  |  | Estimated Fair Value |
|  | (In thousands) |
Financial Assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 172,331 |  |  | $ | 172,331 |
Loans held for sale |  |  | 23,702 |  |  |  | 25,364 |
Loans receivable—net |  |  | 2,043,806 |  |  |  | 2,076,384 |
Federal Reserve Bank stock |  |  | 6,367 |  |  |  | N/A |
Federal Home Loan Bank stock |  |  | 17,717 |  |  |  | N/A |
Accrued interest receivable |  |  | 8,648 |  |  |  | 8,648 |
Customers' liabilities on acceptances |  |  | 11,528 |  |  |  | 11,528 |
Financial Liabilities: |  |  |  |  |  |  |  |
Noninterest-bearing deposits |  | $ | (388,731 | ) |  | $ | (388,731 | )
Saving and other interest bearing demand deposits |  |  | (814,848 | ) |  |  | (814,848 | )
Time deposits |  |  | (972,535 | ) |  |  | (977,762 | )
Borrowings from Federal Home Loan Bank |  |  | (350,000 | ) |  |  | (365,167 | )
Subordinated debentures |  |  | (39,268 | ) |  |  | (39,649 | )
Secured borrowing |  |  | (11,758 | ) |  |  | (11,758 | )
Accrued interest payable |  |  | (4,830 | ) |  |  | (4,830 | )
Bank's liabilities on acceptances outstanding |  |  | (11,528 | ) |  |  | (11,528 | )
The methods and assumptions used to estimate fair value are described as follows. The carrying amount is the estimated fair value for cash and cash equivalents, savings and other interest bearing demand deposits, accrued interest receivable and payable, customer's and Bank's liabilities on acceptances, non-interest-bearing deposits, short-term debt, secured borrowings, and variable rate loans or deposits that reprice frequently and fully. For fixed rate loans or deposits and for variable rate loans or deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. The allowance for loan losses is considered to be a reasonable estimate of discount for credit quality concerns. Fair value of loans held for sale is based on market quotes. The fair value of the FDIC loss share receivable is based on the discounted value of expected future cash flows under the loss sharing agreement with the FDIC. Fair value of time deposits and debt is based on current rates for similar financing. It was not practicable to determine the fair value of Federal Reserve Bank stock or Federal Home Loan Bank stock due to restrictions placed on their transferability. The fair value of commitments to fund loans represents fees currently charged to enter into similar agreements with similar remaining maturities and is not presented herein. The fair value of these financial instruments is not material to the consolidated financial statements.

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- Definition This element represents the disclosure related to the fair value measurement of assets and liabilities which includes [financial] instruments measured at fair value that are classified in stockholders' equity. Such assets and liabilities may be measured on a recurring or nonrecurring basis. The disclosures which may be required or desired include: (1) for assets and liabilities measured on a recurring basis, disclosure may include: (a) the fair value measurements at the reporting date; (b) the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3); (c) for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (ii) purchases, sales, issuances, and settlements (net); (iii) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs); (d) the amount of the total gains or losses for the period in subparagraph (c) (i) above included in earnings (or changes in net assets) that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of income (or activities); (e) the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period and (2) for assets and liabilities that are measured at fair value on a nonrecurring basis (for example, impaired assets) disclosure may include, in addition to (a) above: (a) the reasons for the fair value measurements recorded; (b) the same as (b) above; (c) for fair value measurements using significant unobservable inputs (Level 3), a description of the inputs and the information used to develop the inputs; and (d) the valuation technique(s) used to measure fair value and a discussion of changes, if any, in the valuation technique(s) used to measure similar assets and/or liabilities in prior periods. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 157 -Paragraph 32 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 157 -Paragraph 33 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 157 -Paragraph 6 -Footnote 4 + Details
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