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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2014
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements 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 estimates of assumptions that market participants would use in pricing the 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 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). The fair values of the Company's Level 3 securities available for sale were measured using an income approach valuation technique. The primary inputs and assumptions used in the fair value measurement were derived from the securities' underlying collateral, which included discount rates, prepayment speeds, payment delays, and an assessment of the risk of default of the underlying collateral, among other factors. Significant increases or decreases in any of the inputs or assumptions would result in a significant increase or decrease in the fair value measurement. 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 and result in a Level 2. OREO OREO is fair valued at the time the loan is foreclosed upon and the asset is transferred to OREO. The value is based primarily on third party appraisals, less costs to sell and result in a Level 2 classification of the inputs for determining fair value. OREO is reviewed and evaluated on at least an annual basis for additional impairment and adjusted to lower of cost or market 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 (Level 2 inputs), 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 3 inputs) or may be assessed based upon the fair value of the collateral, which is obtained from recent real estate appraisals (Level 3 inputs). These appraisals may utilize a single valuation approach or a combination of approaches including 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 at the End of the Reporting Period Using
| September 30, 2014 |  | 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 collateralized mortgage obligations | $ | 273,417 |  |  | $ | — |  |  | $ | 273,417 |  |  | $ | — |
GSE mortgage-backed securities | 409,809 |  |  | — |  |  | 409,809 |  |  | — |
Trust preferred securities | 4,050 |  |  | — |  |  | 4,050 |  |  | — |
Municipal bonds | 6,118 |  |  | — |  |  | 4,972 |  |  | 1,146 |
Mutual funds | 17,231 |  |  | 17,231 |  |  | — |  |  | — |
|  |  | Fair Value Measurements at the End of the Reporting Period Using
| December 31, 2013 |  | 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 collateralized mortgage obligations | $ | 274,101 |  |  | $ | — |  |  | $ | 274,101 |  |  | $ | — |
GSE mortgage-backed securities | 404,996 |  |  | — |  |  | 404,996 |  |  | — |
Trust preferred securities | 3,697 |  |  | — |  |  | 3,697 |  |  | — |
Municipal bonds | 5,936 |  |  | — |  |  | 4,824 |  |  | 1,112 |
Mutual funds | 17,021 |  |  | 17,021 |  |  | — |  |  | — |
There were no transfers between Level 1, 2 and 3 during the period ended September 30, 2014 and 2013. There were no gains or losses recognized in earnings The table below presents a reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2014:
|  | Nine Months Ended September 30,
|  | 2014 |  | 2013
|  | (In thousands)
Beginning Balance, January 1 |  | $ | 1,112 |  |  | $ | — |
Purchases, issuances and settlements |  | — |  |  | 1,202 |
Amortization |  | — |  |  | (15 | )
Total gains or (losses) included in earnings |  | — |  |  | — |
Total gains or (losses) included in other comprehensive income |  | 34 |  |  | (45 | )
Ending Balance, September 30 |  | $ | 1,146 |  |  | $ | 1,142 |
Assets measured at fair value on a non-recurring basis are summarized below:
|  |  | Fair Value Measurements at the End of the Reporting Period Using
| September 30, 2014 |  | 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 | $ | 40,082 |  |  | $ | — |  |  | $ | 40,082 |  |  | $ | — |
Commercial business | 2,678 |  |  | — |  |  | 2,678 |  |  | — |
Trade finance | 768 |  |  | — |  |  | 768 |  |  | — |
Consumer | 604 |  |  | — |  |  | 604 |  |  | — |
Loans held for sale, net | 2,578 |  |  | — |  |  | 2,578 |  |  | — |
OREO | 11,163 |  |  | — |  |  | 11,163 |  |  | — |
|  |  | Fair Value Measurements at the End of the Reporting Period Using
| December 31, 2013 |  | 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 | $ | 18,746 |  |  | $ | — |  |  | $ | 18,746 |  |  | $ | — |
Commercial business | 2,383 |  |  | — |  |  | 2,383 |  |  | — |
Loans held for sale, net | 6,900 |  |  | — |  |  | 6,900 |  |  | — |
OREO | 4,003 |  |  | — |  |  | 4,003 |  |  | — |
For assets measured at fair value on a non-recurring basis, the total net gains (losses), which include charge offs, recoveries, specific reserves, and gains and losses on sales recognized are summarized below:
| For the Three Months ended September 30, |  | For the Nine Months ended September 30,
| 2014 |  | 2013 |  | 2014 |  | 2013
| (In thousands)
Assets: |  |  |  |  |  |  |
Impaired loans at fair value: |  |  |  |  |  |  |
Real estate loans | $ | (901 | ) |  | $ | (1,759 | ) |  | $ | 1,015 |  |  | $ | (9,700 | )
Commercial business | (1,921 | ) |  | (509 | ) |  | (5,337 | ) |  | (1,703 | )
Trade Finance | (1,036 | ) |  | — |  |  | (3,232 | ) |  | — |
Consumer | 9 |  |  | — |  |  | 158 |  |  | — |
Loans held for sale, net | (224 | ) |  | (530 | ) |  | (224 | ) |  | (530 | )
OREO | (600 | ) |  | (570 | ) |  | (931 | ) |  | (956 | )
Fair Value of Financial Instruments Carrying amounts and estimated fair values of financial instruments, not previously presented, at September 30, 2014 and December 31, 2013 were as follows:
| September 30, 2014
| Carrying Amount |  | Estimated Fair Value |  | Fair Value Measurement Using
| (In thousands)
Financial Assets: |  |  |  |  |
Cash and cash equivalents | $ | 443,320 |  |  | $ | 443,320 |  |  | Level 1
Loans held for sale | 45,695 |  |  | 47,851 |  |  | Level 2
Loans receivable—net | 5,364,612 |  |  | 5,724,155 |  |  | Level 3
FDIC loss share receivable | — |  |  | — |  |  | Level 3
Customers’ liabilities on acceptances | 3,822 |  |  | 3,822 |  |  | Level 2
Financial Liabilities: |  |  |  |  |
Noninterest bearing deposits | $ | 1,503,275 |  |  | $ | 1,503,275 |  |  | Level 2
Saving and other interest bearing demand deposits | 1,737,420 |  |  | 1,737,420 |  |  | Level 2
Time deposits | 2,269,059 |  |  | 2,273,024 |  |  | Level 2
FHLB advances | 467,071 |  |  | 466,106 |  |  | Level 2
Subordinated debentures | 42,117 |  |  | 44,010 |  |  | Level 2
Bank’s liabilities on acceptances outstanding | 3,822 |  |  | 3,822 |  |  | Level 2
| December 31, 2013
| Carrying Amount |  | Estimated Fair Value |  | Fair Value Measurement Using
| (In thousands)
Financial Assets: |  |  |  |  |
Cash and cash equivalents | $ | 316,705 |  |  | $ | 316,705 |  |  | Level 1
Loans held for sale | 44,115 |  |  | 45,975 |  |  | Level 2
Loans receivable—net | 5,006,856 |  |  | 5,450,008 |  |  | Level 3
FDIC loss share receivable | 1,110 |  |  | 1,110 |  |  | Level 3
Customers’ liabilities on acceptances | 5,602 |  |  | 5,602 |  |  | Level 2
Financial Liabilities: |  |  |  |  |
Noninterest bearing deposits | $ | 1,399,454 |  |  | $ | 1,399,454 |  |  | Level 2
Saving and other interest bearing demand deposits | 1,598,514 |  |  | 1,598,514 |  |  | Level 2
Time deposits | 2,150,089 |  |  | 2,156,514 |  |  | Level 2
FHLB advances | 421,352 |  |  | 421,258 |  |  | Level 2
Subordinated debentures | 57,410 |  |  | 56,544 |  |  | Level 2
Bank’s liabilities on acceptances outstanding | 5,602 |  |  | 5,602 |  |  | Level 2
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, noninterest 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 SBA loans held for sale is based on market quotes. For fair value of non-SBA loans held for sale, see the measurement method discussed previously. 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 FRB stock or FHLB 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 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 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13537-108611 Reference 2: 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=28364263&loc=d3e13433-108611 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 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25499696&loc=d3e19207-110258 Reference 5: 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 6: 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=28364263&loc=d3e13504-108611 + Details
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