XML 58 R17.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Fair Value Disclosures | 9 Months Ended
--- | ---
Sep. 30, 2014
Fair Value Disclosures [Abstract] |
Fair Value Disclosures | Fair Value Disclosures The Corporation determines the fair market values of its financial instruments based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is defined as the price that would be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date and is based on exit prices. Fair value includes assumptions about risk such as nonperformance risk in liability fair values and is a market-based measurement, not an entity-specific measurement. The standard describes three levels of inputs that may be used to measure fair value. Level 1 — Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access at the measurement date. Level 2 — Level 2 inputs are inputs, other than quoted prices included with Level 1, that are observable for the asset or liability either directly or indirectly, 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 for substantially the full term of the assets or liabilities. Level 3 — Level 3 inputs are supported by little or no market activity and are significant to the fair value of the assets or liabilities. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Corporation’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Assets and liabilities measured at fair value on a recurring basis, segregated by fair value hierarchy level, are summarized below:
|  | Fair Value Measurements Using |  |
September 30, 2014 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Thousands)
Assets: |  |  |  |  |  |  |  |
Securities available-for-sale: |  |  |  |  |  |  |  |
Asset backed securities |  | $ | — |  |  | $ | 1,514 |  |  | $ | — |  |  | $ | 1,514 |
U.S. Government agency obligations - government-sponsored enterprises |  | — |  |  | 7,171 |  |  | — |  |  | 7,171 |
Collateralized mortgage obligations - government issued |  | — |  |  | 75,885 |  |  | — |  |  | 75,885 |
Collateralized mortgage obligations - government-sponsored enterprises |  | — |  |  | 57,857 |  |  | — |  |  | 57,857 |
Interest rate swaps |  | — |  |  | 456 |  |  | — |  |  | 456 |
Liabilities: |  |  |  |  |  |  |  | — |
Interest rate swaps |  | $ | — |  |  | $ | 456 |  |  | $ | — |  |  | $ | 456 |
|  | Fair Value Measurements Using |  |
December 31, 2013 |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (In Thousands)
Assets: |  |  |  |  |  |  |  |
Securities available-for-sale: |  |  |  |  |  |  |  |
Municipal obligations |  | $ | — |  |  | $ | 15,489 |  |  | $ | — |  |  | $ | 15,489 |
Asset backed securities |  | — |  |  | 1,494 |  |  | — |  |  | 1,494 |
U.S. Government agency obligations - government-sponsored enterprises |  | — |  |  | 16,244 |  |  | — |  |  | 16,244 |
Collateralized mortgage obligations - government issued |  | — |  |  | 111,969 |  |  | — |  |  | 111,969 |
Collateralized mortgage obligations - government-sponsored enterprises |  | — |  |  | 34,922 |  |  | — |  |  | 34,922 |
Interest rate swaps |  | — |  |  | 946 |  |  | — |  |  | 946 |
Liabilities: |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | — |  |  | $ | 946 |  |  | $ | — |  |  | $ | 946 |
For assets and liabilities measured at fair value on a recurring basis, there were no transfers between the levels during the nine months ended September 30, 2014 or the year ended December 31, 2013 related to the above measurements. Assets and liabilities measured at fair value on a non-recurring basis, segregated by fair value hierarchy are summarized below:
|  |  |  | As of and for the Nine Months Ended September 30, 2014
|  | Balance at |  | Fair Value Measurements Using |  | Total Gains (Losses)
|  | September 30, 2014 |  | Level 1 |  | Level 2 |  | Level 3 |
|  | (In Thousands)
Impaired loans |  | $ | 6,301 |  |  | $ | — |  |  | $ | 6,252 |  |  | $ | 49 |  |  | $ | — |
Foreclosed properties |  | 106 |  |  | — |  |  | 106 |  |  | — |  |  | (4 | )
|  |  |  | As of and for the Year Ended December 31, 2013
|  | Balance at |  | Fair Value Measurements Using |  | Total Gains (Losses)
|  | December 31, 2013 |  | Level 1 |  | Level 2 |  | Level 3 |
|  | (In Thousands)
Impaired loans |  | $ | 13,719 |  |  | $ | — |  |  | $ | 13,666 |  |  | $ | 53 |  |  | $ | — |
Foreclosed properties |  | 333 |  |  | — |  |  | 333 |  |  | — |  |  | (59 | )
Impaired loans that are collateral dependent were written down to their net realizable value of $6.3 million and $13.7 million at September 30, 2014 and December 31, 2013, respectively, through the establishment of specific reserves or by recording charge-offs when the carrying value exceeded the fair value. Valuation techniques consistent with the market approach, income approach, or cost approach were used to measure fair value and primarily included observable inputs for the individual impaired loans being evaluated such as current appraisals, recent sales of similar assets or other observable market data, and are reflected within Level 2 of the hierarchy. In cases where an input is unobservable, specifically discounts applied to appraisal values to adjust such values to current market conditions or to reflect net realizable value, the impaired loan balance is reflected within Level 3 of the hierarchy. The quantification of unobservable inputs for Level 3 impaired loan values range from 19% - 100%. The weighted average of those unobservable inputs as of the measurement date of September 30, 2014 was 58%. The majority of the impaired loans in the Level 3 category are considered collateral dependent loans. Non-financial assets subject to measurement at fair value on a non-recurring basis included foreclosed properties. Foreclosed properties, upon initial recognition, are re-measured and reported at fair value through a charge-off to the allowance for loan and lease losses, if deemed necessary, based upon the fair value of the foreclosed property. The fair value of a foreclosed property, upon initial recognition, is estimated using a market approach or Level 2 inputs based on observable market data, typically a current appraisal, or Level 3 inputs based upon assumptions specific to the individual property or equipment. Level 3 inputs typically include unobservable inputs such as management-applied discounts used to further reduce values to a net realizable value and may be used in situations when observable inputs become stale. Foreclosed property fair value inputs may transition to Level 1 upon receipt of an accepted offer for the sale of the related foreclosed property. As of September 30, 2014, there were no foreclosed properties supported by a Level 3 valuation. The activity of the Corporation’s foreclosed properties is summarized as follows:
| As of and for the Nine Months Ended September 30, 2014 |  | As of and for the Year Ended December 31, 2013
| (In Thousands)
Foreclosed properties at the beginning of the period | $ | 333 |  |  | $ | 1,574 |
Loans transferred to foreclosed properties, at lower of cost or fair value | — |  |  | 1,381 |
Proceeds from sale of foreclosed properties | (232 | ) |  | (2,739 | )
Net gain on sale of foreclosed properties | 9 |  |  | 176 |
Impairment valuation | (4 | ) |  | (59 | )
Foreclosed properties at the end of the period | $ | 106 |  |  | $ | 333 |
Fair Value of Financial Instruments The Corporation is required to disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions, consistent with exit price concepts for fair value measurements, are set forth below:
|  | September 30, 2014
|  | Carrying Amount |  | Fair Value
|  |  |  | Total |  | Level 1 |  | Level 2 |  | Level 3
|  | (In Thousands)
Financial assets: |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 174,498 |  |  | $ | 174,502 |  |  | $ | 159,008 |  |  | $ | 5,394 |  |  | $ | 10,100 |
Securities available-for-sale |  | 142,427 |  |  | 142,427 |  |  | — |  |  | 142,427 |  |  | — |
Securities held-to-maturity |  | 42,522 |  |  | 42,212 |  |  | — |  |  | 42,212 |  |  | — |
Loans and lease receivables, net |  | 1,027,886 |  |  | 1,024,896 |  |  | — |  |  | 6,252 |  |  | 1,018,644 |
Federal Home Loan Bank stock |  | 1,349 |  |  | 1,349 |  |  | — |  |  | — |  |  | 1,349 |
Cash surrender value of life insurance |  | 23,772 |  |  | 23,772 |  |  | 23,772 |  |  | — |  |  | — |
Accrued interest receivable |  | 3,164 |  |  | 3,164 |  |  | 3,164 |  |  | — |  |  | — |
Interest rate swaps |  | 456 |  |  | 456 |  |  | — |  |  | 456 |  |  | — |
Financial liabilities: |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 1,269,200 |  |  | $ | 1,270,993 |  |  | $ | 815,422 |  |  | $ | 455,571 |  |  | $ | — |
Federal Home Loan Bank and other borrowings |  | 22,936 |  |  | 22,865 |  |  | — |  |  | 22,865 |  |  | — |
Junior subordinated notes |  | 10,315 |  |  | 7,098 |  |  | — |  |  | — |  |  | 7,098 |
Interest rate swaps |  | 456 |  |  | 456 |  |  | — |  |  | 456 |  |  | — |
Accrued interest payable |  | 1,780 |  |  | 1,780 |  |  | 1,780 |  |  | — |  |  | — |
Off-balance-sheet items: |  |  |  |  |  |  |  |  |  |
Standby letters of credit |  | 135 |  |  | 135 |  |  | — |  |  | — |  |  | 135 |
Commitments to extend credit |  | — |  |  | * |  |  | * |  |  | * |  |  | * |
*Not meaningful
|  | December 31, 2013
|  | Carrying Amount |  | Fair Value
|  |  |  | Total |  | Level 1 |  | Level 2 |  | Level 3
|  | (In Thousands)
Financial assets: |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 81,286 |  |  | $ | 81,295 |  |  | $ | 66,266 |  |  | $ | 4,029 |  |  | $ | 11,000 |
Securities available-for-sale |  | 180,118 |  |  | 180,118 |  |  | — |  |  | 180,118 |  |  | — |
Loans and lease receivables, net |  | 967,050 |  |  | 963,937 |  |  | — |  |  | 13,666 |  |  | 950,271 |
Federal Home Loan Bank stock |  | 1,255 |  |  | 1,255 |  |  | — |  |  | — |  |  | 1,255 |
Cash surrender value of life insurance |  | 23,142 |  |  | 23,142 |  |  | 23,142 |  |  | — |  |  | — |
Accrued interest receivable |  | 3,231 |  |  | 3,231 |  |  | 3,231 |  |  | — |  |  | — |
Interest rate swaps |  | 946 |  |  | 946 |  |  | — |  |  | 946 |  |  | — |
Financial liabilities: |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 1,129,855 |  |  | $ | 1,131,002 |  |  | $ | 684,344 |  |  | $ | 446,658 |  |  | $ | — |
Federal Home Loan Bank and other borrowings |  | 11,936 |  |  | 11,979 |  |  | — |  |  | 11,979 |  |  | — |
Junior subordinated notes |  | 10,315 |  |  | 7,084 |  |  | — |  |  | — |  |  | 7,084 |
Interest rate swaps |  | 946 |  |  | 946 |  |  | — |  |  | 946 |  |  | — |
Accrued interest payable |  | 1,052 |  |  | 1,052 |  |  | 1,052 |  |  | — |  |  | — |
Off-balance-sheet items: |  |  |  |  |  |  |  |  |  |
Standby letters of credit |  | 219 |  |  | 219 |  |  | — |  |  | — |  |  | 219 |
Commitments to extend credit |  | — |  |  | * |  |  | * |  |  | * |  |  | * |
*Not meaningful Disclosure of fair value information about financial instruments, for which it is practicable to estimate that value, is required whether or not recognized in the Consolidated Balance Sheets. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Certain financial instruments and all non-financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not necessarily represent the underlying value of the Corporation. Cash and cash equivalents: The carrying amounts reported for cash and due from banks, interest-bearing deposits held by the Corporation, accrued interest receivable and accrued interest payable approximate fair value because of their immediate availability and because they do not present unanticipated credit concerns. The carrying value of commercial paper, included in the cash and cash equivalents category, approximates fair value due to the short-term maturity structure of the instrument. As of September 30, 2014 and December 31, 2013, the Corporation held $10.1 million and $11.0 million, respectively, of commercial paper. The fair value of commercial paper is considered a Level 3 input due to the lack of available independent pricing sources. The carrying value of brokered certificates of deposit purchased is equivalent to the purchase price of the instruments as the Corporation has not elected a fair value option for these instruments. The fair value of brokered certificates of deposits purchased is based on the discounted value of contractual cash flows using a discount rate reflective of rates currently offered for deposits of similar remaining maturities. As of September 30, 2014 and December 31, 2013, the Corporation held $5.4 million and $4.0 million, respectively, of brokered certificates of deposits. Securities: The fair value measurements of investment securities are determined by a third-party pricing service which considers observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, trade execution data, market consensus prepayment speeds, credit information and the securities’ terms and conditions, among other things. The fair value measurements are subject to independent verification to another pricing source on a quarterly basis to review for reasonableness. In addition, the Corporation reviews the third-party valuation methodology on a periodic basis. Any significant differences in valuation are reviewed with appropriate members of management who have the relevant technical expertise to assess the results. The Corporation has determined that these valuations are classified in Level 2 of the fair value hierarchy. When the independent pricing service does not provide a fair value measurement for a particular security, the Corporation will estimate the fair value based on specific information about each security. Fair values derived in this manner are classified in Level 3 of the fair value hierarchy. Loans and Leases: The fair value estimation process for the loan portfolio uses an exit price concept and reflects discounts that the Corporation believes are consistent with liquidity discounts in the market place. Fair values are estimated for portfolios of loans with similar financial characteristics. The fair value of performing and nonperforming loans is calculated by discounting scheduled and expected cash flows through the estimated maturity using estimated market rates that reflect the credit and interest rate risk inherent in the portfolio of loans and then applying a discount factor based upon the embedded credit risk of the loan and the fair value of collateral securing nonperforming loans when the loan is collateral dependent. The estimate of maturity is based on the Banks’ historical experience with repayments for each loan classification, modified, as required, by an estimate of the effect of current economic and lending conditions. Significant unobservable inputs include, but are not limited to, discounts (investor yield premiums) applied to fair value calculations to further determine the exit price value of a portfolio of loans. Federal Home Loan Bank Stock: The carrying amount of FHLB stock equals its fair value because the shares may be redeemed by the FHLB at their carrying amount of $100 per share. Cash Surrender Value of Life Insurance: The carrying amount of the cash surrender value of life insurance approximates its fair value as the carrying value represents the current settlement amount. Deposits: The fair value of deposits with no stated maturity, such as demand deposits and money market accounts, is equal to the amount payable on demand. The fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. The fair value estimates do not include the intangible value that results from the funding provided by deposit liabilities compared to borrowing funds in the market. Borrowed Funds: Market rates currently available to the Corporation and Banks for debt with similar terms and remaining maturities are used to estimate fair value of existing debt. Financial Instruments with Off-Balance-Sheet Risks: The fair value of the Corporation’s off-balance-sheet instruments is based on quoted market prices and fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the credit standing of the related counterparty. Commitments to extend credit and standby letters of credit are generally not marketable. Furthermore, interest rates on any amounts drawn under such commitments would generally be established at market rates at the time of the draw. Fair value would principally derive from the present value of fees received for those products. Interest Rate Swaps: The carrying amount and fair value of existing derivative financial instruments are based upon independent valuation models, which use widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative contract. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Corporation incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Corporation considers the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. Limitations: Fair value estimates are made at a discrete point 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 Corporation’s entire holding of a particular financial instrument. Because no market exists for a significant portion of the Corporation’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and are not considered in the estimates.

X
- Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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=35750535&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=35750535&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=36462937&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=35750535&loc=d3e13504-108611 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration