Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Note 12 – Fair Value of Financial Instruments

Following is a summary of the carrying amounts and fair values of the Company’s financial instruments:

	September 30, 2016				December 31, 2015
	Carrying				Carrying
(In thousands)	Amount		Fair Value		Amount		Fair Value
Balance sheet assets:
Cash and cash equivalents	$	303,103	$	303,103	$	253,172	$	253,172
Investment securities		382,671		382,671		375,696		375,696
Loans, net		674,201		678,185		647,420		649,161
Accrued interest receivable		5,498		5,498		6,647		6,647
Total	$	1,365,473	$	1,369,457	$	1,282,935	$	1,284,676
Balance sheet liabilities:
Deposits	$	624,013	$	624,367	$	646,484	$	646,892
Accounts and drafts payable		682,762		682,762		577,259		577,259
Accrued interest payable		40		40		35		35
Total	$	1,306,815	$	1,307,169	$	1,223,778	$	1,224,186

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and Cash Equivalents – The carrying amount approximates fair value. Investment in Securities – The fair value is measured on a recurring basis using Level 2 valuations. Refer to Note 11, “Investment in Securities,” for fair value and unrealized gains and losses by investment type.

Loans – The fair value is estimated using present values of future cash flows discounted at risk-adjusted interest rates for each loan category designated by management and is therefore a Level 3 valuation. Management believes that the risk factor embedded in the interest rates along with the allowance for loan losses result in a fair valuation.

Impaired loans are valued using the fair value of the collateral which is based upon an observable market price or a current appraised value and therefore, the fair value is a nonrecurring Level 3 valuation.

Accrued Interest Receivable – The carrying amount approximates fair value.

Deposits – The fair value of demand deposits, savings deposits and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities and therefore, is a Level 2 valuation. The fair value estimates above do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market or the benefit derived from the customer relationship inherent in existing deposits.

Accounts and Drafts Payable – The carrying amount approximates fair value.

Accrued Interest – The carrying amount approximates fair value.

There were no transfers between Levels 1 and 2 of the fair value hierarchy for the nine months ended September 30, 2016 and 2015. No financial instruments are measured using Level 3 inputs for the nine months ended September 30, 2016 and 2015.