Fair Value Measurements and Fair Value of Financial Instruments (Tables)
|
9 Months Ended |
Sep. 30, 2019 |
|---|
| Fair Value Disclosures [Abstract] |
|
| Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] |
For financial assets and liabilities measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2019 and December 31, 2018 are as follows:
|
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September 30, 2019 |
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|
Fair Value Measurements at Reporting Date Using |
|
|
|
Total Fair Value |
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) |
|
Significant
Other
Observable
Inputs
(Level 2) |
|
Significant
Unobservable
Inputs
(Level 3) |
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring fair value measurements: |
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|
|
|
|
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|
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|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities: |
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|
|
|
|
|
|
|
|
|
|
|
Available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal agency obligations |
|
$ |
24,535 |
|
$ |
- |
|
$ |
24,535 |
|
$ |
- |
|
Residential mortgage pass-through securities |
|
|
215,805 |
|
|
- |
|
|
215,805 |
|
|
- |
|
Commercial mortgage pass-through securities |
|
|
5,090 |
|
|
- |
|
|
5,090 |
|
|
- |
|
Obligations of U.S. states and political subdivision |
|
|
143,656 |
|
|
- |
|
|
134,475 |
|
|
9,181 |
|
Corporate bonds and notes |
|
|
28,250 |
|
|
- |
|
|
28,250 |
|
|
- |
|
Asset-backed securities |
|
|
6,094 |
|
|
- |
|
|
6,094 |
|
|
- |
|
Certificates of deposit |
|
|
150 |
|
|
- |
|
|
150 |
|
|
- |
|
Other securities |
|
|
2,269 |
|
|
2,269 |
|
|
- |
|
|
- |
|
Total available-for-sale |
|
$ |
425,849 |
|
$ |
2,269 |
|
$ |
414,399 |
|
$ |
9,181 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities |
|
|
11,231 |
|
|
11,231 |
|
|
- |
|
|
- |
|
Total assets |
|
$ |
437,080 |
|
$ |
13,500 |
|
$ |
414,399 |
|
$ |
9,181 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives |
|
|
380 |
|
|
- |
|
|
380 |
|
|
- |
|
Total liabilities |
|
$ |
380 |
|
$ |
- |
|
$ |
380 |
|
$ |
- |
31
CONNECTONE BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 7. Fair Value Measurements and Fair Value of Financial Instruments – (continued)
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December 31, 2018 |
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|
Fair Value Measurements at Reporting Date Using |
|
|
|
Total Fair Value |
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) |
|
Significant
Other
Observable
Inputs
(Level 2) |
|
Significant
Unobservable
Inputs
(Level 3) |
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring fair value measurements: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities: |
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|
|
|
|
|
|
|
|
|
|
|
Available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal agency obligations |
|
$ |
44,955 |
|
$ |
- |
|
$ |
44,955 |
|
$ |
- |
|
Residential mortgage pass-through securities |
|
|
185,204 |
|
|
- |
|
|
185,204 |
|
|
- |
|
Commercial mortgage pass-through securities |
|
|
3,874 |
|
|
- |
|
|
3,874 |
|
|
- |
|
Obligations of U.S. states and political subdivision |
|
|
139,185 |
|
|
- |
|
|
129,808 |
|
|
9,377 |
|
Corporate bonds and notes |
|
|
25,813 |
|
|
- |
|
|
25,813 |
|
|
- |
|
Asset-backed securities |
|
|
9,691 |
|
|
- |
|
|
9,691 |
|
|
- |
|
Certificates of deposit |
|
|
322 |
|
|
- |
|
|
322 |
|
|
- |
|
Other securities |
|
|
2,990 |
|
|
2,990 |
|
|
- |
|
|
- |
|
Total available-for-sale |
|
$ |
412,034 |
|
$ |
2,990 |
|
$ |
399,667 |
|
$ |
9,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities |
|
|
11,460 |
|
|
11,460 |
|
|
- |
|
|
- |
|
Derivatives |
|
|
1,159 |
|
|
- |
|
|
1,159 |
|
|
- |
|
Total assets |
|
$ |
424,653 |
|
$ |
14,450 |
|
$ |
400,826 |
|
$ |
9,377 |
|
| Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques [Table Text Block] |
For assets measured at fair value on a nonrecurring basis, the fair value measurements at September 30, 2019 and December 31, 2018 are as follows:
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|
Fair Value Measurements at Reporting Date Using |
|
Assets measured at fair value on a nonrecurring basis: |
|
Carrying Value at September 30, 2019 |
|
Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1) |
|
Significant
Other
Observable
Inputs
(Level 2) |
|
Significant
Unobservable
Inputs
(Level 3) |
|
Impaired loans: |
|
(dollars in thousands) |
|
Commercial real estate |
|
$ |
365 |
|
$ |
- |
|
$ |
- |
|
$ |
365 |
|
Commercial construction |
|
|
5,128 |
|
|
- |
|
|
- |
|
|
5,128 |
|
Residential real estate |
|
|
240 |
|
|
- |
|
|
- |
|
|
240 |
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using |
|
Assets measured at fair value on a nonrecurring basis: |
|
Carrying Value at December 31, 2018 |
|
Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1) |
|
Significant
Other
Observable
Inputs
(Level 2) |
|
Significant
Unobservable
Inputs
(Level 3) |
|
Impaired loans: |
|
(dollars in thousands) |
|
Commercial real estate |
|
$ |
1,481 |
|
$ |
- |
|
$ |
- |
|
$ |
1,481 |
|
Residential real estate |
|
|
231 |
|
|
- |
|
|
- |
|
|
231 |
|
| Fair Value, Recurring basis [Table Text Block] |
The tables below present a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2019 and for the year ended December 31, 2018:
|
|
Municipal
Securities |
|
|
(dollars in thousands) |
|
Beginning balance, January 1, 2019 |
$ |
9,377 |
|
|
Principal paydowns |
|
(196 |
) |
|
Ending balance, September 30, 2019 |
$ |
9,181 |
|
|
|
Municipal
Securities |
|
|
(dollars in thousands) |
|
Beginning balance, January 1, 2018 |
$ |
9,632 |
|
|
Principal paydowns |
|
(255 |
) |
|
Ending balance, December 31, 2018 |
$ |
9,377 |
|
|
| Significant unobservable inputs used in fair value measurements [Table Text Block] |
The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a recurring basis at September 30, 2019 and December 31, 2018. The table below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 hierarchy.
September 30, 2019
|
|
|
Fair Value |
|
Valuation
Techniques |
|
Unobservable
Input |
|
Range |
|
Securities available-for-sale: |
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
Municipal securities |
|
$ |
9,181 |
|
Discounted cash flows |
|
Discount rate |
|
2.9 |
% |
December 31, 2018
|
|
|
Fair Value |
|
Valuation
Techniques |
|
Unobservable
Input |
|
Range |
|
Securities available-for-sale: |
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
Municipal securities |
|
$ |
9,377 |
|
Discounted cash flows |
|
Discount rate |
|
2.9 |
% |
|
| Fair Value Measurements, Nonrecurring [Table Text Block] |
Nonrecurring basis: The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a nonrecurring basis for the periods presented. The tables below provide quantitative information about significant unobservable inputs used in fair value measurements within Level 3 hierarchy.
|
September 30, 2019 |
|
Fair Value |
|
Valuation Techniques |
|
Unobservable Input |
|
Range |
|
Impaired loans: |
|
(dollars in thousands) |
|
|
|
Commercial real estate |
|
$ |
365 |
|
Sales comparison approach |
|
Adjustment for differences between the comparable sales |
|
0% to 20% [10%] |
|
Commercial construction |
|
|
5,128 |
|
Sales comparison approach |
|
Adjustment for differences between the comparable sales |
|
-10% to 13% [2%] |
|
Residential real estate |
|
|
240 |
|
Sales comparison approach |
|
Adjustment for differences between the comparable sales |
|
0% to 7% [2%] |
|
December 31, 2018 |
|
Fair Value |
|
Valuation Techniques |
|
Unobservable Input |
|
Range |
|
Impaired loans: |
|
(dollars in thousands) |
|
|
|
Commercial real estate |
|
$ |
1,481 |
|
Sales comparison approach |
|
Adjustment for differences between the comparable sales |
|
6% to 9% [8%] |
|
Residential real estate |
|
|
231 |
|
Sales comparison approach |
|
Adjustment for differences between the comparable sales |
|
0% to 10% [5%] |
|
| Fair Value, by Balance Sheet Grouping [Table Text Block] |
As of September 30, 2019 the fair value measurements presented are consistent with Topic 820, Fair Value Measurement, in which fair value represents exit price. The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of September 30, 2019 and December 31, 2018:
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|
|
|
|
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|
Fair Value Measurements |
|
|
Carrying Amount |
|
Fair Value |
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
|
Significant Other Observable Inputs
(Level 2) |
|
Significant Unobservable Inputs
(Level 3) |
|
|
(dollars in thousands) |
|
September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
$ |
194,009 |
|
$ |
194,009 |
|
$ |
194,009 |
|
$ |
- |
|
$ |
- |
|
Securities available-for-sale |
|
425,849 |
|
|
425,849 |
|
|
2,269 |
|
|
414,399 |
|
|
9,181 |
|
Investment in restricted stocks |
|
27,946 |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
Equity securities |
|
11,231 |
|
|
11,231 |
|
|
11,231 |
|
|
- |
|
|
- |
|
Net loans |
|
5,071,700 |
|
|
5,087,076 |
|
|
- |
|
|
- |
|
|
5,087,076 |
|
Loans held-for-sale |
|
33,245 |
|
|
33,245 |
|
|
- |
|
|
1,598 |
|
|
31,647 |
|
Accrued interest receivable |
|
21,024 |
|
|
21,024 |
|
|
- |
|
|
2,262 |
|
|
18,762 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing deposits |
|
828,190 |
|
|
828,190 |
|
|
828,190 |
|
|
- |
|
|
- |
|
Interest-bearing deposits |
|
3,923,044 |
|
|
3,935,294 |
|
|
2,349,308 |
|
|
1,585,986 |
|
|
- |
|
Borrowings |
|
512,456 |
|
|
514,331 |
|
|
- |
|
|
514,331 |
|
|
- |
|
Subordinated debentures |
|
128,802 |
|
|
137,790 |
|
|
- |
|
|
137,790 |
|
|
- |
|
Derivatives |
|
380 |
|
|
380 |
|
|
- |
|
|
380 |
|
|
- |
|
Accrued interest payable |
|
4,509 |
|
|
4,509 |
|
|
- |
|
|
4,509 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
$ |
172,366 |
|
$ |
172,366 |
|
$ |
172,366 |
|
$ |
- |
|
$ |
- |
|
Securities available-for-sale |
|
412,034 |
|
|
412,034 |
|
|
2,990 |
|
|
399,667 |
|
|
9,377 |
|
Investment in restricted stocks |
|
31,136 |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
Equity securities |
|
11,460 |
|
|
11,460 |
|
|
11,460 |
|
|
- |
|
|
- |
|
Net loans |
|
4,506,138 |
|
|
4,402,878 |
|
|
- |
|
|
- |
|
|
4,402,878 |
|
Derivatives |
|
1,159 |
|
|
1,159 |
|
|
- |
|
|
1,159 |
|
|
- |
|
Accrued interest receivable |
|
18,214 |
|
|
18,214 |
|
|
- |
|
|
2,064 |
|
|
16,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing deposits |
|
768,584 |
|
|
768,584 |
|
|
768,584 |
|
|
- |
|
|
- |
|
Interest-bearing deposits |
|
3,323,508 |
|
|
3,320,640 |
|
|
1,957,503 |
|
|
1,363,137 |
|
|
- |
|
Borrowings |
|
600,001 |
|
|
598,598 |
|
|
- |
|
|
598,598 |
|
|
- |
|
Subordinated debentures |
|
128,556 |
|
|
132,426 |
|
|
- |
|
|
132,426 |
|
|
- |
|
Accrued interest payable |
|
6,764 |
|
|
6,764 |
|
|
- |
|
|
6,764 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|