Financial Instruments

3 Months Ended

Mar. 31, 2013

Financial Instruments [Abstract]

Financial Instruments

10. Financial Instruments

In the ordinary course of business, the Company has entered into off-balance sheet financial instruments, consisting of commitments to extend credit, commitments under line of credit lending arrangements and letters of credit. Such financial instruments are recorded in the financial statements when they are funded or related fees are received.

The following methods and assumptions were used in estimating fair values of financial instruments.

Cash and cash equivalents – The carrying amounts of cash equivalents approximate their fair values.

Securities – With the exception of floating rate trust preferred securities ( the valuation of the trust preferred securities is discussed in footnote 9, Fair Value), fair values for securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique which is 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.

Securities receivable- The carrying amount of securities receivable approximates their fair values.

Loans receivable and held for sale – Fair values for loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values of impaired loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable. The carrying amounts of loans held for sale approximate their fair values.

Accrued interest receivable and payable – The carrying amounts of accrued interest approximate their fair values.

FHLB stock – FHLB stock is restricted from trading purposes and thus, the carrying value approximates its fair value.

Bank owned life insurance (BOLI) – The fair value of BOLI at March 31, 2013 and December 31, 2012 approximated the cash surrender value of the policies at those dates.

Interest rate cap and interest rate swap contracts – Fair values of interest rate cap and interest rate swap contracts are based on dealer quotes.

Deposits – The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date. Fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies current market interest rates to a schedule of aggregated expected monthly maturities.

Borrowed funds and junior subordinated notes – For variable rate borrowings, fair values are based on carrying values. For fixed rate borrowings, fair values are based on the discounted value of contractual cash flows and on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. Fair values of structured borrowings are based on dealer quotes.

Advance payments by borrowers for taxes and insurance- The fair value of the advance payments by borrowers for taxes and insurance approximated the carrying value of those commitments at those dates.

The following table sets forth the carrying amount and fair value of the Company’s financial instruments included in the consolidated statement of financial condition as of March 31, 2013:

March 31, 2013
(Dollar amounts in thousands)	Carrying amount		Quoted Prices in Active Markets for Identical Assets or  Liabilities (Level I)		Significant Other Observable Inputs (Level II)		Significant Unobservable Inputs (Level III)		Total Fair Value
Financial Assets:
Cash and Cash Equivalents	$	15,142	$	15,142	$	—	$	—	$	15,142
Securities		1,086,629		1,991		1,048,285		36,353		1,086,629
Securities Receivable		1,909		1,909		—		—		1,909
Loans receivable and held for sale		681,273		—		—		712,597		712,597
Accrued Interest Receivable		7,943		7,943		—		—		7,943
FHLB Stock		15,581		15,581		—		—		15,581
Bank owned life insurance		30,181		30,181		—		—		30,181
Interest rate cap contracts		157		—		157		—		157
Financial Liabilities:
Deposits		1,206,843		582,316		—		633,530		1,215,846
Borrowed funds		448,231		—		198,009		273,511		471,520
Junior subordinated notes		36,083		—		21,650		—		21,650
Advance payments by borrowers for taxes and insurance		2,650		2,650		—		—		2,650
Accrued interest payable		1,947		1,947		—		—		1,947
Interest rate swap contracts		5,387		—		5,387		—		5,387

December 31, 2012
(Dollar amounts in thousands)	Carrying amount		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I)		Significant Other Observable Inputs (Level II)		Significant Unobservable Inputs (Level III)		Total Fair Value
Financial Assets:
Cash and Cash Equivalents	$	15,064	$	15,064	$	—	$	—	$	15,064
Securities		1,110,776		1,818		1,092,224		35,789		1,129,831
Securities Receivable		1,277		1,277		—		—		1,277
Loans receivable and held for sale		672,086		—		—		679,819		679,819
Accrued Interest Receivable		8,068		8,068		—		—		8,068
FHLB Stock		15,077		15,077		—		—		15,077
Bank owned life insurance		30,025		30,025		—		—		30,025
Interest rate cap contracts		90		—		532		—		532
Financial Liabilities:
Deposits		1,178,057		546,298		—		1,168,438		1,714,736
Borrowed funds		484,556		—		263,288		331,588		594,876
Junior subordinated notes		46,393		—		20,361		—		20,361
Advance payments by borrowers for taxes and insurance		2,619		2,619		—		—		2,619
Accrued interest payable		1,344		1,344		—		—		1,344
Interest rate swap contracts		5,743		—		5,531		—		5,531

The following table sets forth the carrying amount and fair value of the Company’s financial instruments included in the consolidated statement of financial condition as of December 31, 2011: