Fair Value Disclosures (Tables)

3 Months Ended

Mar. 31, 2017

Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table presents the assets and liabilities measured at fair value on a recurring basis at March 31, 2017 and December 31, 2016, classified using the fair value hierarchy:



	At March 31, 2017
(Dollars in thousands)	Level 1		Level 2		Level 3		Assets/ Liabilities at Fair Value
Assets:
Available-for-sale securities:
U.S. government corporations and agencies	$	—	$	32,204	$	—	$	32,204
State and political subdivisions	—		84,626		—		84,626
Residential mortgage-backed securities	—		190,379		—		190,379
Collateralized mortgage obligations	—		4,301		—		4,301
Corporate bonds	—		79,673		28,194		107,867
Money market mutual funds	11,294		—		—		11,294
Equity securities	941		—		—		941
Total available-for-sale securities	12,235		391,183		28,194		431,612
Loans*	—		—		2,092		2,092
Interest rate locks with customers*	—		1,208		—		1,208
Forward loan sale commitments*	—		3		—		3
Total assets	$	12,235	$	392,394	$	30,286	$	434,915
Liabilities:
Contingent consideration liability	$	—	$	—	$	729	$	729
Interest rate swaps*	—		224		—		224
Credit derivatives*	—		—		57		57
Total liabilities	$	—	$	224	$	786	$	1,010



	At December 31, 2016
(Dollars in thousands)	Level 1		Level 2		Level 3		Assets/ Liabilities at Fair Value
Assets:
Available-for-sale securities:
U.S. government corporations and agencies	$	—	$	32,266	$	—	$	32,266
State and political subdivisions	—		88,350		—		88,350
Residential mortgage-backed securities	—		198,570		—		198,570
Collateralized mortgage obligations	—		4,554		—		4,554
Corporate bonds	—		79,420		28,778		108,198
Money market mutual funds	10,784		—		—		10,784
Equity securities	915		—		—		915
Total available-for-sale securities	11,699		403,160		28,778		443,637
Loans*	—		—		2,138		2,138
Interest rate locks with customers*	—		801		—		801
Forward loan sale commitments*	—		257		—		257
Total assets	$	11,699	$	404,218	$	30,916	$	446,833
Liabilities:
Contingent consideration liability	$	—	$	—	$	5,999	$	5,999
Interest rate swaps*	—		319		—		319
Credit derivatives*	—		—		9		9
Total liabilities	$	—	$	319	$	6,008	$	6,327

* Such financial instruments are recorded at fair value as further described in Note 10 - Derivative Instruments.

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

The following table includes a rollfoward of corporate bonds, loans and credit derivatives for which the Corporation utilized Level 3 inputs to determine fair value on a recurring basis for the three months ended March 31, 2017.



	Three Months Ended March 31, 2017
(Dollars in thousands)	Balance at December 31, 2016			Purchases/additions			Sales		Payments received			Premium amortization, net		(Decrease) increase in value			Balance at March 31, 2017
Corporate bonds	$	28,778		$	—		$	—	$	—		$	—	$	(584	)	$	28,194
Loans	2,138			—			—		(33		)	—		(13		)	2,092
Credit derivatives	(9		)	(120		)	—		—			—		72			(57		)
Net total	$	30,907		$	(120	)	$	—	$	(33	)	$	—	$	(525	)	$	30,229

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation



	Three Months Ended March 31, 2017
(Dollars in thousands)	Balance at December 31, 2016			Purchases/additions			Sales		Payments received			Premium amortization, net		(Decrease) increase in value			Balance at March 31, 2017
Corporate bonds	$	28,778		$	—		$	—	$	—		$	—	$	(584	)	$	28,194
Loans	2,138			—			—		(33		)	—		(13		)	2,092
Credit derivatives	(9		)	(120		)	—		—			—		72			(57		)
Net total	$	30,907		$	(120	)	$	—	$	(33	)	$	—	$	(525	)	$	30,229

Contingent Consideration Liability Change in Amount

The following table presents the change in the balance of the contingent consideration liability related to acquisitions for which the Corporation utilized Level 3 inputs to determine fair value on a recurring basis for the three months ended March 31, 2017 and 2016:



	Three Months Ended March 31, 2017
(Dollars in thousands)	Balance at December 31, 2016		Contingent Consideration from New Acquisition		Payment of Contingent Consideration		Adjustment of Contingent Consideration		Balance at March 31, 2017
Sterner Insurance Associates	$	331	$	—	$	—	$	—	$	331
Girard Partners	5,668		—		5,284		14		398
Total contingent consideration liability	$	5,999	$	—	$	5,284	$	14	$	729



	Three Months Ended March 31, 2016
(Dollars in thousands)	Balance at December 31, 2015		Contingent Consideration from New Acquisition*		Payment of Contingent Consideration		Adjustment of Contingent Consideration		Balance at March 31, 2016
Sterner Insurance Associates	$	1,144	$	—	$	—	$	154	$	1,298
Girard Partners	4,241		$	—	$	900	$	119	3,460
John T. Fretz Insurance Agency	192		—		—		7		199
Total contingent consideration liability	$	5,577	$	—	$	900	$	280	$	4,957

*Includes adjustments during the measurement period in accordance with ASC Topic 805.

Assets Measured at Fair Value on Non-Recurring Basis

The following table represents assets measured at fair value on a non-recurring basis at March 31, 2017 and December 31, 2016:



	At March 31, 2017
(Dollars in thousands)	Level 1		Level 2		Level 3		Assets at Fair Value
Impaired loans held for investment	$	—	$	—	$	37,015	$	37,015
Impaired leases held for investment	—		—		4,441		4,441
Other real estate owned	—		—		3,712		3,712
Total	$	—	$	—	$	45,168	$	45,168



	At December 31, 2016
(Dollars in thousands)	Level 1		Level 2		Level 3		Assets at Fair Value
Impaired loans held for investment	$	—	$	—	$	43,680	$	43,680
Other real estate owned	—		—		4,969		4,969
Total	$	—	$	—	$	48,649	$	48,649

Assets, Liabilities and Off-Balance Sheet Items Not Measured at Fair Value

The following table presents assets and liabilities and off-balance sheet items not measured at fair value on a recurring or non-recurring basis in the Corporation’s consolidated balance sheets but for which the fair value is required to be disclosed at March 31, 2017 and December 31, 2016. The disclosed fair values are classified using the fair value hierarchy.



	At March 31, 2017
(Dollars in thousands)	Level 1		Level 2			Level 3		Fair Value			Carrying Amount
Assets:
Cash and short-term interest-earning assets	$	57,800	$	—		$	—	$	57,800		$	57,800
Held-to-maturity securities	—		33,022			—		33,022			33,027
Federal Home Loan Bank, Federal Reserve Bank and other stock	NA		NA			NA		NA			25,322
Loans held for sale	—		1,121			—		1,121			1,110
Net loans and leases held for investment	—		—			3,271,524		3,271,524			3,278,840
Servicing rights	—		—			9,799		9,799			6,502
Total assets	$	57,800	$	34,143		$	3,281,323	$	3,373,266		$	3,402,601
Liabilities:
Deposits:
Demand and savings deposits, non-maturity	$	2,812,775	$	—		$	—	$	2,812,775		$	2,812,775
Time deposits	—		555,841			—		555,841			553,176
Total deposits	2,812,775		555,841			—		3,368,616			3,365,951
Short-term borrowings	—		79,366			—		79,366			79,366
Long-term debt	—		183,962			—		183,962			182,066
Subordinated notes	—		95,000			—		95,000			94,148
Total liabilities	$	2,812,775	$	914,169		$	—	$	3,726,944		$	3,721,531
Off-Balance-Sheet:
Commitments to extend credit	$	—	$	(2,279	)	$	—	$	(2,279	)	$	—



	At December 31, 2016
(Dollars in thousands)	Level 1		Level 2			Level 3		Fair Value			Carrying Amount
Assets:
Cash and short-term interest-earning assets	$	57,825	$	—		$	—	$	57,825		$	57,825
Held-to-maturity securities	—		24,871			—		24,871			24,881
Federal Home Loan Bank, Federal Reserve Bank and other stock	NA		NA			NA		NA			24,869
Loans held for sale	—		5,943			—		5,943			5,890
Net loans and leases held for investment	—		—			3,193,886		3,193,886			3,222,569
Servicing rights	—		—			9,548		9,548			6,485
Total assets	$	57,825	$	30,814		$	3,203,434	$	3,292,073		$	3,342,519
Liabilities:
Deposits:
Demand and savings deposits, non-maturity	$	2,631,378	$	—		$	—	$	2,631,378		$	2,631,378
Time deposits	—		628,096			—		628,096			626,189
Total deposits	2,631,378		628,096			—		3,259,474			3,257,567
Short-term borrowings	—		195,572			—		195,572			196,171
Long-term debt	—		130,157			—		130,157			127,522
Subordinated notes	—		95,188			—		95,188			94,087
Total liabilities	$	2,631,378	$	1,049,013		$	—	$	3,680,391		$	3,675,347
Off-Balance-Sheet:
Commitments to extend credit	$	—	$	(2,218	)	$	—	$	(2,218	)	$	—