Fair Value Disclosures (Tables)

6 Months Ended

Jun. 30, 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 June 30, 2017 and December 31, 2016, classified using the fair value hierarchy:



	At June 30, 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	$	—	$	27,147	$	—	$	27,147
State and political subdivisions	—		81,778		—		81,778
Residential mortgage-backed securities	—		182,961		—		182,961
Collateralized mortgage obligations	—		4,061		—		4,061
Corporate bonds	—		84,746		28,387		113,133
Money market mutual funds	15,532		—		—		15,532
Equity securities	978		—		—		978
Total available-for-sale securities	16,510		380,693		28,387		425,590
Loans*	—		—		2,058		2,058
Interest rate locks with customers*	—		1,363		—		1,363
Forward loan sale commitments*	—		164		—		164
Total assets	$	16,510	$	382,220	$	30,445	$	429,175
Liabilities:
Contingent consideration liability	$	—	$	—	$	407	$	407
Interest rate swaps*	—		278		—		278
Credit derivatives*	—		—		157		157
Total liabilities	$	—	$	278	$	564	$	842



	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 six months ended June 30, 2017.



	Six Months Ended June 30, 2017
(Dollars in thousands)	Balance at December 31, 2016			Purchases/additions			Sales		Payments received			Premium amortization, net		(Decrease) increase in value			Balance at June 30, 2017
Corporate bonds	$	28,778		$	—		$	—	$	—		$	—	$	(391	)	$	28,387
Loans	2,138			—			—		(67		)	—		(13		)	2,058
Credit derivatives	(9		)	(272		)	—		—			—		124			(157		)
Net total	$	30,907		$	(272	)	$	—	$	(67	)	$	—	$	(280	)	$	30,288

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



	Six Months Ended June 30, 2017
(Dollars in thousands)	Balance at December 31, 2016			Purchases/additions			Sales		Payments received			Premium amortization, net		(Decrease) increase in value			Balance at June 30, 2017
Corporate bonds	$	28,778		$	—		$	—	$	—		$	—	$	(391	)	$	28,387
Loans	2,138			—			—		(67		)	—		(13		)	2,058
Credit derivatives	(9		)	(272		)	—		—			—		124			(157		)
Net total	$	30,907		$	(272	)	$	—	$	(67	)	$	—	$	(280	)	$	30,288

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 six months ended June 30, 2017 and 2016:



	Six Months Ended June 30, 2017
(Dollars in thousands)	Balance at December 31, 2016		Contingent Consideration from New Acquisition		Payment of Contingent Consideration		Adjustment of Contingent Consideration			Balance at June 30, 2017
Sterner Insurance Associates	$	331	$	—	$	—	$	(303	)	$	28
Girard Partners	5,668		—		5,317		28			379
Total contingent consideration liability	$	5,999	$	—	$	5,317	$	(275	)	$	407



	Six Months Ended June 30, 2016
(Dollars in thousands)	Balance at December 31, 2015		Contingent Consideration from New Acquisition		Payment of Contingent Consideration		Adjustment of Contingent Consideration		Balance at June 30, 2016
Sterner Insurance Associates	$	1,144	$	—	$	—	$	490	$	1,634
Girard Partners	4,241		$	—	$	900	$	238	3,579
John T. Fretz Insurance Agency	192		—		260		68		—
Total contingent consideration liability	$	5,577	$	—	$	1,160	$	796	$	5,213

Assets Measured at Fair Value on Non-Recurring Basis

The following table represents assets measured at fair value on a non-recurring basis at June 30, 2017 and December 31, 2016:



	At June 30, 2017
(Dollars in thousands)	Level 1		Level 2		Level 3		Assets at Fair Value
Impaired loans held for investment	$	—	$	—	$	36,561	$	36,561
Impaired leases held for investment	—		—		4,135		4,135
Other real estate owned	—		—		2,202		2,202
Total	$	—	$	—	$	42,898	$	42,898



	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 June 30, 2017 and December 31, 2016. The disclosed fair values are classified using the fair value hierarchy.



	At June 30, 2017
(Dollars in thousands)	Level 1		Level 2			Level 3		Fair Value			Carrying Amount
Assets:
Cash and short-term interest-earning assets	$	61,057	$	—		$	—	$	61,057		$	61,057
Held-to-maturity securities	—		43,737			—		43,737			43,717
Federal Home Loan Bank, Federal Reserve Bank and other stock	NA		NA			NA		NA			31,506
Loans held for sale	—		2,315			—		2,315			2,259
Net loans and leases held for investment	—		—			3,469,648		3,469,648			3,446,506
Servicing rights	—		—			9,666		9,666			6,548
Total assets	$	61,057	$	46,052		$	3,479,314	$	3,586,423		$	3,591,593
Liabilities:
Deposits:
Demand and savings deposits, non-maturity	$	2,801,242	$	—		$	—	$	2,801,242		$	2,801,242
Time deposits	—		546,457			—		546,457			546,838
Total deposits	2,801,242		546,457			—		3,347,699			3,348,080
Short-term borrowings	—		231,726			—		231,726			231,726
Long-term debt	—		217,376			—		217,376			216,610
Subordinated notes	—		96,900			—		96,900			94,209
Total liabilities	$	2,801,242	$	1,092,459		$	—	$	3,893,701		$	3,890,625
Off-Balance-Sheet:
Commitments to extend credit	$	—	$	(2,317	)	$	—	$	(2,317	)	$	—



	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	)	$	—