Fair Value Disclosures (Tables)

9 Months Ended

Sep. 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 September 30, 2017 and December 31, 2016, classified using the fair value hierarchy:



	At September 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	$	—	$	17,090	$	—	$	17,090
State and political subdivisions	—		80,725		—		80,725
Residential mortgage-backed securities	—		174,570		—		174,570
Collateralized mortgage obligations	—		3,842		—		3,842
Corporate bonds	—		85,884		28,545		114,429
Money market mutual funds	6,624		—		—		6,624
Equity securities	1,000		—		—		1,000
Total available-for-sale securities	7,624		362,111		28,545		398,280
Loans*	—		—		2,014		2,014
Interest rate locks with customers*	—		1,234		—		1,234
Total assets	$	7,624	$	363,345	$	30,559	$	401,528
Liabilities:
Contingent consideration liability	$	—	$	—	$	359	$	359
Interest rate swaps*	—		249		—		249
Credit derivatives*	—		—		132		132
Forward loan sale commitments*	—		1		—		1
Total liabilities	$	—	$	250	$	491	$	741



	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 rollforward 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 nine months ended September 30, 2017 and 2016:



	Nine Months Ended September 30, 2017
(Dollars in thousands)	Balance at December 31, 2016			Purchases/additions			Sales		Payments received			Premium amortization, net		(Decrease) increase in value			Balance at September 30, 2017
Corporate bonds	$	28,778		$	—		$	—	$	—		$	—	$	(233	)	$	28,545
Loans	2,138			—			—		(102		)	—		(22		)	2,014
Credit derivatives	(9		)	(272		)	—		—			—		149			(132		)
Net total	$	30,907		$	(272	)	$	—	$	(102	)	$	—	$	(106	)	$	30,427

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



	Nine Months Ended September 30, 2017
(Dollars in thousands)	Balance at December 31, 2016			Purchases/additions			Sales		Payments received			Premium amortization, net		(Decrease) increase in value			Balance at September 30, 2017
Corporate bonds	$	28,778		$	—		$	—	$	—		$	—	$	(233	)	$	28,545
Loans	2,138			—			—		(102		)	—		(22		)	2,014
Credit derivatives	(9		)	(272		)	—		—			—		149			(132		)
Net total	$	30,907		$	(272	)	$	—	$	(102	)	$	—	$	(106	)	$	30,427

Contingent Consideration Liability Change in Amount

he 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 nine months ended September 30, 2017 and 2016:



	Nine Months Ended September 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 September 30, 2017
Sterner Insurance Associates	$	331	$	—	$	30	$	(301	)	$	—
Girard Partners	5,668		—		5,350		41			359
Total contingent consideration liability	$	5,999	$	—	$	5,380	$	(260	)	$	359



	Nine Months Ended September 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 September 30, 2016
Sterner Insurance Associates	$	1,144	$	—	$	1,325	$	501	$	320
Girard Partners	4,241		$	—	934		284		3,591
John T. Fretz Insurance Agency	192		—		260		68		—
Total contingent consideration liability	$	5,577	$	—	$	2,519	$	853	$	3,911

Assets Measured at Fair Value on Non-Recurring Basis

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



	At September 30, 2017
(Dollars in thousands)	Level 1		Level 2		Level 3		Assets at Fair Value
Impaired loans held for investment	$	—	$	—	$	30,472	$	30,472
Impaired leases held for investment	—		—		1,250		1,250
Other real estate owned	—		—		1,763		1,763
Total	$	—	$	—	$	33,485	$	33,485



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



	At September 30, 2017
(Dollars in thousands)	Level 1		Level 2			Level 3		Fair Value			Carrying Amount
Assets:
Cash and short-term interest-earning assets	$	79,490	$	—		$	—	$	79,490		$	79,490
Held-to-maturity securities	—		45,633			—		45,633			45,542
Federal Home Loan Bank, Federal Reserve Bank and other stock	NA		NA			NA		NA			27,244
Loans held for sale	—		2,265			—		2,265			2,228
Net loans and leases held for investment	—		—			3,405,465		3,405,465			3,432,885
Servicing rights	—		—			9,562		9,562			6,556
Total assets	$	79,490	$	47,898		$	3,415,027	$	3,542,415		$	3,593,945
Liabilities:
Deposits:
Demand and savings deposits, non-maturity	$	2,947,430	$	—		$	—	$	2,947,430		$	2,947,430
Time deposits	—		570,749			—		570,749			571,160
Total deposits	2,947,430		570,749			—		3,518,179			3,518,590
Short-term borrowings	—		32,091			—		32,091			32,091
Long-term debt	—		207,770			—		207,770			206,168
Subordinated notes	—		97,963			—		97,963			94,270
Total liabilities	$	2,947,430	$	908,573		$	—	$	3,856,003		$	3,851,119
Off-Balance-Sheet:
Commitments to extend credit	$	—	$	(2,363	)	$	—	$	(2,363	)	$	—



	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	)	$	—