Fair Value Disclosures (Tables)

9 Months Ended

Sep. 30, 2018

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, 2018 and December 31, 2017, classified using the fair value hierarchy:



	At September 30, 2018
(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	$	—	$	15,316	$	—	$	15,316
State and political subdivisions	—		67,892		—		67,892
Residential mortgage-backed securities	—		156,414		—		156,414
Collateralized mortgage obligations	—		2,981		—		2,981
Corporate bonds	—		67,923		26,407		94,330
Total available-for-sale securities	—		310,526		26,407		336,933
Equity securities:
Equity securities - financial services industry	1,103		—		—		1,103
Money market mutual funds	1,161		—		—		1,161
Total equity securities	2,264		—		—		2,264
Loans*	—		—		1,801		1,801
Interest rate swaps*	—		505		—		505
Interest rate locks with customers*	—		305		—		305
Forward loan sale commitments*	—		53		—		53
Total assets	$	2,264	$	311,389	$	28,208	$	341,861
Liabilities:
Contingent consideration liability	$	—	$	—	$	310	$	310
Interest rate swaps*	—		20		—		20
Credit derivatives*	—		—		24		24
Total liabilities	$	—	$	20	$	334	$	354



	At December 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	$	—	$	16,961	$	—	$	16,961
State and political subdivisions	—		78,297		—		78,297
Residential mortgage-backed securities	—		185,421		—		185,421
Collateralized mortgage obligations	—		3,602		—		3,602
Corporate bonds	—		79,190		27,986		107,176
Total available-for-sale securities	—		363,471		27,986		391,457
Equity securities:
Equity securities - financial services industry	1,076		—		—		1,076
Money market mutual funds	5,985		—		—		5,985
Total equity securities	7,061		—		—		7,061
Loans*	—		—		1,958		1,958
Interest rate swap*	—		13		—		13
Interest rate locks with customers*	—		527		—		527
Forward loan sale commitments*	—		61		—		61
Total assets	$	7,061	$	364,072	$	29,944	$	401,077
Liabilities:
Contingent consideration liability	$	—	$	—	$	339	$	339
Interest rate swaps*	—		50		—		50
Credit derivatives*	—		—		36		36
Total liabilities	$	—	$	50	$	375	$	425

* Such financial instruments are recorded at fair value as further described in Note 11, "Derivative Instruments and Hedging Activities.

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, 2018 and 2017:



	Nine Months Ended September 30, 2018
(Dollars in thousands)	Balance at December 31, 2017			Purchases/additions			Sales		Payments received			Premium amortization, net		(Decrease) increase in value			Balance at September 30, 2018
Corporate bonds	$	27,986		$	—		$	—	$	—		$	—	$	(1,579	)	$	26,407
Loans	1,958			—			—		(110		)	—		(47		)	1,801
Credit derivatives	(36		)	(75		)	—		—			—		87			(24		)
Net total	$	29,908		$	(75	)	$	—	$	(110	)	$	—	$	(1,539	)	$	28,184

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



	Nine Months Ended September 30, 2018
(Dollars in thousands)	Balance at December 31, 2017			Purchases/additions			Sales		Payments received			Premium amortization, net		(Decrease) increase in value			Balance at September 30, 2018
Corporate bonds	$	27,986		$	—		$	—	$	—		$	—	$	(1,579	)	$	26,407
Loans	1,958			—			—		(110		)	—		(47		)	1,801
Credit derivatives	(36		)	(75		)	—		—			—		87			(24		)
Net total	$	29,908		$	(75	)	$	—	$	(110	)	$	—	$	(1,539	)	$	28,184

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, 2018 and 2017:



	Nine Months Ended September 30, 2018
(Dollars in thousands)	Balance at December 31, 2017		Contingent Consideration from New Acquisition		Payment of Contingent Consideration		Adjustment of Contingent Consideration		Balance at September 30, 2018
Girard Partners	339		—		67		38		310
Total contingent consideration liability	$	339	$	—	$	67	$	38	$	310



	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

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, 2018 and December 31, 2017:



	At September 30, 2018
(Dollars in thousands)	Level 1		Level 2		Level 3		Assets at Fair Value
Impaired loans held for investment	$	—	$	—	$	27,674	$	27,674
Impaired leases held for investment	—		—		1,250		1,250
Other real estate owned	—		—		1,433		1,433
Total	$	—	$	—	$	30,357	$	30,357



	At December 31, 2017
(Dollars in thousands)	Level 1		Level 2		Level 3		Assets at Fair Value
Impaired loans held for investment	$	—	$	—	$	28,351	$	28,351
Impaired leases held for investment	—		—		1,250		1,250
Other real estate owned	—		—		1,843		1,843
Total	$	—	$	—	$	31,444	$	31,444

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, 2018 and December 31, 2017. The disclosed fair values are classified using the fair value hierarchy.



	At September 30, 2018
(Dollars in thousands)	Level 1		Level 2			Level 3		Fair Value			Carrying Amount
Assets:
Cash and short-term interest-earning assets	$	84,110	$	—		$	—	$	84,110		$	84,110
Held-to-maturity securities	—		105,642			—		105,642			108,142
Federal Home Loan Bank, Federal Reserve Bank and other stock	NA		NA			NA		NA			33,071
Loans held for sale	—		114			—		114			106
Net loans and leases held for investment	—		—			3,794,987		3,794,987			3,808,073
Servicing rights	—		—			11,935		11,935			6,715
Total assets	$	84,110	$	105,756		$	3,806,922	$	3,996,788		$	4,040,217
Liabilities:
Deposits:
Demand and savings deposits, non-maturity	$	3,148,565	$	—		$	—	$	3,148,565		$	3,148,565
Time deposits	—		661,806			—		661,806			671,483
Total deposits	3,148,565		661,806			—		3,810,371			3,820,048
Short-term borrowings	—		86,765			—		86,765			86,765
Long-term debt	—		142,862			—		142,862			145,430
Subordinated notes	—		96,063			—		96,063			94,514
Total liabilities	$	3,148,565	$	987,496		$	—	$	4,136,061		$	4,146,757
Off-Balance-Sheet:
Commitments to extend credit	$	—	$	(2,508	)	$	—	$	(2,508	)	$	—



	At December 31, 2017
(Dollars in thousands)	Level 1		Level 2			Level 3		Fair Value			Carrying Amount
Assets:
Cash and short-term interest-earning assets	$	75,409	$	—		$	—	$	75,409		$	75,409
Held-to-maturity securities	—		55,320			—		55,320			55,564
Federal Home Loan Bank, Federal Reserve Bank and other stock	NA		NA			NA		NA			27,204
Loans held for sale	—		1,676			—		1,676			1,642
Net loans and leases held for investment	—		—			3,547,451		3,547,451			3,566,953
Servicing rights	—		—			10,046		10,046			6,573
Total assets	$	75,409	$	56,996		$	3,557,497	$	3,689,902		$	3,733,345
Liabilities:
Deposits:
Demand and savings deposits, non-maturity	$	2,980,170	$	—		$	—	$	2,980,170		$	2,980,170
Time deposits	—		574,737			—		574,737			574,749
Total deposits	2,980,170		574,737			—		3,554,907			3,554,919
Short-term borrowings	—		105,431			—		105,431			105,431
Long-term debt	—		156,834			—		156,834			155,828
Subordinated notes	—		98,075			—		98,075			94,331
Total liabilities	$	2,980,170	$	935,077		$	—	$	3,915,247		$	3,910,509
Off-Balance-Sheet:
Commitments to extend credit	$	—	$	(2,414	)	$	—	$	(2,414	)	$	—