Fair Value Disclosures (Tables)

6 Months Ended

Jun. 30, 2019

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, 2019 and December 31, 2018, classified using the fair value hierarchy:



	At June 30, 2019
(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	$	—	$	10,316	$	—	$	10,316
State and political subdivisions	—		44,172		—		44,172
Residential mortgage-backed securities	—		141,815		—		141,815
Collateralized mortgage obligations	—		2,677		—		2,677
Corporate bonds	—		67,117		26,925		94,042
Total available-for-sale securities	—		266,097		26,925		293,022
Equity securities:
Equity securities - financial services industry	943		—		—		943
Money market mutual funds	1,922		—		—		1,922
Total equity securities	2,865		—		—		2,865
Loans*	—		—		1,725		1,725
Interest rate locks with customers*	—		798		—		798
Total assets	$	2,865	$	266,895	$	28,650	$	298,410
Liabilities:
Contingent consideration liability	$	—	$	—	$	211	$	211
Interest rate swaps*	—		293		—		293
Credit derivatives*	—		—		160		160
Forward loan sale commitments*	—		197		—		197
Total liabilities	$	—	$	490	$	371	$	861



	At December 31, 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	$	—	$	15,315	$	—	$	15,315
State and political subdivisions	—		65,415		—		65,415
Residential mortgage-backed securities	—		151,762		—		151,762
Collateralized mortgage obligations	—		2,888		—		2,888
Corporate bonds	—		67,398		25,729		93,127
Total available-for-sale securities	—		302,778		25,729		328,507
Equity securities:
Equity securities - financial services industry	924		—		—		924
Money market mutual funds	1,241		—		—		1,241
Total equity securities	2,165		—		—		2,165
Loans*	—		—		1,779		1,779
Interest rate swap*	—		189		—		189
Interest rate locks with customers*	—		490		—		490
Total assets	$	2,165	$	303,457	$	27,508	$	333,130
Liabilities:
Contingent consideration liability	$	—	$	—	$	259	$	259
Interest rate swaps*	—		20		—		20
Credit derivatives*	—		—		72		72
Forward loan sale commitments*	—		150		—		150
Total liabilities	$	—	$	170	$	331	$	501

* 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 six months ended June 30, 2019 and 2018:



	Six Months Ended June 30, 2019
(Dollars in thousands)	Balance at December 31, 2018			Purchases/additions			Sales		Payments received			Premium amortization, net		Increase (decrease) in value		Balance at June 30, 2019
Corporate bonds	$	25,729		$	—		$	—	$	—		$	—	$	1,196	$	26,925
Loans	1,779			—			—		(78		)	—		24		1,725
Credit derivatives	(72		)	(670		)	—		—			—		582		(160		)
Net total	$	27,436		$	(670	)	$	—	$	(78	)	$	—	$	1,802	$	28,490



	Six Months Ended June 30, 2018
(Dollars in thousands)	Balance at December 31, 2017			Purchases/additions			Sales		Payments received			Premium amortization, net		(Decrease) increase in value			Balance at June 30, 2018
Corporate bonds	$	27,986		$	—		$	—	$	—		$	—	$	(1,600	)	$	26,386
Loans	1,958			—			—		(73		)	—		(38		)	1,847
Credit derivatives	(36		)	(40		)	—		—			—		39			(37		)
Net total	$	29,908		$	(40	)	$	—	$	(73	)	$	—	$	(1,599	)	$	28,196

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



	Six Months Ended June 30, 2018
(Dollars in thousands)	Balance at December 31, 2017			Purchases/additions			Sales		Payments received			Premium amortization, net		(Decrease) increase in value			Balance at June 30, 2018
Corporate bonds	$	27,986		$	—		$	—	$	—		$	—	$	(1,600	)	$	26,386
Loans	1,958			—			—		(73		)	—		(38		)	1,847
Credit derivatives	(36		)	(40		)	—		—			—		39			(37		)
Net total	$	29,908		$	(40	)	$	—	$	(73	)	$	—	$	(1,599	)	$	28,196

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, 2019 and 2018:



	Six Months Ended June 30, 2019
(Dollars in thousands)	Balance at December 31, 2018		Contingent Consideration from New Acquisition		Payment of Contingent Consideration		Adjustment of Contingent Consideration		Balance at June 30, 2019
Girard Partners	$	259	$	—	$	65	$	17	$	211
Total contingent consideration liability	$	259	$	—	$	65	$	17	$	211



	Six Months Ended June 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 June 30, 2018
Girard Partners	$	339	$	—	$	67	$	28	$	300
Total contingent consideration liability	$	339	$	—	$	67	$	28	$	300

Assets Measured at Fair Value on Non-Recurring Basis

The Corporation may be required to periodically measure certain assets and liabilities at fair value on a non-recurring basis in accordance with GAAP. These adjustments to fair value usually result from the application of lower of cost or market accounting or impairment charges of individual assets. The following table represents assets measured at fair value on a non-recurring basis at June 30, 2019 and December 31, 2018:



	At June 30, 2019
(Dollars in thousands)	Level 1		Level 2		Level 3		Assets at Fair Value
Impaired loans held for investment	$	—	$	—	$	22,663	$	22,663
Other real estate owned	—		—		540		540
Total	$	—	$	—	$	23,203	$	23,203



	At December 31, 2018
(Dollars in thousands)	Level 1		Level 2		Level 3		Assets at Fair Value
Impaired loans held for investment	$	—	$	—	$	25,166	$	25,166
Other real estate owned	—		—		1,187		1,187
Total	$	—	$	—	$	26,353	$	26,353

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, 2019 and December 31, 2018. The disclosed fair values are classified using the fair value hierarchy.



	At June 30, 2019
(Dollars in thousands)	Level 1		Level 2			Level 3		Fair Value			Carrying Amount
Assets:
Cash and short-term interest-earning assets	$	84,567	$	—		$	—	$	84,567		$	84,567
Held-to-maturity securities	—		175,296			—		175,296			172,946
Federal Home Loan Bank, Federal Reserve Bank and other stock	NA		NA			NA		NA			32,755
Loans held for sale	—		1,531			—		1,531			1,498
Net loans and leases held for investment	—		—			4,121,087		4,121,087			4,110,916
Servicing rights	—		—			8,911		8,911			6,599
Total assets	$	84,567	$	176,827		$	4,129,998	$	4,391,392		$	4,409,281
Liabilities:
Deposits:
Demand and savings deposits, non-maturity	$	3,412,673	$	—		$	—	$	3,412,673		$	3,412,673
Time deposits	—		712,030			—		712,030			709,437
Total deposits	3,412,673		712,030			—		4,124,703			4,122,110
Short-term borrowings	—		39,350			—		39,350			39,350
Long-term debt	—		171,177			—		171,177			170,195
Subordinated notes	—		96,572			—		96,572			94,696
Total liabilities	$	3,412,673	$	1,019,129		$	—	$	4,431,802		$	4,426,351
Off-Balance-Sheet:
Commitments to extend credit	$	—	$	(8,066	)	$	—	$	(8,066	)	$	—



	At December 31, 2018
(Dollars in thousands)	Level 1		Level 2			Level 3		Fair Value			Carrying Amount
Assets:
Cash and short-term interest-earning assets	$	109,420	$	—		$	—	$	109,420		$	109,420
Held-to-maturity securities	—		141,575			—		141,575			142,634
Federal Home Loan Bank, Federal Reserve Bank and other stock	NA		NA			NA		NA			28,337
Loans held for sale	—		1,798			—		1,798			1,754
Net loans and leases held for investment	—		—			3,924,329		3,924,329			3,950,265
Servicing rights	—		—			11,496		11,496			6,768
Total assets	$	109,420	$	143,373		$	3,935,825	$	4,188,618		$	4,239,178
Liabilities:
Deposits:
Demand and savings deposits, non-maturity	$	3,215,856	$	—		$	—	$	3,215,856		$	3,215,856
Time deposits	—		664,738			—		664,738			670,077
Total deposits	3,215,856		664,738			—		3,880,594			3,885,933
Short-term borrowings	—		189,768			—		189,768			189,768
Long-term debt	—		144,021			—		144,021			145,330
Subordinated notes	—		95,113			—		95,113			94,574
Total liabilities	$	3,215,856	$	1,093,640		$	—	$	4,309,496		$	4,315,605
Off-Balance-Sheet:
Commitments to extend credit	$	—	$	(2,516	)	$	—	$	(2,516	)	$	—