Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2018

Summary of Financial Instruments Measured at Fair Value on a Recurring Basis

The following table summarizes financial instruments measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:



	March 31, 2018
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Securities available for sale
Obligations of U.S. Government-sponsored enterprises	$	—	$	98,192	$	—	$	98,192
Obligations of states and political subdivisions	—		32,788		—		32,788
Residential mortgage-backed securities	—		511,385		—		511,385
U.S. Treasury bills	—		9,907		—		9,907
Total securities available for sale	$	—	$	652,272	$	—	$	652,272
Other investments	171		—		—		171
State tax credits held for sale	—		—		350		350
Derivative financial instruments	—		4,006		—		4,006
Total assets	$	171	$	656,278	$	350	$	656,799

Liabilities
Derivative financial instruments	$	—	$	4,006	$	—	$	4,006
Total liabilities	$	—	$	4,006	$	—	$	4,006



	December 31, 2017
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Securities available for sale
Obligations of U.S. Government-sponsored enterprises	$	—	$	99,224	$	—	$	99,224
Obligations of states and political subdivisions	—		34,642		—		34,642
Residential mortgage-backed securities	—		507,516		—		507,516
Total securities available for sale	$	—	$	641,382	$	—	$	641,382
State tax credits held for sale	—		—		400		400
Derivative financial instruments	—		3,589		—		3,589
Total assets	$	—	$	644,971	$	400	$	645,371

Liabilities
Derivative financial instruments	$	—	$	3,589	$	—	$	3,589
Total liabilities	$	—	$	3,589	$	—	$	3,589

Schedule of Level 3 Financial Instruments Measured at Fair Value on a Recurring Basis

The following table presents the changes in Level 3 financial instruments measured at fair value on a recurring basis as of March 31, 2018 and 2017.


•	Purchases, sales, issuances and settlements. There were no Level 3 purchases during the quarters ended March 31, 2018 or 2017.


•	Transfers in and/or out of Level 3. There were no Level 3 transfers during the quarters ended March 31, 2018 and 2017.



	Securities available for sale, at fair value
	Three months ended March 31,
(in thousands)	2018		2017
Beginning balance	$	—	$	3,089
Total gains:
Included in other comprehensive income	—		4
Purchases, sales, issuances and settlements:
Purchases	—		—
Transfer in and/or out of Level 3	—		—
Ending balance	$	—	$	3,093

Change in unrealized gains relating to assets still held at the reporting date	$	—	$	4



	State tax credits held for sale
	Three months ended March 31,
(in thousands)	2018			2017
Beginning balance	$	400		$	3,585
Total gains:
Included in earnings	3			40
Purchases, sales, issuances and settlements:
Sales	(53		)	(2,167		)
Ending balance	$	350		$	1,458

Change in unrealized gains (losses) relating to assets still held at the reporting date	$	(13	)	$	(606	)

Summary of Financial Instruments and Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis

The following table presents financial instruments and non-financial assets measured at fair value on a non-recurring basis as of March 31, 2018.



	(1)		(1)		(1)		(1)
(in thousands)	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total losses for the three months ended March 31, 2018
Impaired loans	$	2,929	$	—	$	—	$	2,929	$	882
Other real estate	455		—		—		455		43
Total	$	3,384	$	—	$	—	$	3,384	$	925

(1) The amounts represent only balances measured at fair value during the period and still held as of the reporting date.

Summary of Carrying Amount and Fair Values of Financial Instruments Reported on the Balance Sheets

Following is a summary of the carrying amounts and fair values of the Company’s financial instruments on the consolidated balance sheets at March 31, 2018 and December 31, 2017. Fair values that are not estimable are listed at the carrying value.



	March 31, 2018				December 31, 2017
(in thousands)	Carrying Amount		Estimated fair value		Carrying Amount		Estimated fair value
Balance sheet assets
Cash and due from banks	$	81,604	$	81,604	$	91,084	$	91,084
Federal funds sold	1,099		1,099		1,223		1,223
Interest-bearing deposits	62,798		62,798		63,661		63,661
Securities available for sale	652,272		652,272		641,382		641,382
Securities held to maturity	70,579		68,766		73,749		73,458
Other investments, at cost	29,263		29,263		26,661		26,661
Loans held for sale	1,748		1,748		3,155		3,155
Derivative financial instruments	4,006		4,006		3,589		3,589
Portfolio loans, net	4,146,195		4,158,694		4,054,473		4,096,741
State tax credits, held for sale	42,364		41,072		43,468		44,271
Accrued interest receivable	17,277		17,277		14,069		14,069

Balance sheet liabilities
Deposits	4,281,377		4,276,096		4,156,414		4,153,323
Subordinated debentures and notes	118,118		105,751		118,105		105,031
Federal Home Loan Bank advances	224,624		224,665		172,743		172,893
Other borrowings	166,589		166,471		253,674		253,530
Derivative financial instruments	4,006		4,006		3,589		3,589
Accrued interest payable	2,046		2,046		1,730		1,730

Schedule of Estimated Fair Values of Financial Instruments Not Recorded at Fair Value on Balance Sheet

The following table presents the level in the fair value hierarchy for the estimated fair values of only the Company’s financial instruments that are not already presented on the condensed consolidated balance sheets at fair value at March 31, 2018, and December 31, 2017.



	Estimated Fair Value Measurement at Reporting Date Using						Balance at March 31, 2018
(in thousands)	Level 1		Level 2		Level 3
Financial Assets:
Securities held to maturity	$	—	$	68,766	$	—	$	68,766
Portfolio loans, net	—		—		4,158,694		4,158,694
State tax credits, held for sale	—		—		40,722		40,722
Financial Liabilities:
Deposits	3,633,073		—		643,023		4,276,096
Subordinated debentures and notes	—		105,751		—		105,751
Federal Home Loan Bank advances	—		224,665		—		224,665
Other borrowings	—		166,471		—		166,471

	Estimated Fair Value Measurement at Reporting Date Using						Balance at December 31, 2017
(in thousands)	Level 1		Level 2		Level 3
Financial Assets:
Securities held to maturity	$	—	$	73,458	$	—	$	73,458
Portfolio loans, net	—		—		4,096,741		4,096,741
State tax credits, held for sale	—		—		43,871		43,871
Financial Liabilities:
Deposits	3,577,641		—		575,682		4,153,323
Subordinated debentures and notes	—		105,031		—		105,031
Federal Home Loan Bank advances	—		172,893		—		172,893
Other borrowings	—		253,530		—		253,530