Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 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 June 30, 2018 and December 31, 2017, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:



	June 30, 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	$	—	$	98,044	$	—	$	98,044
Obligations of states and political subdivisions	—		31,944		—		31,944
Residential mortgage-backed securities	—		511,289		—		511,289
U.S. Treasury bills	—		9,863		—		9,863
Total securities available for sale	$	—	$	651,140	$	—	$	651,140
Other investments	179		—		—		179
State tax credits held for sale	—		—		299		299
Derivative financial instruments	—		5,358		—		5,358
Total assets	$	179	$	656,498	$	299	$	656,976

Liabilities
Derivative financial instruments	$	—	$	5,358	$	—	$	5,358
Total liabilities	$	—	$	5,358	$	—	$	5,358



	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 June 30, 2018 and 2017.


•	Purchases, sales, issuances and settlements. There were no Level 3 purchases during the quarters ended June 30, 2018 or 2017.


•	Transfers in and/or out of Level 3. There were no Level 3 transfers during the quarter ended June 30, 2018. There was $3.1 million in Level 3 transfers to Level 2 during the quarter ended June 30, 2017.



	Securities available for sale, at fair value
	Three months ended June 30,					Six months ended June 30,
(in thousands)	2018		2017			2018		2017
Beginning balance	$	—	$	3,093		$	—	$	3,089
Total gains:
Included in other comprehensive income	—		—			—		4
Purchases, sales, issuances and settlements:
Purchases	—		—			—		—
Transfer in and/or out of Level 3	—		(3,093		)	—		(3,093		)
Ending balance	$	—	$	—		$	—	$	—

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



	State tax credits held for sale
	Three months ended June 30,						Six months ended June 30,
(in thousands)	2018			2017			2018			2017
Beginning balance	$	350		$	1,458		$	400		$	3,585
Total gains:
Included in earnings	3			9			6			49
Purchases, sales, issuances and settlements:
Sales	(54		)	(193		)	(107		)	(2,360		)
Ending balance	$	299		$	1,274		$	299		$	1,274

Change in unrealized gains (losses) relating to assets still held at the reporting date	$	(13	)	$	(49	)	$	(26	)	$	(655	)

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 June 30, 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 June 30, 2018		Total losses for the six months ended June 30, 2018
Impaired loans	$	1,486	$	—	$	—	$	1,486	$	900	$	1,609
Other real estate	454		—		—		454		1		44
Total	$	1,940	$	—	$	—	$	1,940	$	901	$	1,653

(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 June 30, 2018 and December 31, 2017. Fair values that are not estimable are listed at the carrying value.



	June 30, 2018				December 31, 2017
(in thousands)	Carrying Amount		Estimated fair value		Carrying Amount		Estimated fair value
Balance sheet assets
Cash and due from banks	$	91,851	$	91,851	$	91,084	$	91,084
Federal funds sold	1,445		1,445		1,223		1,223
Interest-bearing deposits	86,141		86,141		63,661		63,661
Securities available for sale	651,140		651,140		641,382		641,382
Securities held to maturity	68,931		66,909		73,749		73,458
Other investments, at cost	36,132		36,132		26,661		26,661
Loans held for sale	1,388		1,388		3,155		3,155
Derivative financial instruments	5,358		5,358		3,589		3,589
Portfolio loans, net	4,231,391		4,252,679		4,054,473		4,096,741
State tax credits, held for sale	46,481		45,069		43,468		44,271
Accrued interest receivable	17,808		17,808		14,069		14,069

Balance sheet liabilities
Deposits	4,247,912		4,242,061		4,156,414		4,153,323
Subordinated debentures and notes	118,131		105,889		118,105		105,031
Federal Home Loan Bank advances	361,534		361,531		172,743		172,893
Other borrowings	167,216		167,086		253,674		253,530
Derivative financial instruments	5,358		5,358		3,589		3,589
Accrued interest payable	1,884		1,884		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 June 30, 2018, and December 31, 2017.



	Estimated Fair Value Measurement at Reporting Date Using						Balance at June 30, 2018
(in thousands)	Level 1		Level 2		Level 3
Financial Assets:
Securities held to maturity	$	—	$	66,909	$	—	$	66,909
Portfolio loans, net	—		—		4,252,679		4,252,679
State tax credits, held for sale	—		—		44,770		44,770
Financial Liabilities:
Deposits	3,574,581		—		667,480		4,242,061
Subordinated debentures and notes	—		105,889		—		105,889
Federal Home Loan Bank advances	—		361,531		—		361,531
Other borrowings	—		167,086		—		167,086

	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