Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2017

Summary of Company's Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The following tables summarize the Company’s financial assets and liabilities that were measured at fair value on a recurring basis at September 30, 2017 and December 31, 2016:

			Fair Value Measurements Using
September 30, 2017	Fair Value		Level 1		Level 2		Level 3
Financial assets
Securities available-for-sale
U.S. Treasury Notes	$	14,925	$	14,925	$	—	$	—
U.S. Government agencies		53,219		—		53,219		—
Obligations of states, municipalities, and political subdivisions		32,535		—		31,985		550
Mortgage-backed securities; residential
Agency		324,040		—		324,040		—
Non-Agency		25,470		—		25,470		—
Mortgage-backed securities; commercial
Agency		70,757		—		70,757		—
Non-Agency		31,257		—		31,257		—
Corporate securities		27,524		—		27,524		—
Other securities		4,957		1,938		2,480		539
Servicing assets		21,669		—		—		21,669
Derivative assets		3,913		—		3,913		—
Financial liabilities
Derivative liabilities		1,190		—		1,190		—

			Fair Value Measurements Using
December 31, 2016	Fair Value		Level 1		Level 2		Level 3
Financial assets
Securities available-for-sale
U.S. Treasury Notes	$	14,920	$	14,920	$	—	$	—
U.S. Government agencies		58,857		—		58,857		—
Obligations of states, municipalities, and political subdivisions		16,059		—		15,509		550
Mortgage-backed securities; residential
Agency		368,160		—		368,160		—
Non-Agency		19,933		—		19,933		—
Mortgage-backed securities; commercial
Agency		77,403		—		77,403		—
Non-Agency		31,052		—		31,052		—
Corporate securities		17,329		—		17,329		—
Other securities		4,847		1,938		2,379		530
Servicing assets		21,091		—		—		21,091
Derivative assets		4,317		—		4,317		—
Financial liabilities
Derivative liabilities		559		—		559		—

Summary of Financial Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs

The following table presents additional information about financial assets measured at fair value on recurring basis for which the Company used significant unobservable inputs (Level 3):

	Nine Months Ended
	September 30,
	2017		2016		2017			2016
	Investment Securities				Servicing Assets
Balance, beginning of period	$	1,080	$	—	$	21,091		$	—
Additions, net		—		—		4,675			—
Amortization		3		—		—			—
Change in unrealized loss		6		—		—			—
Change in fair value		—		—		(4,097	)		—
Balance, end of period	$	1,089	$	—	$	21,669		$	—

Summary of Unobservable Inputs Used in the Fair Value Measurements on Recurring Basis

The following table presents additional information about the unobservable inputs used in the fair value measurements on recurring basis that were categorized within Level 3 of the fair value hierarchy as of September 30, 2017:

Financial Instruments

Valuation Technique

Unobservable Inputs

Range of

Inputs

Weighted

Average

Range

Impact to

Valuation from an

Increased or

Higher Input Value

Obligations of states, municipalities,

and political obligations

Discounted cash flow

Probability of default

2.0%—2.4%

2.2

Decrease

Single issuer trust preferred

Discounted cash flow

Probability of default

7.5%—9.9%

8.9

Decrease

Servicing assets

Discounted cash flow

Prepayment speeds

1.7%—9.0%

7.6

Decrease

Discount rate

9.1%—16.2%

12.8

Decrease

Expected weighted

average loan life

0.4—11.5 years

6.1 years

Increase

Summary of Company's Assets Measured at Fair Value on a Non-Recurring Basis

The following tables summarize the Company’s assets that were measured at fair value on a non-recurring basis, excluding acquired impaired loans, as of September 30, 2017 and December 31, 2016:

			Fair Value Measurements Using
September 30, 2017	Fair Value		Level 1		Level 2		Level 3
Non-recurring
Impaired loans
(excluding acquired impaired loans)
Commercial real estate	$	13,742	$	—	$	—	$	13,742
Residential real estate		1,772		—		—		1,772
Construction, land development, and other land		565		—		—		565
Commercial and industrial		4,490		—		—		4,490
Installment and other		-		—		—		-
Assets held for sale		12,938		—		—		12,938
Other real estate owned		13,859		—		—		13,859

			Fair Value Measurements Using
December 31, 2016	Fair Value		Level 1		Level 2		Level 3
Non-recurring
Impaired loans
(excluding acquired impaired loans)
Commercial real estate	$	8,916	$	—	$	—	$	8,916
Residential real estate		1,007		—		—		1,007
Construction, land development, and other land		—		—		—		—
Commercial and industrial		986		—		—		986
Installment and other		—		—		—		—
Assets held for sale		14,748		—		—		14,748
Other real estate owned		16,570		—		—		16,570

Summary of the Valuation Technique, Unobservable Inputs and Qualitative Information About the Company?s Assets and Liabilities

The following table provides a description of the valuation technique, unobservable inputs and qualitative information about the Company’s assets and liabilities classified as Level 3 and measured at fair value on a non-recurring basis as of September 30, 2017:

Financial Instruments	Valuation Technique	Unobservable Inputs	Range of Inputs	Impact to Valuation from an Increased or Higher Input Value
Impaired loans (excluding acquired impaired loans)	Appraisals	Appraisal adjustments, sales costs and other discount adjustments for market conditions	6% - 10%	Decrease
Assets held for sale	List price, contract price	Sales costs and other discount adjustments for market conditions	7%	Decrease
Other real estate owned	Appraisals	Appraisal adjustments, sales costs and other discount adjustments for market conditions	7% - 20%	Decrease

Estimated Fair Values of Financial Instruments

The estimated fair values of financial instruments and levels within the fair value hierarchy are as follows:

			September 30,				December 31,
	Fair Value		2017				2016
	Hierarchy Level		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets
Cash and due from banks		1	$	16,193	$	16,193	$	17,735	$	17,735
Interest bearing deposits with other banks		2		46,043		46,043		28,798		28,798
Securities held-to-maturity		2		121,453		122,266		138,846		138,082
Other restricted stock		2		10,628		10,628		14,993		14,993
Loans held for sale		3		2,087		2,335		23,976		26,487
Loans and lease receivables, net		3		2,200,519		2,118,769		2,137,088		2,068,157
Accrued interest receivable		3		7,183		7,183		6,866		6,866
Financial liabilities
Non-interest bearing deposits		2		753,662		753,662		724,457		724,457
Interest bearing deposits		2		1,767,267		1,721,537		1,765,937		1,723,941
Accrued interest payable		2		1,184		1,184		2,427		2,427
Line of credit		2		-		-		20,650		20,650
Federal Home Loan Bank advances		2		234,559		234,543		313,715		313,646
Securities sold under repurchase agreement		2		30,807		30,807		17,249		17,249
Junior subordinated debentures		3		27,482		26,779		26,926		26,943