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Fair Value Measurements (Tables)
12 Months Ended
Dec. 31, 2019
Fair value measurements  
Schedule of differences between the fair value carrying amount of mortgages held for sale measured at fair value and the aggregate unpaid principal amount
The following table shows the differences between fair value carrying amount of mortgages held for sale measured at fair value and the aggregate unpaid principal amount the Company is contractually entitled to receive at maturity on December 31, 2019 and 2018.
(Dollars in thousands) 
 
Fair value carrying amount
 
Aggregate unpaid principal
 
Excess of fair value carrying amount over (under) unpaid principal
 
December 31, 2019
 
 

 
 

 
 

 
Mortgages held for sale reported at fair value:
 
 

 
 

 
 

 
Total Loans
 
$
20,277

 
$
19,890

 
$
387

(1)
December 31, 2018
 
 

 
 

 
 

 
Mortgages held for sale reported at fair value:
 
 

 
 

 
 

 
Total Loans
 
$
11,290

 
$
11,076

 
$
214

(1)
 
(1) The excess of fair value carrying amount over (under) unpaid principal is included in mortgage banking income and includes changes in fair value at and subsequent to funding and gains and losses on the related loan commitment prior to funding.
Schedule of assets and liabilities measured at fair value on a recurring basis
The following table shows the balance of assets and liabilities measured at fair value on a recurring basis.
(Dollars in thousands)
 
Level 1
 
Level 2
 
Level 3
 
Total
December 31, 2019
 
 
 
 
 
 
 
 
Assets:
 
 

 
 

 
 

 
 

Investment securities available-for-sale:
 
 

 
 

 
 

 
 

U.S. Treasury and Federal agencies securities
 
$
80,393

 
$
446,571

 
$

 
$
526,964

U.S. States and political subdivisions securities
 

 
82,213

 
2,292

 
84,505

Mortgage-backed securities - Federal agencies
 

 
375,389

 

 
375,389

Corporate debt securities
 

 
53,025

 

 
53,025

Foreign government and other securities
 

 
700

 

 
700

Total debt securities available-for-sale
 
80,393

 
957,898

 
2,292

 
1,040,583

Mortgages held for sale
 

 
20,277

 

 
20,277

Accrued income and other assets (interest rate swap agreements)
 

 
21,975

 

 
21,975

Total
 
$
80,393

 
$
1,000,150

 
$
2,292

 
$
1,082,835

 
 
 
 
 
 
 
 
 
Liabilities:
 
 

 
 

 
 

 
 

Accrued expenses and other liabilities (interest rate swap agreements)
 
$

 
$
22,352

 
$

 
$
22,352

Total
 
$

 
$
22,352

 
$

 
$
22,352

 
 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
Assets:
 
 

 
 

 
 

 
 

Investment securities available-for-sale:
 
 

 
 

 
 

 
 

U.S. Treasury and Federal agencies securities
 
$
33,746

 
$
497,477

 
$

 
$
531,223

U.S. States and political subdivisions securities
 

 
93,557

 
1,025

 
94,582

Mortgage-backed securities - Federal agencies
 

 
318,233

 

 
318,233

Corporate debt securities
 

 
45,392

 

 
45,392

Foreign government and other securities
 

 
699

 

 
699

Total debt securities available-for-sale
 
33,746

 
955,358

 
1,025

 
990,129

Mortgages held for sale
 

 
11,290

 

 
11,290

Accrued income and other assets (interest rate swap agreements)
 

 
7,124

 

 
7,124

Total
 
$
33,746

 
$
973,772

 
$
1,025

 
$
1,008,543

 
 
 
 
 
 
 
 
 
Liabilities:
 
 

 
 

 
 

 
 

Accrued expenses and other liabilities (interest rate swap agreements)
 
$

 
$
7,250

 
$

 
$
7,250

Total
 
$

 
$
7,250

 
$

 
$
7,250


Schedule of changes in Level 3 assets and liabilities measured at fair value on a recurring basis
The following table shows the changes in Level 3 assets and liabilities measured at fair value on a recurring basis.
(Dollars in thousands)
 
U.S. States and political subdivisions securities
 
Foreign government and other securities
 
Investment securities available-for-sale
Beginning balance January 1, 2019
 
$
1,025

 
$

 
$
1,025

Total gains or losses (realized/unrealized):
 
 

 
 
 
 

Included in earnings
 

 

 

Included in other comprehensive income
 
(35
)
 

 
(35
)
Purchases
 
5,600

 

 
5,600

Issuances
 

 

 

Sales
 

 

 

Settlements
 

 

 

Maturities
 
(4,298
)
 

 
(4,298
)
Transfers into Level 3
 

 

 

Transfers out of Level 3
 

 

 

Ending balance December 31, 2019
 
$
2,292

 
$

 
$
2,292

 
 
 
 
 
 
 
Beginning balance January 1, 2018
 
$
2,155

 
$
710

 
$
2,865

Total gains or losses (realized/unrealized):
 
 

 
 
 
 

Included in earnings
 

 

 

Included in other comprehensive income
 
6

 
(11
)
 
(5
)
Purchases
 

 
200

 
200

Issuances
 

 

 

Sales
 

 

 

Settlements
 

 

 

Maturities
 
(1,136
)
 
(200
)
 
(1,336
)
Transfers into Level 3
 

 

 

Transfers out of Level 3
 

 
(699
)
 
(699
)
Ending balance December 31, 2018
 
$
1,025

 
$

 
$
1,025


Schedule of carrying value of assets measured at fair value on a non-recurring basis
The following table shows the carrying value of assets measured at fair value on a non-recurring basis.
(Dollars in thousands)
 
Level 1
 
Level 2
 
Level 3
 
Total
December 31, 2019
 
 

 
 

 
 

 
 

Impaired loans - collateral based
 
$

 
$

 
$
8,492

 
$
8,492

Accrued income and other assets (mortgage servicing rights)
 

 

 
4,200

 
4,200

Accrued income and other assets (repossessions)
 

 

 
8,623

 
8,623

Accrued income and other assets (other real estate)
 

 

 
522

 
522

Total
 
$

 
$

 
$
21,837

 
$
21,837

 
 
 
 
 
 
 
 
 
December 31, 2018
 
 

 
 

 
 

 
 

Impaired loans - collateral based
 
$

 
$

 
$
7,306

 
$
7,306

Accrued income and other assets (mortgage servicing rights)
 

 

 
4,283

 
4,283

Accrued income and other assets (repossessions)
 

 

 
6,666

 
6,666

Accrued income and other assets (other real estate)
 

 

 
299

 
299

Total
 
$

 
$

 
$
18,554

 
$
18,554


Schedule of fair values of financial instruments
The following table shows the fair values of the Company’s financial instruments.
(Dollars in thousands)
 
Carrying or Contract Value
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
December 31, 2019
 
 

 
 

 
 

 
 

 
 

Assets:
 
 

 
 

 
 

 
 

 
 

Cash and due from banks
 
$
67,215

 
$
67,215

 
$
67,215

 
$

 
$

Federal funds sold and interest bearing deposits with other banks
 
16,150

 
16,150

 
16,150

 

 

Investment securities, available-for-sale
 
1,040,583

 
1,040,583

 
80,393

 
957,898

 
2,292

Other investments
 
28,414

 
28,414

 
28,414

 

 

Mortgages held for sale
 
20,277

 
20,277

 

 
20,277

 

Loans and leases, net of reserve for loan and lease losses
 
4,974,273

 
4,992,684

 

 

 
4,992,684

Mortgage servicing rights
 
4,200

 
5,986

 

 

 
5,986

Accrued interest receivable
 
19,125

 
19,125

 

 
19,125

 

Interest rate swaps
 
21,975

 
21,975

 

 
21,975

 

Liabilities:
 
 

 
 

 
 

 
 

 
 

Deposits
 
$
5,357,326

 
$
5,362,633

 
$
3,708,828

 
$
1,653,805

 
$

Short-term borrowings
 
145,893

 
145,893

 
120,891

 
25,002

 

Long-term debt and mandatorily redeemable securities
 
71,639

 
71,084

 

 
71,084

 

Subordinated notes
 
58,764

 
61,469

 

 
61,469

 

Accrued interest payable
 
13,918

 
13,918

 

 
13,918

 

Interest rate swaps
 
22,352

 
22,352

 

 
22,352

 

Off-balance-sheet instruments *
 

 
281

 

 
281

 

 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
 

 
 

 
 

 
 

 
 

Assets:
 
 

 
 

 
 

 
 

 
 

Cash and due from banks
 
$
94,907

 
$
94,907

 
$
94,907

 
$

 
$

Federal funds sold and interest bearing deposits with other banks
 
4,172

 
4,172

 
4,172

 

 

Investment securities, available-for-sale
 
990,129

 
990,129

 
33,746

 
955,358

 
1,025

Other investments
 
28,404

 
28,404

 
28,404

 

 

Mortgages held for sale
 
11,290

 
11,290

 

 
11,290

 

Loans and leases, net of reserve for loan and lease losses
 
4,734,995

 
4,689,267

 

 

 
4,689,267

Mortgage servicing rights
 
4,283

 
7,238

 

 

 
7,238

Accrued interest receivable
 
18,880

 
18,880

 

 
18,880

 

Interest rate swaps
 
7,124

 
7,124

 

 
7,124

 

Liabilities:
 
 

 
 

 
 

 
 

 
 

Deposits
 
$
5,122,322

 
$
5,111,711

 
$
3,654,556

 
$
1,457,155

 
$

Short-term borrowings
 
199,344

 
199,344

 
113,734

 
85,610

 

Long-term debt and mandatorily redeemable securities
 
71,123

 
68,751

 

 
68,751

 

Subordinated notes
 
58,764

 
45,874

 

 
45,874

 

Accrued interest payable
 
8,950

 
8,950

 

 
8,950

 

Interest rate swaps
 
7,250

 
7,250

 

 
7,250

 

Off-balance-sheet instruments *
 

 
259

 

 
259

 


 
* Represents estimated cash outflows required to currently settle the obligations at current market rates.
Recurring  
Fair value measurements  
Schedule of valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a recurring and non-recurring basis
The following table shows the valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a recurring basis.
(Dollars in thousands)
 
Fair value
 
Valuation Methodology
 
Unobservable Inputs
 
Range of Inputs
December 31, 2019
 
 
 
 
 
 
 
 
Debt securities available-for-sale
 
 

 
 
 
 
 
 
Direct placement municipal securities
 
$
2,292

 
Discounted cash flows
 
Credit spread assumption
 
0.12% - 2.85%
 
 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
Debt securities available-for-sale
 
 
 
 
 
 
 
 
Direct placement municipal securities
 
$
1,025

 
Discounted cash flows
 
Credit spread assumption
 
0.17% - 3.02%

Non-recurring  
Fair value measurements  
Schedule of valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a recurring and non-recurring basis
The following table shows the valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a non-recurring basis.
(Dollars in thousands)
 
Carrying Value
 
Fair value
 
Valuation Methodology
 
Unobservable Inputs
 
Range of Inputs
December 31, 2019
 
 
 
 
 
 
 
 
 
 
Impaired loans
 
$
8,492

 
$
8,492

 
Collateral based measurements including appraisals, trade publications, and auction values
 
Discount for lack of marketability and current conditions
 
0% - 90%
 
 
 
 
 
 
 
 
 
 
 
Mortgage servicing rights
 
4,200

 
5,986

 
Discounted cash flows
 
Constant prepayment rate (CPR)
 
10.2% - 28.1%
 
 
 

 
 

 
 
 
Discount rate
 
9.3% - 12.1%
 
 
 
 
 
 
 
 
 
 
 
Repossessions
 
8,623

 
9,211

 
Appraisals, trade publications and auction values
 
Discount for lack of marketability
 
3% - 25%
 
 
 
 
 
 
 
 
 
 
 
Other real estate
 
522

 
564

 
Appraisals
 
Discount for lack of marketability
 
0% - 11%
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
 
 
Impaired loans
 
$
7,306

 
$
7,306

 
Collateral based measurements including appraisals, trade publications, and auction values
 
Discount for lack of marketability and current conditions
 
20% - 35%
 
 
 
 
 
 
 
 
 
 
 
Mortgage servicing rights
 
4,283

 
7,238

 
Discounted cash flows
 
Constant prepayment rate (CPR)
 
7.2% - 24.8%
 
 
 

 
 

 
 
 
Discount rate
 
10.3% - 13.1%
 
 
 
 
 
 
 
 
 
 
 
Repossessions
 
6,666

 
6,991

 
Appraisals, trade publications and auction values
 
Discount for lack of marketability
 
4% - 6%
 
 
 
 
 
 
 
 
 
 
 
Other real estate
 
299

 
305

 
Appraisals
 
Discount for lack of marketability
 
0% - 10%