Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2016

Recorded Amount of Assets and Liabilities Measured at Fair Value on Recurring Basis

The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis (in thousands):


Fair value at June 30, 2016	Total		Level 1		Level 2		Level 3
Securities available for sale:
Obligations of U.S. government corporations and agencies	$	408,986		—	$	408,986		—
Obligations of states and political subdivisions		116,984		—		116,984		—
Corporate debt securities		—		—		—		—
Marketable equity securities		3,047	$	3,047		—		—
Mortgage servicing rights		6,720		—		—	$	6,720

Total assets measured at fair value	$	535,737	$	3,047	$	525,970	$	6,720

Fair value at December 31, 2015	Total		Level 1		Level 2		Level 3
Securities available-for-sale:
Obligations of U.S. government corporations and agencies	$	313,682		—	$	313,682		—
Obligations of states and political subdivisions		88,218		—		88,218		—
Corporate debt securities		—		—		—		—
Marketable equity securities		2,985	$	2,985		—		—
Mortgage servicing rights		7,618		—		—	$	7,618

Total assets measured at fair value	$	412,503	$	2,985	$	401,900	$	7,618

Reconciliation of Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) on Recurring Basis

The following table provides a reconciliation of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the time periods indicated. Had there been any transfer into or out of Level 3 during the time periods indicated, the amount included in the “Transfers into (out of) Level 3” column would represent the beginning balance of an item in the period (interim quarter) during which it was transferred (in thousands):


	Three months ended June 30,					Six months ended June 30,
	2016			2015		2016			2015
Mortgage servicing rights:
Balance at beginning of period	$	7,140		$	7,057	$	7,618		$	7,378
Issuances		281			236		501			421
Change included in earnings		(701	)		521		(1,399	)		15

Balance at end of period	$	6,720		$	7,814	$	6,720		$	7,814

Quantitative Information about Recurring Level 3 Fair Value Measurements

The following table presents quantitative information about recurring Level 3 fair value measurements at June 30, 2016:


	Fair Value		Valuation	Unobservable	Range,
	(in thousands)		Technique	Inputs	Weighted Average

Mortgage Servicing Rights	$	6,720	Discounted cash flow	Constant prepayment rate	6.5%-20.6%, 13.2%
				Discount rate	10.0%-12.0%, 10.0%

The following table presents quantitative information about recurring Level 3 fair value measurements at December 31, 2015:


	Fair Value		Valuation	Unobservable	Range,
	(in thousands)		Technique	Inputs	Weighted Average

Mortgage Servicing Rights	$	7,618	Discounted cash flow	Constant prepayment rate	6.3%-20.5%, 9.5%
				Discount rate	10.0%-12.0%, 10.0%

Assets Measured at Fair Value on Nonrecurring Basis

The table below presents the recorded amount of certain assets measured at fair value on a nonrecurring basis, as of the dates indicated. For these purposes, an asset is deemed to be measured at fair value if it had a write-down or an additional allowance provided during the periods indicated, and the recorded value of the asset at the end of the period is equal to the net value of the underlying collateral (in thousands):


Six months ended June 30, 2016	Total		Level 1		Level 2		Level 3		Total Gains/(Losses)
Fair value:
Impaired Originated & PNCI loans	$	1,318		—		—	$	1,318	$	316
Foreclosed assets		1,396		—		—		1,396		—

Total assets measured at fair value	$	2,714		—		—	$	2,714	$	316


									Total Gains
Year ended December 31, 2015	Total		Level 1		Level 2		Level 3		(Losses)
Fair value:
Impaired Originated & PNCI loans	$	4,649		—		—	$	4,649	$	(660	)
Foreclosed assets		1,540						1,540		(102	)

Total assets measured at fair value	$	6,189		—		—	$	6,189	$	(762	)


									Total
Six months ended June 30, 2015	Total		Level 1		Level 2		Level 3		Gains/(Losses)
Fair value:
Impaired Originated & PNCI loans	$	3,377		—		—	$	3,377	$	151
Foreclosed assets		3,190		—		—		3,190		(239	)

Total assets measured at fair value	$	6,567		—		—	$	6,567	$	(88	)

Schedule of Gains and Losses from Nonrecurring Fair Value Adjustments

The table below presents the gains and losses from nonrecurring fair value adjustments that occurred in the periods indicated (in thousands):


	Three months ended June 30,
	2016		2015
(Gains)/losses from nonrecurring fair value adjustments:
Impaired Originated & PNCI loans	$	431	$	(22	)
Foreclosed assets		—		206

Total losses from nonrecurring fair value adjustments	$	431	$	184

Quantitative Information about Level 3 Fair Value Measurements for Financial Instruments Measured at Fair Value on Nonrecurring Basis

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at June 30, 2016:


	Fair Value		Valuation	Unobservable	Range,
	(in thousands)		Technique	Inputs	Weighted Average

Impaired Originated & PNCI loans	$	1,318	Sales comparison approach	Adjustment for differences between comparable sales	(0.0)%-(5.0)%, (5.0)%
			Income approach	Capitalization rate	N/A
Foreclosed assets (Land & construction)		—	Sales comparison approach	Adjustment for differences between comparable sales	N/A
Foreclosed assets (residential (Residential real estate)	$	1,396	Sales comparison approach	Adjustment for differences between comparable sales	(5.0)%-(5.0)%, (5.0)%
Foreclosed assets (Commercial real estate)		—	Sales comparison approach	Adjustment for differences between comparable sales	N/A

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis at December 31, 2015:


	Fair Value		Valuation	Unobservable	Range,
	(in thousands)		Technique	Inputs	Weighted Average

Impaired Originated & PNCI loans	$	4,649	Sales comparison approach	Adjustment for differences between comparable sales	(5.0)%-(5.0)%, (5.0)%
			Income approach	Capitalization rate	7.0%-8.0%, 7.25%
Foreclosed assets (Land & construction)	$	96	Sales comparison approach	Adjustment for differences between comparable sales	(5.0)%-(5.0)%, (5.0)%
Foreclosed assets (residential (Residential real estate)	$	1,177	Sales comparison approach	Adjustment for differences between comparable sales	(5.0)%-(5.0)%, (5.0)%
Foreclosed assets (Commercial real estate)	$	267	Sales comparison approach	Adjustment for differences between comparable sales	(5.0)%-(5.0)%, (5.0)%

Estimated Fair Values of Financial Instruments that are Reported at Amortized Cost in Consolidated Balance Sheets

The estimated fair values of financial instruments that are reported at amortized cost in the Corporation’s consolidated balance sheets, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value, were as follows (in thousands):


	June 30, 2016				December 31, 2015
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial assets:
Level 1 inputs:
Cash and due from banks	$	88,157	$	88,157	$	94,305	$	94,305
Cash at Federal Reserve and other banks		128,629		128,629		209,156		209,156
Level 2 inputs:
Securities held to maturity		674,412		699,599		726,530		732,208
Restricted equity securities		16,956		N/A		16,596		N/A
Loans held for sale		2,904		2,904		1,873		1,873
Level 3 inputs:
Loans, net		2,618,121		2,712,083		2,486,926		2,555,297
Financial liabilities:
Level 2 inputs:
Deposits		3,741,396		3,740,956		3,631,266		3,630,129
Other borrowings		19,464		19,464		12,328		12,328
Level 3 inputs:
Junior subordinated debt	$	56,567	$	49,559	$	56,470	$	44,527

	Contract		Fair		Contract		Fair
	Amount		Value		Amount		Value
Off-balance sheet:
Level 3 inputs:
Commitments	$	760,601	$	7,606	$	705,316	$	7,053
Standby letters of credit	$	9,241	$	92	$	8,330	$	83
Overdraft privilege commitments	$	99,149	$	991	$	94,473	$	945