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Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2019

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, 2019	Total		Level 1		Level 2		Level 3
Marketable equity securities	$	2,952	$	2,952	$	—	$	—
Debt securities available for sale:
Obligations of U.S. government corporations and agencies		630,911		—		630,911		—
Obligations of states and political subdivisions		125,980		—		125,980		—
Corporate bonds		4,521		—		4,521		—
Asset backed securities		372,582		—		372,582		—
Loans held for sale		5,875		—		5,875		—
Mortgage servicing rights		6,229		—		—		6,229

Total assets measured at fair value	$	1,149,050	$	2,952	$	1,139,869	$	6,229


Fair value at December 31, 2018	Total		Level 1		Level 2		Level 3
Marketable equity securities	$	2,874	$	2,874	$	—	$	—
Debt securities available for sale:
Obligations of U.S. government corporations and agencies		629,981		—		629,981		—
Obligations of states and political subdivisions		126,072		—		126,072		—
Corporate bonds		4,478		—		4,478		—
Asset backed securities		354,505		—		354,505		—
Loans held for sale		3,687		—		3,687		—
Mortgage servicing rights		7,098		—		—		7,098

Total assets measured at fair value	$	1,128,695	$	2,874	$	1,118,723	$	7,098

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):


			Transfers		Change
	Beginning		into (out of)		Included					Ending
Three months ended June 30,	Balance		Level 3		in Earnings			Issuances		Balance
2019: Mortgage servicing rights	$	6,572		—	$	(552	)	$	209	$	6,229
2018: Mortgage servicing rights	$	6,953		—	$	(36	)	$	104	$	7,021


Six months ended June 30,	Beginning Balance		Transfers into (out of) Level 3		Change Included in Earnings			Issuances		Ending Balance
2019: Mortgage servicing rights	$	7,098		—	$	(1,197	)	$	328	$	6,229
2018: Mortgage servicing rights	$	6,687		—	$	75		$	259	$	7,021

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, 2019 and December 31, 2018:

Fair Value

Valuation

Unobservable

Range,

Weighted

As of June 30, 2019:

(in thousands)

Technique

Inputs

Average

Mortgage Servicing Rights

6,229

Discounted cash flow

Constant prepayment rate

6.9%

39.0%; 10.5

Discount rate

10% - 14%;12

As of December 31, 2018:

Mortgage Servicing Rights

7,098

Discounted cash flow

Constant prepayment rate

5.0% - 27.3%; 7.6

Discount rate

12% - 13%;12

Assets and Liabilities Measured at Fair Value on Nonrecurring Basis

The tables below present the recorded investment in assets and liabilities measured at fair value on a nonrecurring basis, as of the dates indicated (in thousands):


									Total Gains
June 30, 2019	Total		Level 1		Level 2		Level 3		(Losses)
Fair value:
Impaired Originated & PNCI loans	$	1,164		—		—	$	1,164	$	(808	)
Foreclosed assets		454		—		—		454		(63	)

Total assets measured at fair value	$	1,618		—		—	$	1,618	$	(871	)


									Total Gains
December 31, 2018	Total		Level 1		Level 2		Level 3		(Losses)
Fair value:
Impaired Originated & PNCI loans	$	281		—		—	$	281	$	(294	)
Foreclosed assets		1,311		—		—		1,311		(8	)

Total assets measured at fair value	$	1,592		—		—	$	1,592	$	(302	)


									Total Gains
June 30, 2018	Total		Level 1		Level 2		Level 3		(Losses)
Fair value:
Impaired Originated & PNCI loans	$	1,647		—		—	$	1,647	$	(505	)
Foreclosed assets		584		—		—		584		(90	)

Total assets measured at fair value	$	2,231		—		—	$	2,231	$	(595	)

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, 2019:

June 30, 2019

Fair Value
(in thousands)

Valuation

Technique

Unobservable Inputs

Range,
Weighted Average

Impaired Originated & PNCI loans

—

Sales comparison approach

Income approach

Adjustment for differences between comparable sales

Capitalization rate

Not meaningful
N/A

Foreclosed assets (Residential real estate)

—

Sales comparison approach

Adjustment for differences between comparable sales

Not meaningful

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, 2018:

December 31, 2018

Fair Value
(in thousands)

Valuation

Technique

Unobservable Inputs

Range,
Weighted Average

Impaired Originated & PNCI loans

281

Sales comparison approach

Income approach

Adjustment for differences between comparable sales

Capitalization rate

(16.3%)

35.14%; 10.45% N/A

Foreclosed assets (Residential real estate)

693

Sales comparison approach

Adjustment for differences between comparable sales

(21.83%) - 7.25%;
(3.75%)

Foreclosed assets (Commercial real estate)

618

Sales comparison approach

Adjustment for differences between comparable sales

(65%) - 20%; (45%)

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


	June 30, 2019				December 31, 2018
(in thouands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Level 1 inputs:
Cash and due from banks	$	106,939	$	106,939	$	119,781	$	119,781
Cash at Federal Reserve and other banks		68,643		68,643		107,752		107,752
Level 2 inputs:
Securities held to maturity		412,524		415,276		444,936		437,370
Restricted equity securities		17,250		N/A		17,250		N/A
Loans held for sale		5,875		5,875		3,687		4,616
Level 3 inputs:
Loans, net		4,070,819		4,057,792		3,989,432		4,006,986
Financial liabilities:
Level 2 inputs:
Deposits		5,342,173		5,341,105		5,366,466		5,362,173
Other borrowings		13,292		13,292		15,839		15,839
Level 3 inputs:
Junior subordinated debt		57,132		56,209		57,042		62,610

(in thouands)	Contract Amount		Fair Value		Contract Amount		Fair Value
Off-balance sheet:
Level 3 inputs:
Commitments	$	1,201,892	$	12,019	$	1,192,054	$	11,921
Standby letters of credit		11,338		113		11,346		113
Overdraft privilege commitments		108,941		1,089		111,956		1,120