Fair Value Disclosures (Tables)

3 Months Ended

Mar. 31, 2015

Assets and liabilities measured at fair value

Assets and liabilities measured at fair value, including financial assets for which we have elected the fair value option, were as follows:

			Fair Value Measurements Using
	Fair Value Measure- ments		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
March 31, 2015:
Measured at Fair Value on a Recurring Basis:
Assets
Trading securities	$	213	$	213	$	-	$	-
Securities available for sale
U.S. agency		35,529		-		35,529		-
U.S. agency residential mortgage-backed		234,254		-		234,254		-
U.S. agency commercial mortgage-backed		33,081		-		33,081		-
Private label residential mortgage-backed		5,820		-		5,820		-
Other asset backed		95,191		-		95,191		-
Obligations of states and political subdivisions		142,788		-		142,788		-
Corporate		22,661		-		22,661		-
Trust preferred		2,438		-		2,438		-
Loans held for sale		30,932		-		30,932		-
Derivatives (1)		1,268		-		1,268		-
Liabilities
Derivatives (2)		666		-		666		-

Measured at Fair Value on a Non-recurring basis:
Assets
Capitalized mortgage loan servicing rights (3)		8,129		-		-		8,129
Impaired loans (4)
Commercial
Income producing - real estate		786		-		-		786
Land, land development & construction-real estate		142		-		-		142
Commercial and industrial		2,511		-		-		2,511
Mortgage
1-4 Family		1,217		-		-		1,217
Resort Lending		139		-		-		139
Other real estate (5)
Commercial
Land, land development & construction-real estate		677		-		-		677
Mortgage
1-4 Family		102		-		-		102
Resort Lending		427		-		-		427

(1)	Included in accrued income and other assets

(2)	Included in accrued expenses and other liabilities

(3)	Only includes servicing rights that are carried at fair value due to recognition of a valuation allowance.

(4)	Only includes impaired loans with specific loss allocations based on collateral value.

(5)	Only includes other real estate with subsequent write downs to fair value.

			Fair Value Measurements Using
	Fair Value Measure- ments		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
December 31, 2014:
Measured at Fair Value on a Recurring Basis:
Assets
Trading securities	$	203	$	203	$	-	$	-
Securities available for sale
U.S. agency		35,006		-		35,006		-
U.S. agency residential mortgage-backed		257,558		-		257,558		-
U.S. agency commercial mortgage-backed		33,728		-		33,728		-
Private label residential mortgage-backed		6,013		-		6,013		-
Other asset backed		32,353		-		32,353		-
Obligations of states and political subdivisions		143,415		-		143,415		-
Corporate		22,664		-		22,664		-
Trust preferred		2,441		-		2,441		-
Loans held for sale		23,662		-		23,662		-
Derivatives (1)		619		-		619		-
Liabilities
Derivatives (2)		366		-		366		-

Measured at Fair Value on a Non-recurring basis:
Assets
Capitalized mortgage loan servicing rights (3)		9,197		-		-		9,197
Impaired loans (4)
Commercial
Income producing - real estate		869		-		-		869
Land, land development & construction-real estate		354		-		-		354
Commercial and industrial		2,601		-		-		2,601
Mortgage
1-4 Family		1,306		-		-		1,306
Other real estate (5)
Commercial
Income producing - real estate		479		-		-		479
Land, land development & construction-real estate		737		-		-		737
Mortgage
1-4 Family		102		-		-		102
Resort Lending		575		-		-		575
Installment
Home equity - 1st lien		13		-		-		13

(1)	Included in accrued income and other assets

(2)	Included in accrued expenses and other liabilities

(3)	Only includes servicing rights that are carried at fair value due to recognition of a valuation allowance.

(4)	Only includes impaired loans with specific loss allocations based on collateral value.

(5)	Only includes other real estate with subsequent write downs to fair value.

Changes in fair value for financial assets

Changes in fair values for financial assets which we have elected the fair value option for the periods presented were as follows:

		Changes in Fair Values for the Three-Month Periods Ended March 31 for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
		2015						2014
		Net Gains (Losses) on Assets				Total Change in Fair Values Included in Current Period		Net Gains (Losses) on Assets				Total Change in Fair Values Included in Current Period
		Securities		Loans		Earnings		Securities		Loans		Earnings
	(In thousands)
Trading securities		$	10	$	-	$	10	$	112	$	-	$	112
Loans held for sale			-		209		209		-		30		30

Quantitative information about Level 3 fair value measurements measured on a non-recurring basis

Quantitative information about Level 3 fair value measurements measured on a non-recurring basis follows:

	Asset (Liability) Fair Value		Valuation Technique	Unobservable Inputs	Weighted Average
	(In thousands)
March 31, 2015
Capitalized mortgage loan servicing rights	$	8,129	Present value of net servicing revenue	Discount rate		10.02	%
				Cost to service	$	80
				Ancillary income		25
				Float rate		1.53	%

Impaired loans
Commercial (1)		2,406	Sales comparison approach	Adjustment for differences between comparable sales		(3.7	)%
			Income approach	Capitalization rate		9.3

Mortgage		1,356	Sales comparison approach	Adjustment for differences between comparable sales		9.1

Other real estate
Commercial		677	Sales comparison approach	Adjustment for differences between comparable sales		(5.3	)

Mortgage		529	Sales comparison approach	Adjustment for differences between comparable sales		16.0

December 31, 2014
Capitalized mortgage loan servicing rights	$	9,197	Present value of net servicing revenue	Discount rate		10.07	%
				Cost to service	$	82
				Ancillary income		25
				Float rate		1.77	%

Impaired loans
Commercial (1)		2,751	Sales comparison approach	Adjustment for differences between comparable sales		(3.8	)%
			Income approach	Capitalization rate		9.3

Mortgage		1,306	Sales comparison approach	Adjustment for differences between comparable sales		8.6

Other real estate
Commercial		1,216	Sales comparison approach	Adjustment for differences between comparable sales		(9.0	)

Mortgage and installment		690	Sales comparison approach	Adjustment for differences between comparable sales		34.3

(1)

In addition to the valuation techniques and unobservable inputs discussed above, at March 31, 2015 and December 31, 2014 we had an impaired collateral dependent commercial relationship that totaled $1.0 million and $1.1 million, respectively that was primarily secured by collateral other than real estate. Collateral securing this relationship primarily included machinery and equipment, accounts receivable, inventory and company stock. Valuation techniques at March 31, 2015 included discounting restructuring firm valuations based on estimates of value recovery of each particular asset type. Discount rates used ranged from 20% to 100% of stated values while valuation techniques at December 31, 2014 included discounting cost and financial statement value approaches based on estimates of value recovery of each particular asset type. Discount rates used ranged from 35% to 100% of stated values.

Aggregate fair value and aggregate remaining contractual principal balance for loans held for sale

The following table reflects the difference between the aggregate fair value and the aggregate remaining contractual principal balance outstanding for loans held for sale for which the fair value option has been elected for the periods presented.

	Aggregate Fair Value		Difference		Contractual Principal
	(In thousands)
Loans held for sale
March 31, 2015	$	30,932	$	833	$	30,099
December 31, 2014		23,662		624		23,038

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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- Definition

Tabular disclosure of the application of the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected, provide the aggregate carrying amount of ineligible items included in each line item in the balance sheet, if any; (b) the difference between the aggregate fair value and the aggregate unpaid principal balance (assuming contractual principal amounts and fair value option elected) of: (i) loans and long-term receivables (other than securities otherwise reported at fair value) and (ii) long-term debt instruments; (c) for loans held as assets for which the fair value option has been elected: (i) the aggregate fair value of loans that are 90 days or more past due, (ii) if the policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status, and (iii) the difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both; (2) for items included in the income statement: (a) the amounts of gains and losses from fair value changes included in earnings and in which line in the income statement those gains and losses are reported whether or not combined with gains and losses from items required to be accounted for at fair value; (b) for loans and other receivables held as assets, the estimated amount of gains or losses included in earnings attributable to changes in instrument-specific credit risk; (c) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk, the estimated amount of gains and losses from fair value changes included in earnings that are attributable to changes in the instrument-specific credit risk; and (3) certain other disclosures as required or determined to be provided.

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