Fair Value of Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2016

Assets Measured at Fair Value on Recurring Basis

The following table presents the Company’s assets that are measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall as of June 30, 2016 and December 31, 2015 (in thousands):



			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2016
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	50,210		—		50,210		—
Obligations of states and political subdivisions	113,041		—		113,041		—
Mortgage-backed securities	331,504		—		331,504		—
Trust preferred securities	1,746		—		—		1,746
Other securities	4,076		83		3,993		—
Total available-for-sale securities	500,577		83		498,748		1,746
December 31, 2015
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	90,141		—		90,141		—
Obligations of states and political subdivisions	110,717		—		110,717		—
Mortgage-backed securities	312,054		—		312,054		—
Trust preferred securities	1,906		—		—		1,906
Other securities	4,030		64		3,966		—
Total available-for-sale securities	$	518,848	$	64	$	516,878	$	1,906

Fair Value of Assets Measured on a Recurring Basis Using Significant Unobservable Inputs

The change in fair value of assets measured on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2016 and 2015 is summarized as follows (in thousands):



	Trust Preferred Securities
	June 30, 2016			June 30, 2015
Beginning balance	$	1,906		$	364
Transfers into Level 3	—			—
Transfers out of Level 3	—			—
Total gains or losses:
Included in net income	—			—
Included in other comprehensive income (loss)	(124		)	1,876
Purchases, issuances, sales and settlements:
Purchases	—			—
Issuances	—			—
Sales	—			—
Settlements	(36		)	(99		)
Ending balance	$	1,746		$	2,141
Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date	$	—		$	—

Assets Measured at Fair Value on a Nonrecurring Basis

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2016 and December 31, 2015 (in thousands):



	Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2016
Impaired loans (collateral dependent)	$	977	$	—	$	—	$	977
Foreclosed assets held for sale	89		—		—		89
December 31, 2015
Impaired loans (collateral dependent)	$	294	$	—	$	—	$	294
Foreclosed assets held for sale	423		—		—		423

Significant Assumptions Used in Valuation of Level 3 Financial Instruments

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements other than goodwill (in thousands).



June 30, 2016	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Trust Preferred Securities	$	1,746	Discounted cash flow	Discount rate	11.5%
				Constant prepayment rate (1)	1.3%
				Cumulative projected prepayments	23.6%
				Probability of default	0.4%
				Projected cures given deferral	100.0%
				Loss severity	97.3%
Impaired loans (collateral dependent)	$	977	Third party valuations	Discount to reflect realizable value	0	%	-	40%	(	20%	)
Foreclosed assets held for sale	$	89	Third party valuations	Discount to reflect realizable value less estimated selling costs	0	%	-	40%	(	35%	)



December 31, 2015	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Trust Preferred Securities	$	1,906	Discounted cash flow	Discount rate	11.4%
				Constant prepayment rate (1)	1.3%
				Cumulative projected prepayments	23.6%
				Probability of default	0.4%
				Projected cures given deferral	100.0%
				Loss severity	97.3%
Impaired loans (collateral dependent)	$	294	Third party valuations	Discount to reflect realizable value	0	%	-	40%	(	20%	)
Foreclosed assets held for sale	$	423	Third party valuations	Discount to reflect realizable value less estimated selling costs	0	%	-	40%	(	35%	)

(1) Every five years

Carrying Amounts and Estimated Fair Values of Financial Instruments Not Carried at Fair Value

The following tables present estimated fair values of the Company’s financial instruments at June 30, 2016 and December 31, 2015 in accordance with FAS 107-1 and APB 28-1, codified with ASC 805 (in thousands):



	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
June 30, 2016
Financial Assets
Cash and due from banks	$	52,581	$	52,581	$	52,581	$	—	$	—
Federal funds sold	491		491		491		—		—
Certificates of deposit investments	30,307		30,391		—		30,391		—
Available-for-sale securities	500,577		500,577		83		498,748		1,746
Held-to-maturity securities	112,161		113,112		—		113,112		—
Loans held for sale	1,346		1,346		—		1,346		—
Loans net of allowance for loan losses	1,298,677		1,297,118		—		—		1,297,118
Interest receivable	7,299		7,299		—		7,299		—
Federal Reserve Bank stock	2,272		2,272		—		2,272		—
Federal Home Loan Bank stock	3,391		3,391		—		3,391		—
Financial Liabilities
Deposits	$	1,704,199	$	1,704,869	$	—	$	1,454,392	$	250,477
Securities sold under agreements to repurchase	131,099		131,125		—		131,125		—
Interest payable	385		385		—		385		—
Federal Home Loan Bank borrowings	40,000		40,979		—		40,979		—
Junior subordinated debentures	20,620		13,223		—		13,223		—



	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
December 31, 2015
Financial Assets
Cash and due from banks	$	115,292	$	115,292	$	115,292	$	—	$	—
Federal funds sold	492		492		492		—		—
Certificates of deposit investments	25,000		25,056		—		25,056		—
Available-for-sale securities	518,848		518,848		64		516,878		1,906
Held-to-maturity securities	85,208		85,737		—		85,737		—
Loans held for sale	968		968		—		968		—
Loans net of allowance for loan losses	1,266,345		1,265,126		—		—		1,265,126
Interest receivable	8,085		8,085		—		8,085		—
Federal Reserve Bank stock	2,272		2,272		—		2,272		—
Federal Home Loan Bank stock	3,391		3,391		—		3,391		—
Financial Liabilities
Deposits	$	1,732,568	$	1,732,463	$	—	$	1,489,130	$	243,333
Securities sold under agreements to repurchase	128,842		128,843		—		128,843		—
Interest payable	356		356		—		356		—
Federal Home Loan Bank borrowings	20,000		20,422		—		20,422		—
Junior subordinated debentures	20,620		13,207		—		13,207		—