Fair Value of Assets and Liabilities (Tables)

9 Months Ended

Sep. 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 September 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)
September 30, 2016
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	48,736		—		48,736		—
Obligations of states and political subdivisions	160,919		—		160,919		—
Mortgage-backed securities	341,190		—		341,190		—
Trust preferred securities	1,661		—		—		1,661
Other securities	4,120		110		4,010		—
Total available-for-sale securities	556,626		110		554,855		1,661
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 nine months ended September 30, 2016 and 2015 is summarized as follows (in thousands):



	Trust Preferred Securities
	Three months ended						Nine months ended
	September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
Beginning balance	$	1,746		$	2,141		$	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)	(66		)	18			(190		)	1,894
Purchases, issuances, sales and settlements:
Purchases	—			—			—			—
Issuances	—			—			—			—
Sales	—			—			—			—
Settlements	(19		)	(34		)	(55		)	(133		)
Ending balance	$	1,661		$	2,125		$	1,661		$	2,125
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 September 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)
September 30, 2016
Impaired loans (collateral dependent)	$	9,647	$	—	$	—	$	9,647
Foreclosed assets held for sale	1,821		—		—		1,821
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).



September 30, 2016	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Trust Preferred Securities	$	1,661	Discounted cash flow	Discount rate	13.4%
				Constant prepayment rate (1)	1.3%
				Cumulative projected prepayments	22.4%
				Probability of default	0.5%
				Projected cures given deferral	100.0%
				Loss severity	97.6%
Impaired loans (collateral dependent)	$	9,647	Third party valuations	Discount to reflect realizable value	0	%	-	40%	(	20%	)
Foreclosed assets held for sale	$	1,821	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 September 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
September 30, 2016
Financial Assets
Cash and due from banks	$	108,919	$	108,919	$	108,919	$	—	$	—
Federal funds sold	14,118		14,118		14,118		—		—
Certificates of deposit investments	26,270		26,313		—		26,313		—
Available-for-sale securities	556,626		556,626		110		554,855		1,661
Held-to-maturity securities	101,679		102,648		—		102,648		—
Loans held for sale	3,584		3,584		—		3,584		—
Loans net of allowance for loan losses	1,787,000		1,767,461		—		—		1,767,461
Interest receivable	10,271		10,271		—		10,271		—
Federal Reserve Bank stock	3,949		3,949		—		3,949		—
Federal Home Loan Bank stock	4,389		4,389		—		4,389		—
Financial Liabilities
Deposits	$	2,265,259	$	2,265,734	$	—	$	1,883,315	$	382,419
Securities sold under agreements to repurchase	127,432		127,442		—		127,442		—
Interest payable	593		593		—		593		—
Federal Home Loan Bank borrowings	50,109		50,968		—		50,968		—
Other borrowings	22,000		22,000		—		22,000		—
Junior subordinated debentures	23,892		16,757		—		16,757		—



	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		—