Fair Value of Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2019

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 March 31, 2019 and December 31, 2018 (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)
March 31, 2019
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	190,727	$	—	$	190,727	$	—
Obligations of states and political subdivisions	191,103		—		190,135		968
Mortgage-backed securities	311,484		—		311,484		—
Other securities	2,304		96		2,208		—
Total available-for-sale securities	$	695,618	$	96	$	694,554	$	968
December 31, 2018
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	198,649	$	—	$	198,649	$	—
Obligations of states and political subdivisions	192,579		—		191,612		967
Mortgage-backed securities	298,672		—		298,672		—
Other securities	2,374		364		2,010		—
Total available-for-sale securities	$	692,274	$	364	$	690,943	$	967

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 three months ended March 31, 2019 and 2018 is summarized as follows (in thousands):



	Obligations of State and Political Subdivisions				Trust Preferred Securities
	Three months ended				Three months ended
	March 31, 2019		March 31, 2018		March 31, 2019		March 31, 2018
Beginning balance	$	967	$	—	$	—	$	2,548
Transfers into Level 3	—		—		—		—
Transfers out of Level 3	—		—		—		—
Total gains or losses:
Included in net income	1		—		—		—
Included in other comprehensive income (loss)	—		—		—		18
Purchases, issuances, sales and settlements:					—
Purchases	—		—		—		—
Issuances	—		—		—		—
Sales	—		—		—		—
Settlements	—		—		—		(44		)
Ending balance	$	968	$	—	$	—	$	2,522
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 March 31, 2019 and December 31, 2018 (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)
March 31, 2019
Impaired loans (collateral dependent)	$	8,478	$	—	$	—	$	8,478
Foreclosed assets held for sale	1,574		—		—		1,574
December 31, 2018
Impaired loans (collateral dependent)	$	16,437	$	—	$	—	$	16,437
Foreclosed assets held for sale	836		—		—		836

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 at March 31, 2019 and December 31, 2018 (in thousands).



March 31, 2019	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans (collateral dependent)	$	8,478	Third party valuations	Discount to reflect realizable value	0	%	-	40%	(	20%	)
Foreclosed assets held for sale	1,574		Third party valuations	Discount to reflect realizable value less estimated selling costs	0	%	-	40%	(	35%	)



December 31, 2018	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans (collateral dependent)	$	16,437	Third party valuations	Discount to reflect realizable value	0	%	-	40%	(	20%	)
Foreclosed assets held for sale	836		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 March 31, 2019 and December 31, 2018 in accordance with ASC 825 (in thousands):



	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
March 31, 2019
Financial Assets
Cash and due from banks	$	232,052	$	232,052	$	232,052	$	—	$	—
Federal funds sold	496		496		496		—		—
Certificates of deposit investments	7,320		7,320		—		7,320		—
Available-for-sale securities	695,618		695,618		96		694,554		968
Held-to-maturity securities	69,462		68,743		—		68,743		—
Loans held for sale	1,233		1,233		—		1,233		—
Loans net of allowance for loan losses	2,569,057		2,520,206		—		—		2,520,206
Interest receivable	16,073		16,073		—		16,073		—
Right-of-use lease assets	13,531		13,531		—		13,531		—
Federal Reserve Bank stock	7,389		7,389		—		7,389		—
Federal Home Loan Bank stock	2,995		2,995		—		2,995		—
Financial Liabilities
Deposits	$	3,046,213	$	3,051,083	$	—	$	2,385,575	$	665,508
Securities sold under agreements to repurchase	157,760		157,647		—		157,647		—
Interest payable	2,166		2,166		—		2,166		—
Federal Home Loan Bank borrowings	119,791		120,079		—		120,079		—
Other borrowings	6,257		6,257		—		6,257		—
Junior subordinated debentures	29,042		24,302		—		24,302		—
Lease liabilities	13,533		13,533		—		13,533		—



	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
December 31, 2018
Financial Assets
Cash and due from banks	$	140,735	$	140,735	$	140,735	$	—	$	—
Federal funds sold	665		665		665		—		—
Certificates of deposit investments	7,569		7,569		—		7,569		—
Available-for-sale securities	692,274		692,274		364		690,943		967
Held-to-maturity securities	69,436		67,909		—		67,909		—
Loans held for sale	1,508		1,508		—		1,508		—
Loans net of allowance for loan losses	2,616,822		2,541,037		—		—		2,541,037
Interest receivable	16,881		16,881		—		16,881		—
Federal Reserve Bank stock	7,390		7,390		—		7,390		—
Federal Home Loan Bank stock	3,095		3,095		—		3,095		—
Financial Liabilities
Deposits	$	2,988,686	$	2,991,177	$	—	$	2,396,917	$	594,260
Securities sold under agreements to repurchase	192,330		192,179		—		192,179		—
Interest payable	1,758		1,758		—		1,758		—
Federal Home Loan Bank borrowings	119,745		119,704		—		119,704		—
Other borrowings	7,724		7,724		—		7,724		—
Junior subordinated debentures	29,000		24,418		—		24,418		—