Fair Value (Tables)

9 Months Ended

Sep. 30, 2013

Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are as follows at September 30, 2013 and December 31, 2012:


				Fair Value Measurements at September 30, 2013 Using
Description	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
Securities Available For Sale:
U.S. Treasury	$	2,007		$	0	$	2,007		$	0
U.S. Government sponsored entities		177,230			0		177,230			0
States and political subdivisions		179,863			0		179,863			0
Residential and multi-family mortgage		255,039			0		255,039			0
Commercial mortgage		950			0		950			0
Corporate notes and bonds		14,157			0		14,157			0
Pooled trust preferred		776			0		0			776
Pooled SBA		69,513			69,513		0			0
Other securities		996			996		0			0

Total Securities Available For Sale	$	700,531		$	70,509	$	629,246		$	776

Trading Securities:
Corporate equity securities	$	2,998		$	2,998	$	0		$	0
Certificates of deposit		253			253		0			0
International mutual funds		257			257		0			0
Large cap growth mutual funds		182			182		0			0
Large cap value mutual funds		121			121		0			0
Real estate investment trust mutual funds		40			40		0			0
Corporate notes and bonds		152			0		152			0
Mid cap mutual funds		81			81		0			0
Small cap mutual funds		81			81		0			0
U.S. Government sponsored entities		53			0		53			0
Commodities mutual funds		54			54		0			0
Money market mutual funds		86			86		0			0

Total Trading Securities	$	4,358		$	4,153	$	205		$	0

Liabilities:
Interest rate swaps	$	(1,241	)	$	0	$	(1,241	)	$	0


				Fair Value Measurements at December 31, 2012 Using
Description	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
Securities Available For Sale:
U.S. Treasury	$	4,036		$	0	$	4,036		$	0
U.S. Government sponsored entities		163,781			0		163,781			0
States and political subdivisions		181,279			0		181,279			0
Residential and multi-family mortgage		316,822			0		316,822			0
Commercial mortgage		1,304			0		1,304			0
Corporate notes and bonds		15,024			0		13,044			1,980
Pooled trust preferred		600			0		0			600
Pooled SBA		52,927			52,631		296			0
Other securities		1,538			1,538		0			0

Total Securities Available For Sale	$	737,311		$	54,169	$	680,562		$	2,580

Trading Securities:
Corporate equity securities	$	3,117		$	3,117	$	0		$	0
Certificates of deposit		408			408		0			0
International mutual funds		287			287		0			0
Large cap growth mutual funds		157			157		0			0
Money market mutual funds		110			110		0			0
Large cap value mutual funds		104			104		0			0
Corporate notes and bonds		101			0		101			0
Real estate investment trust mutual funds		65			65		0			0
U.S. Government sponsored entities		58			0		58			0
Small cap mutual funds		26			26		0			0
Mid cap mutual funds		26			26		0			0

Total Trading Securities	$	4,459		$	4,300	$	159		$	0

Liabilities:
Interest rate swaps	$	(1,745	)	$	0	$	(1,745	)	$	0

Securities Available for Sale Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3)

The table below presents a reconciliation and income statement classification of gains and losses for all securities available for sale measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended September 30, 2013:


	Pooled trust preferred
Balance, July 1, 2013	$	630
Total gains or (losses):
Included in other comprehensive income		146
Included in realized gains on available-for-sale securities		0
Sale of available-for-sale securities		0

Balance, September 30, 2013	$	776


	Corporate notes and bonds			Pooled trust preferred
Balance, January 1, 2013	$	1,980		$	600
Total gains or (losses):
Included in other comprehensive income		(29	)		176
Included in realized gains on available-for-sale securities		58			0
Sale of available-for-sale securities		(2,009	)		0

Balance, September 30, 2013	$	0		$	776


	Corporate notes and bonds			Pooled trust preferred
Balance, July 1, 2012	$	2,071		$	360
Total gains or losses:
Included in other comprehensive income (unrealized)		(86	)		0

Balance, September 30, 2012	$	1,985		$	360


	Corporate notes and bonds			Pooled trust preferred
Balance, January 1, 2012	$	2,060		$	340
Total gains or losses:
Included in other comprehensive income (unrealized)		(75	)		20

Balance, September 30, 2012	$	1,985		$	360

Quantitative Information about Level 3 Fair Value Measurements

The following table presents quantitative information about Level 3 fair value measurements at September 30, 2013:


	Fair value		Valuation Technique	Unobservable Inputs	Input Utilized
Pooled trust preferred	$	776	Discounted cash flow	Collateral default rate	2% in 2013; 1.5% in 2014; 1.0% in 2015; 0.5% in 2016 and thereafter
				Yield Prepayment speed	12% 6.7% constant prepayment rate in 2013; 2.0% constant prepayment rate in 2014 and thereafter

The following table presents quantitative information about Level 3 fair value measurements at December 31, 2012:


	Fair value		Valuation Technique	Unobservable Inputs	Input Utilized
Corporate notes and bonds	$	1,980	Discounted cash flow	Constant prepayment rate Probability of default Discount rate	0% 0% 9.6%

Pooled trust preferred	$	600	Discounted cash flow	Collateral default rate Yield Recovery probability	2% annually for 2 years; 0.36% thereafter 13% 10%, lagged 2 years

Sale Securities Reported as Level 1 Securities as of Beginning of Period were Transferred to Level 2 Category

During the nine months ended September 30, 2013 and 2012, the following available for sale securities reported as Level 1 securities as of the beginning of the period were transferred to the Level 2 category:


	2013		2012
U.S. Government sponsored entities	$	0	$	2,000
States and political subdivisions		0		4,655
Residential mortgage and asset backed		0		8,577

Total	$	0	$	15,232

Assets and Liabilities Measured at Fair Value on Non-Recurring Basis

Assets and liabilities measured at fair value on a non-recurring basis are as follows at September 30, 2013 and December 31, 2012:


			Fair Value Measurements at September 30, 2013 Using
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Commercial mortgages	$	7,474	$	0	$	0	$	7,474
Commercial, industrial, and agricultural		1,200		0		0		1,200
Residential real estate		64		0		0		64

			Fair Value Measurements at December 31, 2012 Using
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Commercial mortgages	$	8,422	$	0	$	0	$	8,422
Commercial, industrial, and agricultural		1,973		0		0		1,973
Residential real estate		402		0		0		402

Quantitative Information about Level 3 Fair Value Measurements for Financial Instruments Measured at Fair Value on Non Recurring Basis

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at September 30, 2013:


	Fair value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)

Impaired loans – commercial mortgages	$	7,473	Sales comparison approach	Adjustment for differences between the comparable sales	9% - 10% (10%)

Impaired loans – commercial, industrial, and agricultural		1,200	Income approach	Adjustment for differences in net operating income	13% - 32% (23%)

Impaired loans – residential real estate		64	Sales comparison approach	Adjustment for differences between the comparable sales	17% - 26% (23%)

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2012:


	Fair value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)

Impaired loans – commercial mortgages	$	8,422	Sales comparison approach	Adjustment for differences between the comparable sales	1% - 39% (19%)

Impaired loans – commercial, industrial, and agricultural		1,973	Income approach	Adjusting for differences in net operating income	24% - 38% (27%)

Impaired loans – residential real estate		402	Sales comparison approach	Adjustment for differences between the comparable sales	10% - 15% (11%)

Carrying Amount and Fair Value of Financial Instruments

The following table presents the carrying amount and fair value of financial instruments at September 30, 2013:


	Carrying			Fair Value Measurement Using:									Total
	Amount			Level 1			Level 2			Level 3			Fair Value
ASSETS
Cash and cash equivalents	$	32,856		$	32,856		$	0		$	0		$	32,856
Interest bearing time deposits with other banks		275			0			281			0			281
Securities available for sale		700,531			70,509			629,246			776			700,531
Trading securities		4,358			4,153			205			0			4,358
Loans held for sale		399			0			410			0			410
Net loans		1,011,750			0			0			1,008,375			1,008,375
FHLB and other equity interests		7,580			n/a			n/a			n/a			n/a
Accrued interest receivable		7,267			429			3,827			3,011			7,267

LIABILITIES
Deposits	$	(1,552,281	)	$	(1,365,864	)	$	(186,041	)	$	0		$	(1,551,905	)
FHLB and other borrowings		(122,976	)		0			(122,976	)		0			(122,976	)
Subordinated debentures		(20,620	)		0			(10,945	)		0			(10,945	)
Interest rate swaps		(1,241	)		0			(1,241	)		0			(1,241	)
Accrued interest payable		(805	)		(200	)		(590	)		(15	)		(805	)

The following table presents the carrying amount and fair value of financial instruments at December 31, 2012:


	Carrying			Fair Value Measurement Using:									Total
	Amount			Level 1			Level 2			Level 3			Fair Value
ASSETS
Cash and cash equivalents	$	31,881		$	31,881		$	0		$	0		$	31,881
Interest bearing time deposits with other banks		225			0			230			0			230
Securities available for sale		737,311			54,169			680,562			2,580			737,311
Trading securities		4,459			4,300			159			0			4,459
Loans held for sale		2,398			0			2,460			0			2,460
Net loans		913,764			0			0			917,785			917,785
FHLB and other equity interests		6,684			n/a			n/a			n/a			n/a
Accrued interest receivable		6,863			278			3,498			3,087			6,863

LIABILITIES
Deposits	$	(1,485,003	)	$	(1,272,060	)	$	(215,485	)	$	0		$	(1,487,545	)
FHLB and other borrowings		(97,806	)		0			(105,850	)		0			(105,850	)
Subordinated debentures		(20,620	)		0			(10,682	)		0			(10,682	)
Interest rate swaps		(1,745	)		0			(1,745	)		0			(1,745	)
Accrued interest payable		(1,022	)		(301	)		(707	)		(14	)		(1,022	)

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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