Fair Value (Tables)

6 Months Ended

Jun. 30, 2014

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 June 30, 2014 and December 31, 2013:


				Fair Value Measurements at June 30, 2014 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. Government sponsored entities	$	167,176		$	0	$	167,176		$	0
States and political subdivisions		183,212			0		183,212			0
Residential and multi-family mortgage		262,901			0		262,901			0
Commercial mortgage		188			0		188			0
Corporate notes and bonds		14,484			0		14,484			0
Pooled trust preferred		798			0		0			798
Pooled SBA		65,658			0		65,658			0
Other securities		1,002			1,002		0			0

Total Securities Available For Sale	$	695,419		$	1,002	$	695,419		$	798

Trading Securities:
Corporate equity securities	$	2,990		$	2,990	$	0		$	0
Mutual funds		978			978		0			0
Certificates of deposit		254			254		0			0
Corporate notes and bonds		153			0		153			0
U.S. Government sponsored entities		54			0		54			0

Total Trading Securities	$	4,429		$	4,222	$	207		$	0

Liabilities:
Interest rate swaps	$	(1,089	)	$	0	$	(1,089	)	$	0


				Fair Value Measurements at December 31, 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. Government sponsored entities	$	181,625		$	0	$	181,625		$	0
States and political subdivisions		177,943			0		177,943			0
Residential and multi-family mortgage		242,607			0		242,607			0
Commercial mortgage		374			0		374			0
Corporate notes and bonds		14,075			0		14,075			0
Pooled trust preferred		661			0		0			661
Pooled SBA		67,721			0		67,721			0
Other securities		985			985		0			0

Total Securities Available For Sale	$	685,991		$	985	$	684,345		$	661

Trading Securities:
Corporate equity securities	$	2,705		$	2,705	$	0		$	0
Mutual funds		965			965		0			0
Certificates of deposit		253			253		0			0
Corporate notes and bonds		152			0		152			0
U.S. Government sponsored entities		52			0		52			0

Total Trading Securities	$	4,127		$	3,923	$	204		$	0

Liabilities:
Interest rate swaps	$	(1,116	)	$	0	$	(1,116	)	$	0

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

The table below presents a reconciliation of the fair value of securities available for sale measured on a recurring basis using significant unobservable inputs (Level 3) for the three months ended June 30, 2014:


	Pooled trust preferred
Balance, April 1, 2014	$	798
Total gains or (losses):
Included in other comprehensive income (unrealized)		0

Balance, June 30, 2014	$	798


	Pooled Trust Preferred
Balance, January 1, 2014	$	661
Total gains or (losses):
Included in other comprehensive income (unrealized)		137

Balance, June 30, 2014	$	798


	Corporate notes and bonds			Pooled trust preferred
Balance, April 1, 2013	$	2,067		$	558
Total gains or (losses):
Included in other comprehensive income		(116	)		72
Included in realized gains on available-for-sale securities		58			0
Sale of available-for-sale securities		(2,009	)		0

Balance, June 30, 2013	$	0		$	630


	Corporate notes and bonds			Pooled trust preferred
Balance, January 1, 2013	$	1,980		$	600
Total gains or (losses):
Included in other comprehensive income		(29	)		30
Included in realized gains on available-for-sale securities		58			0
Sale of available-for-sale securities		(2,009	)		0

Balance, June 30, 2013	$	0		$	630

Quantitative Information About Level 3 Fair Value Measurements

The following table presents quantitative information about Level 3 fair value measurements at June 30, 2014:


	Fair value		Valuation Technique	Unobservable Inputs	Input Utilized
Pooled trust preferred	$	798	Discounted cash flow	Collateral default rate	1.5% in 2014; 1.0% in 2015; 0.5% in 2016 and thereafter
				Yield Prepayment speed	12% 2.0% constant prepayment rate in 2014 and thereafter

The following table presents quantitative information about Level 3 fair value measurements at December 31, 2013:


	Fair value		Valuation Technique	Unobservable Inputs	Input Utilized
Pooled trust preferred	$	661	Discounted cash flow	Collateral default rate	2% in 2014; 1.5% in 2015; 1.0% in 2016; 0.5% in 2017 and thereafter
				Yield Prepayment speed	15% 2.0% constant prepayment rate in 2014 and thereafter

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 June 30, 2014 and December 31, 2013:


			Fair Value Measurements at June 30, 2014 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	$	3,067		0		0	$	3,067
Commercial, industrial, and agricultural		3,360		0		0		3,360


			Fair Value Measurements at December 31, 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	$	3,000		0		0	$	3,000
Commercial, industrial, and agricultural		3,706		0		0		3,706

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 June 30, 2014:


	Fair value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)

Impaired loans – commercial mortgages	$	3,067	Sales comparison approach	Adjustment for differences between the comparable sales	13% - 61% (35%)

Impaired loans – commercial, industrial, and agricultural	$	3,360	Sales comparison approach	Adjustment for differences between the comparable sales	9% - 28% (9%)

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, 2013:


	Fair value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)

Impaired loans – commercial mortgages	$	3,000	Sales comparison approach	Adjustment for differences between the comparable sales	17% - 61% (22%)

Impaired loans – commercial, industrial, and agricultural	$	3,274	Sales comparison approach	Adjustment for differences between the comparable sales	9%

Impaired loans – commercial, industrial, and agricultural	$	432	Income approach	Adjustment for differences in net operating income	2%

Carrying Amount and Fair Value of Financial Instruments

The following table presents the carrying amount and fair value of financial instruments at June 30, 2014:


	Carrying			Fair Value Measurement Using:									Total
	Amount			Level 1			Level 2			Level 3			Fair Value
ASSETS
Cash and cash equivalents	$	34,351		$	34,351		$	0		$	0		$	34,351
Interest bearing time deposits with other banks		225			0			225			0			225
Securities available for sale		695,419			1,002			693,619			798			695,419
Trading securities		4,429			4,222			207			0			4,429
Loans held for sale		942			0			942			0			942
Net loans		1,290,916			0			0			1,290,449			1,290,449
FHLB and other equity interests		9,040			n/a			n/a			n/a			n/a
Accrued interest receivable		7,533			5			3,607			3,921			7,533

LIABILITIES
Deposits	$	(1,851,047	)	$	(1,650,115	)	$	(200,558	)	$	0		$	(1,850,673	)
FHLB and other borrowings		(85,608	)		0			(85,703	)		0			(85,703	)
Subordinated debentures		(20,620	)		0			(11,275	)		0			(11,275	)
Interest rate swaps		(1,089	)		0			(1,089	)		0			(1,089	)
Accrued interest payable		(800	)		(332	)		(453	)		(15	)		(800	)

The following table presents the carrying amount and fair value of financial instruments at December 31, 2013:


	Carrying			Fair Value Measurement Using:									Total
	Amount			Level 1			Level 2			Level 3			Fair Value
ASSETS
Cash and cash equivalents	$	29,633		$	29,633		$	0		$	0		$	29,633
Interest bearing time deposits with other banks		275			0			274			0			274
Securities available for sale		685,991			985			684,345			661			685,991
Trading securities		4,127			3,923			204			0			4,127
Loans held for sale		487			0			507			0			507
Net loans		1,279,129			0			0			1,276,622			1,276,622
FHLB and other equity interests		7,533			n/a			n/a			n/a			n/a
Accrued interest receivable		8,032			368			3,302			4,362			8,032

LIABILITIES
Deposits	$	(1,835,314	)	$	(1,569,552	)	$	(265,237	)	$	0		$	(1,834,789	)
FHLB and other borrowings		(87,950	)		0			(87,833	)		0			(87,833	)
Subordinated debentures		(20,620	)		0			(11,178	)		0			(11,178	)
Interest rate swaps		(1,116	)		0			(1,116	)		0			(1,116	)
Accrued interest payable		(868	)		(200	)		(653	)		(15	)		(868	)

- 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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