Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2018

Fair value of Mortgage Loans Held for Sale

The following table presents a summary of mortgage loans held for sale accounted for under the fair value option:



(Dollars in thousands)
December 31,	2018		2017
Aggregate fair value		$20,996		$26,943
Aggregate principal balance	20,498		26,400
Difference between fair value and principal balance		$498		$543

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present the balances of assets and liabilities reported at fair value on a recurring basis:



(Dollars in thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2018	Total				Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Securities available for sale:
Obligations of U.S. government-sponsored enterprises		$242,683		$—		$242,683		$—
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises	660,793		—		660,793		—
Obligations of states and political subdivisions	937		—		937		—
Individual name issuer trust preferred debt securities	11,772		—		11,772		—
Corporate bonds	11,625		—		11,625		—
Mortgage loans held for sale	20,996		—		20,996		—
Derivative assets	3,966		—		3,966		—
Total assets at fair value on a recurring basis		$952,772		$—		$952,772		$—
Liabilities:
Derivative liabilities		$3,202		$—		$3,202		$—
Total liabilities at fair value on a recurring basis		$3,202		$—		$3,202		$—



(Dollars in thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2017	Total				Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Securities available for sale:
Obligations of U.S. government-sponsored enterprises		$157,604		$—		$157,604		$—
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises	590,882		—		590,882		—
Obligations of states and political subdivisions	2,359		—		2,359		—
Individual name issuer trust preferred debt securities	16,984		—		16,984		—
Corporate bonds	13,125		—		13,125		—
Mortgage loans held for sale	26,943		—		26,943		—
Derivative assets	2,759		—		2,759		—
Total assets at fair value on a recurring basis		$810,656		$—		$810,656		$—
Liabilities:
Derivative liabilities		$3,047		$—		$3,047		$—
Contingent consideration liability	1,404		—		—		1,404
Total liabilities at fair value on a recurring basis		$4,451		$—		$3,047		$1,404

Fair Value of Contingent Consideration Rollforward

The following table presents the change in the contingent consideration liability, which is included in other liabilities in the Consolidated Balance Sheets.



(Dollars in thousands)
Years ended December 31,	2018			2017
Beginning Balance		$1,404			$2,047
Change in fair value	(187		)	(643		)
Payments	(1,217		)	—
Ending Balance		$—			$1,404

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The following table presents the carrying value of assets held at December 31, 2018, which were written down to fair value during the year ended December 31, 2018:



(Dollars in thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Collateral dependent impaired loans		$883		$—		$—		$883
Property acquired through foreclosure or repossession	2,142		—		—		2,142
Total assets at fair value on a nonrecurring basis		$3,025		$—		$—		$3,025

The allowance for loan losses on collateral dependent impaired loans amounted to $24 thousand at December 31, 2018.

The following table presents the carrying value of assets held at December 31, 2017, which were written down to fair value during the year ended December 31, 2017:



(Dollars in thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Collateral dependent impaired loans		$1,425		$—		$—		$1,425
Property acquired through foreclosure or repossession	131		—		—		131
Total assets at fair value on a nonrecurring basis		$1,556		$—		$—		$1,556

The allowance for loan losses on collateral dependent impaired loans amounted to $690 thousand at December 31, 2017.

Qualitative Information About Level 3 Assets Measured at Fair Value on a Nonrecurring Basis

The following tables present valuation techniques and unobservable inputs for assets measured at fair value on a nonrecurring basis for which the Corporation has utilized Level 3 inputs to determine fair value:



(Dollars in thousands)	Fair Value		Valuation Technique	Unobservable Input	Range of Inputs Utilized (Weighted Average)
December 31, 2018	Fair Value		Valuation Technique	Unobservable Input	Range of Inputs Utilized (Weighted Average)
Collateral dependent impaired loans		$883	Appraisals of collateral	Discount for costs to sell	0% - 10% (10%)
				Appraisal adjustments (1)	0% - 100% (2%)
Property acquired through foreclosure or repossession	2,142		Appraisals of collateral	Discount for costs to sell	13%
				Appraisal adjustments (1)	12% - 28% (20%)


(1)	Management may adjust appraisal values to reflect market value declines or other discounts resulting from its knowledge of the property.



(Dollars in thousands)	Fair Value		Valuation Technique	Unobservable Input	Range of Inputs Utilized (Weighted Average)
December 31, 2017	Fair Value		Valuation Technique	Unobservable Input	Range of Inputs Utilized (Weighted Average)
Collateral dependent impaired loans		$1,425	Appraisals of collateral	Discount for costs to sell	0% - 15% (15%)

Property acquired through foreclosure or repossession	131		Appraisals of collateral	Discount for costs to sell	10%
				Appraisal adjustments (1)	12% - 17% (15%)


(1)	Management may adjust appraisal values to reflect market value declines or other discounts resulting from its knowledge of the property.

Carrying Amounts, Estimated Fair Values and Fair Value Hierarchy of Financial Instruments

The estimated fair values and related carrying amounts for financial instruments for which fair value is only disclosed are presented below as of the periods indicated. The tables exclude financial instruments for which the carrying value approximates fair value such as cash and cash equivalents, FHLB stock, accrued interest receivable, bank-owned life insurance, non-maturity deposits and accrued interest payable.



(Dollars in thousands)	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2018	Carrying Amount		Total Fair Value				Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Securities held to maturity		$10,415		$10,316		$—		$10,316		$—
Loans, net of allowance for loan losses	3,653,288		3,598,025		—		—		3,598,025

Financial Liabilities:
Time deposits		$1,255,108		$1,269,433		$—		$1,269,433		$—
FHLB advances	950,722		950,691		—		950,691		—
Junior subordinated debentures	22,681		19,226		—		19,226		—



(Dollars in thousands)	Carrying Amount		Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2017	Carrying Amount		Total Fair Value				Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Securities held to maturity		$12,541		$12,721		$—		$12,721		$—
Loans, net of allowance for loan losses	3,347,583		3,369,932		—		—		3,369,932

Financial Liabilities:
Time deposits		$1,015,095		$1,018,396		$—		$1,018,396		$—
FHLB advances	791,356		792,887		—		792,887		—
Junior subordinated debentures	22,681		18,559		—		18,559		—