Fair Value (Tables)

12 Months Ended

Dec. 31, 2014

Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of December 31, 2014 and 2013, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:



	Fair Value		Readily Available Market Prices (Level 1)		Observable Market Data (Level 2)		Company Determined Fair Value (Level 3)
December 31, 2014:
Financial assets:
AFS securities:
Obligations of U.S. government-sponsored enterprises	$	5,027	$	—	$	5,027	$	—
Obligations of states and political subdivisions	26,777		—		26,777		—
Mortgage-backed securities issued or guaranteed by U.S. government-sponsored enterprises	381,308		—		381,308		—
Collateralized mortgage obligations issued or guaranteed by U.S. government-sponsored enterprises	343,897		—		343,897		—
Private issue collateralized mortgage obligations	6,054		—		6,054		—
Trading account assets	2,457		2,457		—		—
Customer loan swaps	1,140		—		1,140		—
Financial liabilities:
Interest rate swap agreements	9,143		—		9,143		—
Customer loan swaps	1,140		—		1,140		—
December 31, 2013:
Financial assets:
AFS securities:
Obligations of states and political subdivisions	$	31,207	$	—	$	31,207	$	—
Mortgage-backed securities issued or guaranteed by U.S. government-sponsored enterprises	395,903		—		395,903		—
Collateralized mortgage obligations issued or guaranteed by U.S. government-sponsored enterprises	374,435		—		374,435		—
Private issue collateralized mortgage obligations	6,932		—		6,932		—
Trading account assets	2,488		2,488		—		—
Customer loan swaps	114		—		114		—
Financial liabilities:
Interest rate swap agreements	3,912		—		3,912		—
Customer loan swaps	114		—		114		—

Summary of Assets Measured at Fair Value on Non Recurring Basis

The table below highlights financial and non-financial assets measured and recorded at fair value on a non-recurring basis as of December 31, 2014 and 2013. Not included in the table below because they are not recorded at fair value at December 31, 2014 and 2013 are: (i) impaired loans of $17.6 million and $19.4 million, respectively; (ii) MSR's reported of $319,000 and $322,000, respectively; and (iii) OREO properties of $305,000 and $612,000, respectively.



	Fair Value		Readily Available Market Prices (Level 1)		Observable Market Data (Level 2)		Company Determined Fair Value (Level 3)
December 31, 2014:
Financial assets:
Collateral-dependent impaired loans	$	3,581	$	—	$	—	$	3,581
MSRs⁽¹⁾	173		—		173		—
Non-financial assets:
OREO	1,282		—		—		1,282
December 31, 2013:
Financial assets:
Collateral-dependent impaired loans	$	8,557	$	—	$	—	$	8,557
MSRs⁽¹⁾	404		—		404		—
Non-financial assets:
OREO	1,583		—		—		1,583

(1) Represents MSRs deemed to be impaired and a valuation allowance was established to carry at fair value at December 31, 2014 and 2013.

Valuation Methodology and Unobservable Inputs for Level Three Assets Measured at Fair Value on Non Recurring Basis

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at December 31, 2014 and 2013:



	Fair Value		Valuation Methodology	Unobservable input	Discount Range (Weighted-Average)
December 31, 2014:
Collateral-dependent impaired loans:
Partially charged-off	$	1,569	Market approach appraisal of collateral	Management adjustment of appraisal	0 - 17%	(0%)
				Estimated selling costs	10%	(10%)
Specifically reserved	2,012		Market approach appraisal of collateral	Management adjustment of appraisal	0 - 50%	(22%)
				Estimated selling costs	10%	(10%)
OREO	1,282		Market approach appraisal of collateral	Management adjustment of appraisal	0 - 68%	(21%)
				Estimated selling costs	6 - 10%	(9%)
December 31, 2013:
Collateral-dependent impaired loans:
Partially charged-off	$	1,874	Market approach appraisal of collateral	Management adjustment of appraisal	0 - 85%	(14%)
Specifically reserved	6,683		Market approach appraisal of collateral	Management adjustment of appraisal	7 - 90%	(22%)
OREO	1,583		Market approach appraisal of collateral	Management adjustment of appraisal	0 - 41%	(16%)
				Estimated selling costs	6 - 10%	(10%)

At December 31, 2014, the Company amended its calculation of fair value for its collateral-dependent impaired loans for which a specific reserve is allocated. Historically, the specific reserve for collateral-dependent impaired loans was determined by any loan-to-value ratio in excess of 80% for consumer loans and any loan-to-value ratio in excess of 75% for commercial loans after applying any adjustments necessary to appraisals received to reflect changes in known factors, including, but not limited to, property condition and property location. For the December 31, 2014 valuation of fair value for the collateral-dependent impaired loans for which a specific reserve is allocated in accordance with Company policy, management calculated the reserve without consideration of loan-to-value ratios. Management calculated the estimated fair value of these impaired loans by reducing the appraised value of the collateral, adjusted for known factors, including, but not limited to, property condition, property location, by the estimated direct selling costs of the collateral. The amendment did not have a material impact on the ALL.

Carrying Amounts and Estimated Fair Value for Financial Instrument Assets and Liabilities

The following table presents the carrying amounts and estimated fair value for financial instrument assets and liabilities at December 31, 2014:



	Carrying Amount		Fair Value		Readily Available Market Prices (Level 1)		Observable Market Prices (Level 2)		Company Determined Market Prices (Level 3)
Financial assets:
Cash and due from banks	$	60,813	$	60,813	$	60,813	$	—	$	—
AFS securities	763,063		763,063		—		763,063		—
HTM securities	20,179		20,425		—		20,425		—
FHLB and FRB stock	20,391		20,391		20,391		—		—
Trading account assets	2,457		2,457		2,457		—		—
Residential real estate loans	579,946		596,172		—		—		596,172
Commercial real estate loans	635,609		631,434		—		—		631,434
Commercial loans	249,823		244,713		—		—		244,713
Home equity loans	269,176		270,904		—		—		270,904
Consumer loans	16,940		17,007		—		—		17,007
MSRs⁽¹⁾	493		1,447		—		1,447		—
Interest receivable	6,017		6,017		—		6,017		—
Investment in CCTA and UBCT	1,331		1,331		—		—		1,331
Customer interest rate swap agreement	1,140		1,140		—		1,140		—
Financial liabilities:
Deposits	$	1,932,097	$	1,933,805	$	1,361,604	$	572,201	$	—
FHLB advances	56,039		57,986		—		57,986		—
Commercial repurchase agreements	30,097		31,395		—		31,395		—
Other borrowed funds	446,842		446,909		446,909		—		—
Junior subordinated debentures	44,024		44,024		—		44,024		—
Interest payable	537		537		537		—		—
Interest rate swap agreements	9,143		9,143		—		9,143		—
Customer interest rate swap agreement	1,140		1,140		—		1,140		—

(1) Reported fair value represents all MSRs currently being serviced by the Company at December 31, 2014, regardless of carrying amount.

The following table presents the carrying amounts and estimated fair value for financial instrument assets and liabilities at December 31, 2013:



	Carrying Amount		Fair Value		Readily Available Market Prices (Level 1)		Observable Market Prices (Level 2)		Company Determined Market Prices (Level 3)
Financial assets:
Cash and due from banks	$	51,355	$	51,355	$	51,355	$	—	$	—
AFS securities	808,477		808,477		—		808,477		—
FHLB and FRB stock	19,724		19,724		19,724		—		—
Trading account assets	2,488		2,488		2,488		—		—
Residential real estate loans	563,425		577,153		—		—		577,153
Commercial real estate loans	536,107		535,961		—		—		535,961
Commercial loans	172,105		171,432		—		—		171,432
Home equity loans	269,888		271,041		—		—		271,041
Consumer loans	17,287		17,662		—		—		17,662
MSRs⁽¹⁾	726		1,494		—		1,494		—
Interest receivable	5,808		5,808		—		5,808		—
Investment in CCTA and UBCT	1,331		1,331		—		—		1,331
Customer interest rate swap agreement	114		114		—		114		—
Financial liabilities:
Deposits	$	1,813,824	$	1,817,199	$	1,324,221	$	492,978	$	—
FHLB advances	56,112		59,118		—		59,118		—
Commercial repurchase agreements	30,142		32,038		—		32,038		—
Other borrowed funds	399,916		400,144		400,144		—		—
Junior subordinated debentures	43,922		43,922		—		43,922		—
Interest payable	567		567		567		—		—
Interest rate swap agreements	3,912		3,912		—		3,912		—
Customer interest rate swap agreement	114		114		—		114		—

(1) Reported fair value represents all MSRs currently being serviced by the Company at December 31, 2013, regardless of carrying amount.

- 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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