FAIR VALUE MEASUREMENT (Tables)

3 Months Ended

Mar. 31, 2015

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 March 31, 2015 and December 31, 2014, 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)
March 31, 2015
Financial assets:
Loans held for sale	$	625	$	—	$	625	$	—
AFS securities:
Obligations of U.S. government-sponsored enterprises	5,085		—		5,085		—
Obligations of states and political subdivisions	23,167		—		23,167		—
Mortgage-backed securities issued or guaranteed by U.S. government-sponsored enterprises	384,722		—		384,722		—
Collateralized mortgage obligations issued or guaranteed by U.S. government-sponsored enterprises	333,381		—		333,381		—
Private issue collateralized mortgage obligations	5,809		—		5,809		—
Trading account assets	2,308		2,308		—		—
Customer interest rate swap agreements	2,073		—		2,073		—
Financial liabilities:
Interest rate swap agreements	10,570		—		10,570		—
Forward-starting interest rate swap agreements	376		—		376		—
Customer interest rate swap agreements	2,073		—		2,073		—
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 interest rate swap agreements	1,140		—		1,140		—
Financial liabilities:
Interest rate swap agreements	9,143		—		9,143		—
Customer interest rate swap agreements	1,140		—		1,140		—

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 March 31, 2015 and December 31, 2014. Not included in the table below because they are not recorded at fair value at March 31, 2015 and December 31, 2014 are: (i) impaired loans of $14.8 million and $17.6 million, respectively; (ii) MSRs reported of $65,000 and $319,000, respectively; and (iii) OREO properties of $305,000 and $305,000, respectively.



	Fair Value		Readily Available Market Prices (Level 1)		Observable Market Data (Level 2)		Company Determined Fair Value (Level 3)
March 31, 2015
Financial assets:
Collateral-dependent impaired loans	$	2,684	$	—	$	—	$	2,684
MSRs⁽¹⁾	419		—		419		—
Non-financial assets:
OREO	1,076		—		—		1,076
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

(1) Represents MSRs deemed to be impaired and a valuation allowance established to carry at fair value.

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 March 31, 2015 and December 31, 2014:



	Fair Value		Valuation Methodology	Unobservable input	Discount Range (Weighted-Average)
March 31, 2015
Collateral-dependent impaired loans:
Partially charged-off	$	1,447	Market approach appraisal of collateral	Management adjustment of appraisal	0 - 17%	(0%)
				Estimated selling costs	0 - 10%	(7%)
Specifically reserved	1,237		Market approach appraisal of collateral	Management adjustment of appraisal	0 - 50%	(18%)
				Estimated selling costs	0 - 10%	(7%)
OREO	1,076		Market approach appraisal of collateral	Management adjustment of appraisal	0 - 50%	(15%)
				Estimated selling cost	0 - 10%	(9%)
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%)

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 measured at March 31, 2015:



	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	$	53,074	$	53,074	$	53,074	$	—	$	—
AFS securities	752,164		752,164		—		752,164		—
HTM securities	41,010		41,499		—		41,499		—
Trading account assets	2,308		2,308		2,308		—		—
Loans held for sale	625		625		—		625		—
Residential real estate loans	579,066		592,727		—		—		592,727
Commercial real estate loans	652,135		646,470		—		—		646,470
Commercial loans	250,046		248,584		—		—		248,584
Home equity loans	272,271		274,325		—		—		274,325
Consumer loans	16,297		16,691		—		—		16,691
MSRs⁽¹⁾	484		1,150		—		1,150		—
Interest receivable	6,458		6,458		—		6,458		—
Customer interest rate swap agreements	2,073		2,073		—		2,073		—
Financial liabilities:
Deposits	$	1,966,174	$	1,968,582	$	1,355,266	$	613,316	$	—
FHLB advances	56,020		57,843		—		57,843		—
Commercial repurchase agreements	30,086		31,395		—		31,395		—
Other borrowed funds	417,444		417,894				417,894		—
Junior subordinated debentures	44,050		44,050		—		44,050		—
Interest payable	536		536		536		—		—
Interest rate swap agreements	10,570		10,570		—		10,570		—
Forward-starting interest rate swap agreements	376		376				376
Customer interest rate swap agreements	2,073		2,073		—		2,073		—

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

The following table presents the carrying amounts and estimated fair value for financial instrument assets and liabilities measured 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		—
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		—
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, 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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