FAIR VALUE MEASUREMENT (Tables)

6 Months Ended

Jun. 30, 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 June 30, 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)
June 30, 2015
Financial assets:
Loans held for sale	$	1,426	$	—	$	1,426	$	—
AFS securities:
Obligations of U.S. government-sponsored enterprises	5,051		—		5,051		—
Obligations of states and political subdivisions	21,673		—		21,673		—
Mortgage-backed securities issued or guaranteed by U.S. government-sponsored enterprises	383,267		—		383,267		—
Collateralized mortgage obligations issued or guaranteed by U.S. government-sponsored enterprises	326,873		—		326,873		—
Private issue collateralized mortgage obligations	5,492		—		5,492		—
Customer interest rate swap agreements	780		—		780		—
Financial liabilities:
Interest rate swap agreements	7,991		—		7,991		—
Forward-starting interest rate swap agreements	348		—		348		—
Customer interest rate swap agreements	780		—		780		—
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		—
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 June 30, 2015 and December 31, 2014. Not included in the table below because they were not recorded at fair value at June 30, 2015 and December 31, 2014 are: (i) impaired loans of $13.6 million and $17.6 million, respectively; (ii) MSRs reported of $141,000 and $319,000, respectively; and (iii) OREO properties of $0 and $305,000, respectively.



	Fair Value		Readily Available Market Prices (Level 1)		Observable Market Data (Level 2)		Company Determined Fair Value (Level 3)
June 30, 2015
Financial assets:
Collateral-dependent impaired loans	$	2,436	$	—	$	—	$	2,436
MSRs⁽¹⁾	387		—		387		—
Non-financial assets:
OREO	651		—		—		651
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 June 30, 2015 and December 31, 2014:



	Fair Value		Valuation Methodology	Unobservable input	Discount Range (Weighted-Average)
June 30, 2015
Collateral-dependent impaired loans:
Partially charged-off	$	1,225	Market approach appraisal of collateral	Management adjustment of appraisal	0%	(0%)
				Estimated selling costs	0 - 10%	(8%)
Specifically reserved	1,211		Market approach appraisal of collateral	Management adjustment of appraisal	0 - 50%	(14%)
				Estimated selling costs	10%	(10%)
OREO	651		Market approach appraisal of collateral	Management adjustment of appraisal	0 - 28%	(10%)
				Estimated selling cost	6 - 10%	(10%)
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 June 30, 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	$	55,495	$	55,495	$	55,495	$	—	$	—
AFS securities	742,356		742,356		—		742,356		—
HTM securities	60,234		59,809		—		59,809		—
Loans held for sale	1,426		1,426		—		1,426		—
Residential real estate loans	581,894		592,135		—		—		592,135
Commercial real estate loans	654,775		648,031		—		—		648,031
Commercial loans	254,455		253,203		—		—		253,203
Home equity loans	278,611		280,108		—		—		280,108
Consumer loans	16,078		16,450		—		—		16,450
MSRs⁽¹⁾	528		1,360		—		1,360		—
Interest receivable	6,752		6,752		—		6,752		—
Customer interest rate swap agreements	780		780		—		780		—
Financial liabilities:
Deposits	$	1,981,131	$	1,982,300	$	1,383,678	$	598,622	$	—
FHLB advances	56,001		57,527		—		57,527		—
Commercial repurchase agreements	30,075		31,061		—		31,061		—
Other borrowed funds	433,946		434,349				434,349		—
Junior subordinated debentures	44,075		44,075		—		44,075		—
Interest payable	511		511		511		—		—
Interest rate swap agreements	7,991		7,991		—		7,991		—
Forward-starting interest rate swap agreements	348		348		—		348		—
Customer interest rate swap agreements	780		780		—		780		—

(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		—
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.