FAIR VALUE MEASUREMENT (Tables)

9 Months Ended

Sep. 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 September 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)
September 30, 2015
Financial assets:
Loans held for sale	$	890	$	—	$	890	$	—
AFS securities:
Obligations of U.S. government-sponsored enterprises	5,094		—		5,094		—
Obligations of states and political subdivisions	19,872		—		19,872		—
Mortgage-backed securities issued or guaranteed by U.S. government-sponsored enterprises	381,049		—		381,049		—
Collateralized mortgage obligations issued or guaranteed by U.S. government-sponsored enterprises	318,222		—		318,222		—
Customer interest rate swap agreements	3,188		—		3,188		—
Financial liabilities:
Interest rate swap agreements	10,165		—		10,165		—
Forward-starting interest rate swap agreements	887		—		887		—
Customer interest rate swap agreements	3,188		—		3,188		—
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 September 30, 2015 and December 31, 2014. Not included in the table below because they were not recorded at fair value at September 30, 2015 and December 31, 2014 are: (i) impaired loans of $13.2 million and $17.6 million, respectively; (ii) MSRs reported of $165,000 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)
September 30, 2015
Financial assets:
Collateral-dependent impaired loans	$	1,986	$	—	$	—	$	1,986
MSRs⁽¹⁾	392		—		392		—
Non-financial assets:
OREO	204		—		—		204
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 September 30, 2015 and December 31, 2014:



	Fair Value		Valuation Methodology	Unobservable input	Discount Range (Weighted-Average)
September 30, 2015
Collateral-dependent impaired loans:
Partially charged-off	$	1,186	Market approach appraisal of collateral	Management adjustment of appraisal	0%	(0%)
				Estimated selling costs	0 - 10%	(6%)
Specifically reserved	800		Market approach appraisal of collateral	Management adjustment of appraisal	0 - 50%	(10%)
				Estimated selling costs	0 - 10%	(10%)
OREO	204		Market approach appraisal of collateral	Management adjustment of appraisal	0%	(0%)
				Estimated selling cost	0 - 10%	(1%)
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

Junior Subordinated Debentures: The carrying amounts reported in the consolidated statements of condition approximate fair value.

The following table presents the carrying amounts and estimated fair value for financial instrument assets and liabilities measured at September 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	$	66,644	$	66,644	$	66,644	$	—	$	—
AFS securities	724,237		724,237		—		724,237		—
HTM securities	75,368		76,578		—		76,578		—
Loans held for sale	890		890		—		890		—
Residential real estate loans	578,033		590,234		—		—		590,234
Commercial real estate loans	685,046		677,866		—		—		677,866
Commercial loans	250,501		248,747		—		—		248,747
Home equity loans	279,186		281,045		—		—		281,045
Consumer loans	16,245		16,643		—		—		16,643
MSRs⁽¹⁾	557		1,399		—		1,399		—
Interest receivable	6,577		6,577		—		6,577		—
Customer interest rate swap agreements	3,188		3,188		—		3,188		—
Financial liabilities:
Deposits	$	2,008,177	$	2,010,117	$	1,408,272	$	601,845	$	—
FHLB advances	55,000		56,515		—		56,515		—
Commercial repurchase agreements	30,063		31,012		—		31,012		—
Other borrowed funds	434,740		434,836				434,836		—
Junior subordinated debentures	44,101		44,101		—		44,101		—
Interest payable	505		505		505		—		—
Interest rate swap agreements	10,165		10,165		—		10,165		—
Forward-starting interest rate swap agreements	887		887		—		887		—
Customer interest rate swap agreements	3,188		3,188		—		3,188		—

(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.