Fair Values of Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2015

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

Assets and liabilities carried at fair value on a recurring basis at March 31, 2015 are summarized in the following table:



(dollars in thousands)	Total			Level 1		Level 2			Level 3
Assets:
Available-for-sale debt securities:
U.S. government sponsored agencies	$	2,036		$	—	$	2,036		$	—
Residential mortgage-backed securities-GSE	285,719			—		285,719			—
Residential mortgage-backed securities-Private	16,430			—		16,430			—
Commercial mortgage-backed securities-GSE	22,208					22,208
Commercial mortgage-backed securities-Private	10,457			—		10,457			—
Corporate notes	30,992			—		30,992			—
Total available-for-sale debt securities	367,842			—		367,842			—
Mortgage servicing rights	1,896			—		—			1,896
Interest rate swaps	(1,045		)	—		(1,045		)	—
Total assets at fair value	$	368,693		$	—	$	366,797		$	1,896

Assets and liabilities carried at fair value on a recurring basis at December 31, 2014 are summarized in the following table:



(dollars in thousands)	Total			Level 1		Level 2			Level 3
Assets:
Available-for-sale debt securities:
U.S. government sponsored agencies	$	2,044		$	—	$	2,044		$	—
Residential mortgage-backed securities-GSE	290,145			—		290,145			—
Residential mortgage-backed securities-Private	17,271			—		17,271			—
Commercial mortgage-backed securities-GSE	21,958			—		21,958			—
Commercial mortgage-backed securities-Private	10,215			—		10,215			—
Corporate notes	8,407			—		8,407			—
Total available-for-sale debt securities	350,040			—		350,040			—
Mortgage servicing rights	1,726			—		—			1,726
Interest rate swaps	(525		)	—		(525		)	—
Total assets at fair value	$	351,241		$	—	$	349,515		$	1,726

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The following tables present a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the periods indicated:



	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Servicing Rights
(dollars in thousands)	Three Months Ended March 31,
	2015			2014
Balance, beginning of period	$	1,726		$	1,552
Total gains or losses (realized/unrealized):
Included in earnings, gross	300			144
Less amortization	(130		)	(109		)
Balance, end of period	$	1,896		$	1,587

Fair Value Measurements, Nonrecurring

Assets measured at fair value on a non-recurring basis are included in the following table at March 31, 2015:



(dollars in thousands)	Total		Level 1		Level 2		Level 3
Impaired loans, net	$	7,186	$	—	$	—	$	7,186
Other real estate owned	15,729		—		—		15,729
Total assets at fair value from continuing operations	$	22,915	$	—	$	—	$	22,915

Assets measured at fair value on a non-recurring basis are included in the following table at December 31, 2014:



(dollars in thousands)	Total		Level 1		Level 2		Level 3
Impaired loans, net	$	7,433	$	—	$	—	$	7,433
Other real estate owned	15,579		—		—		15,579
Total assets at fair value from continuing operations	$	23,012	$	—	$	—	$	23,012

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques



(dollars in thousands)	Fair Value at March 31, 2015		Valuation Techniques	Unobservable Input	Range

Impaired loans, net	$	7,186	Discounted appraisals	Collateral discounts	1.00% - 30.00%
Other real estate owned	15,729		Discounted appraisals	Collateral discounts	1.00% - 30.00%
Mortgage servicing rights	1,896		Discounted cash flows	Prepayment rate	10.00% - 25.00%
Mortgage servicing rights				Discount rate	6.00% - 10.00%



(dollars in thousands)	Fair Value at December 31, 2014		Valuation Techniques	Unobservable Input	Range

Impaired loans, net	$	7,433	Discounted appraisals	Collateral discounts	1.00%-30.00%
Other real estate owned	15,579		Discounted appraisals	Collateral discounts	1.00%-30.00%
Mortgage servicing rights	1,726		Discounted cash flows	Prepayment rate	10.00% - 25.00%
Mortgage servicing rights				Discount rate	6.00% - 10.00%

Fair Value, by Balance Sheet Grouping

The estimated fair values of financial instruments are as follows at the periods indicated:



	At March 31, 2015
(dollars in thousands)	Carrying Value			Estimated Fair Value			Level 1		Level 2			Level 3
Financial Assets:
Cash and cash equivalents	$	47,933		$	47,933		$	47,933	$	—		$	—
Investment securities: Available-for-sale	367,842			367,842			—		367,842			—
Investment securities: Held-to-maturity	140,559			140,959			—		140,959			—
Loans held for sale	7,571			7,571			—		7,571			—
Loans held for investment, net	1,376,903			1,374,489			—		—			1,374,489
Accrued interest receivable	5,306			5,306			—		1,480			3,826
Interest rate swaps	(1,044		)	(1,044		)	—		(1,044		)	—
Interest rate locks and forward loan sale commitments	55			55			—		55			—
Financial Liabilities:
Deposits	1,807,472			1,807,162			—		1,807,162			—
Retail repurchase agreements	7,837			7,837			—		7,837			—
Federal Home Loan Bank advances	68,221			71,119			—		71,119			—
Long-term notes payable	5,358			5,358			—		—			5,358
Junior subordinated debentures	56,702			32,030			—		—			32,030
Accrued interest payable	359			359			—		342			17



	At December 31, 2014
(dollars in thousands)	Carrying Value			Estimated Fair Value			Level 1		Level 2			Level 3
Financial Assets:
Cash and cash equivalents	$	95,882		$	95,882		$	95,882	$	—		$	—
Investment securities: Available-for-sale	350,040			350,040			—		350,040			—
Investment securities: Held-to-maturity	142,461			140,875					140,875			—
Loans held for sale	2,796			2,796			—		2,796			—
Loans held for investment, net	1,337,443			1,328,895			—		—			1,328,895
Accrued interest receivable	4,885			4,885			—		1,262			3,623
Interest rate locks and forward loan sale commitments	(525		)	(525		)	—		(525		)	—
Financial Liabilities:
Deposits	1,794,420			1,793,205			—		1,793,205			—
Retail repurchase agreements	9,076			9,076			—		9,076			—
Federal Home Loan Bank advances	68,234			71,462			—		71,462			—
Long-term notes payable	5,338			5,338			—		—			5,338
Junior subordinated debentures	56,702			32,341			—		—			32,341
Accrued interest payable	3,624			3,624			—		321			3,303

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- 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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