Fair Values of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2015

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

Assets and liabilities carried at fair value on a recurring basis at September 30, 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	$	2,019		$	—	$	2,019		$	—
Residential mortgage-backed securities-GSE	288,141			—		288,141			—
Residential mortgage-backed securities-Private	15,083			—		15,083			—
Commercial mortgage-backed securities-GSE	22,148			—		22,148			—
Commercial mortgage-backed securities-Private	17,813			—		17,813			—
Corporate notes	30,725			—		30,725			—
Total available-for-sale debt securities	375,929			—		375,929			—
Mortgage servicing rights	2,108			—		—			2,108
Interest rate swaps	(1,359		)	—		(1,359		)	—
Total assets at fair value	$	376,678		$	—	$	374,570		$	2,108

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

Schedule of 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 September 30,
	2015			2014
Balance, beginning of period	$	2,012		$	1,587
Total gains or losses (realized/unrealized):
Included in earnings, gross	248			166
Less amortization	(152		)	(116		)
Balance, end of period	$	2,108		$	1,637



	Fair Value Measurements Using Significant
	Unobservable Inputs (Level 3)
	Mortgage Servicing Rights
(dollars in thousands)	Nine Months Ended September 30,
	2015			2014
Beginning balance at January 1,	$	1,726		$	1,552
Total gains or losses (realized/unrealized):
Included in earnings, gross	804			310
Less amortization	(422		)	(225		)
Balance, end of period	$	2,108		$	1,637

Schedule of Assets Measure at Fair Value on a Nonrecurring Basis

Assets measured at fair value on a nonrecurring basis are included in the following table at September 30, 2015:



(dollars in thousands)	Total		Level 1		Level 2		Level 3
Impaired loans, net	$	3,104	$	—	$	—	$	3,104
Other real estate owned	12,991		—		—		12,991
Total assets at fair value from continuing operations	$	16,095	$	—	$	—	$	16,095

Assets measured at fair value on a nonrecurring 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

Schedule of Quantitative Information About Level 3 Fair Value Measurements

Quantitative Information about Level 3 Fair Value Measurements



(dollars in thousands)	Fair Value at September 30, 2015		Valuation Techniques	Unobservable Input	Range

Impaired loans, net	$	3,104	Discounted appraisals	Collateral discounts	1.00% - 30.00%
Other real estate owned	12,991		Discounted appraisals	Collateral discounts	1.00% - 30.00%
Mortgage servicing rights	2,108		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%

Schedule of Estimated Fair Values of Financial Instruments

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



	At September 30, 2015
(dollars in thousands)	Carrying Value			Estimated Fair Value			Level 1		Level 2			Level 3
Financial Assets:
Cash and cash equivalents	$	28,006		$	28,006		$	28,006	$	—		$	—
Investment securities: Available-for-sale	375,929			375,929			—		375,929			—
Investment securities: Held-to-maturity	152,670			151,935			—		151,935			—
Loans held for sale	4,089			4,089			—		4,089			—
Loans held for investment, net	1,505,267			1,501,039			—		—			1,501,039
Accrued interest receivable	5,526			5,526			1		1,509			4,016
Interest rate swaps	(1,359		)	(1,359		)	—		(1,359		)	—
Financial Liabilities:
Deposits	1,896,879			1,898,024			—		1,898,024			—
Retail repurchase agreements	16,753			16,753			—		16,753			—
Federal Home Loan Bank advances	90,244			92,737			—		92,737			—
Long-term notes payable	5,396			5,396			—		—			5,396
Junior subordinated debentures	56,702			32,164			—		—			32,164
Accrued interest payable	366			366			—		350			16



	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