Fair Values of Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2016

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, 2016 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	$	—		$	—	$	—		$	—
Residential mortgage-backed securities-GSE	277,062			—		277,062			—
Residential mortgage-backed securities-Private	31,434			—		31,434			—
Commercial mortgage-backed securities-GSE	22,122			—		22,122			—
Commercial mortgage-backed securities-Private	17,848			—		17,848			—
Corporate notes	37,528			—		37,528			—
Total available-for-sale debt securities	385,994			—		385,994			—
Mortgage servicing rights	2,654			—		—			2,654
Interest rate swaps	(1,627		)	—		(1,627		)	—
Total assets at fair value	$	387,021		$	—	$	384,367		$	2,654

Assets and liabilities carried at fair value on a recurring basis at December 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	$	2,008		$	—	$	2,008		$	—
Residential mortgage-backed securities-GSE	278,107			—		278,107			—
Residential mortgage-backed securities-Private	33,577			—		33,577			—
Commercial mortgage-backed securities-GSE	21,611			—		21,611			—
Commercial mortgage-backed securities-Private	17,575			—		17,575			—
Corporate notes	37,555			—		37,555			—
Total available-for-sale debt securities	390,433			—		390,433			—
Mortgage servicing rights	2,231			—		—			2,231
Interest rate swaps	(755		)	—		(755		)	—
Total assets at fair value	$	391,909		$	—	$	389,678		$	2,231

Schedule of Assets Measured on Recurring Basis, Unobservable Input Reconciliation

The following table presents 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,
	2016			2015
Balance, beginning of period	$	2,231		$	1,726
Total gains or losses (realized/unrealized):
Included in earnings, gross	593			300
Less amortization	(170		)	(130		)
Balance, end of period	$	2,654		$	1,896

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 March 31, 2016:



(dollars in thousands)	Total		Level 1		Level 2		Level 3
Impaired loans, net	$	2,364	$	—	$	—	$	2,364
Other real estate owned	7,159		—		—		7,159
Total assets at fair value from continuing operations	$	9,523	$	—	$	—	$	9,523

Assets measured at fair value on a nonrecurring basis are included in the following table at December 31, 2015:



(dollars in thousands)	Total		Level 1		Level 2		Level 3
Impaired loans, net	$	3,418	$	—	$	—	$	3,418
Other real estate owned	10,630		—		—		10,630
Total assets at fair value from continuing operations	$	14,048	$	—	$	—	$	14,048

Schedule of Quantitative Information About Level 3 Fair Value Measurements

Quantitative Information about Level 3 Fair Value Measurements



(dollars in thousands)	Fair Value at March 31, 2016		Valuation Techniques	Unobservable Input	Range

Impaired loans, net	$	2,364	Discounted appraisals	Collateral discounts	1.00% - 30.00%
Other real estate owned	7,159		Discounted appraisals	Collateral discounts	1.00% - 30.00%
Mortgage servicing rights	2,654		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, 2015		Valuation Techniques	Unobservable Input	Range

Impaired loans, net	$	3,418	Discounted appraisals	Collateral discounts	1.00%-30.00%
Other real estate owned	10,630		Discounted appraisals	Collateral discounts	1.00%-30.00%
Mortgage servicing rights	2,231		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 March 31, 2016
(dollars in thousands)	Carrying Value			Estimated Fair Value			Level 1		Level 2			Level 3
Financial Assets:
Cash and cash equivalents	$	63,578		$	63,578		$	63,578	$	—		$	—
Investment securities: Available-for-sale	385,994			385,994			—		385,994			—
Investment securities: Held-to-maturity	145,127			145,853			—		145,853			—
Loans held for sale	4,328			4,328			—		4,328			—
Loans held for investment, net	1,510,166			1,512,307			—		—			1,512,307
Accrued interest receivable	5,421			5,421			3		1,522			3,896
Interest rate swaps	(1,627		)	(1,627		)	—		(1,627		)	—
Financial Liabilities:
Deposits	1,955,190			1,956,107			—		1,956,107			—
Retail repurchase agreements	7,352			7,352			—		7,352			—
Federal Home Loan Bank advances	65,167			67,437			—		67,437			—
Long-term notes payable	5,435			5,435			—		—			5,435
Junior subordinated debentures	56,702			31,853			—		—			31,853
Accrued interest payable	387			387			—		368			19



	At December 31, 2015
(dollars in thousands)	Carrying Value			Estimated Fair Value			Level 1		Level 2			Level 3
Financial Assets:
Cash and cash equivalents	$	39,175		$	39,175		$	39,175	$	—		$	—
Investment securities: Available-for-sale	390,434			390,434			—		390,434			—
Investment securities: Held-to-maturity	147,967			145,184			—		145,184			—
Loans held for sale	5,403			5,403			—		5,403			—
Loans held for investment, net	1,528,600			1,513,226			—		—			1,513,226
Accrued interest receivable	5,305			5,305			—		1,630			3,675
Interest rate locks and forward loan sale commitments	(755		)	(755		)	—		(755		)	—
Financial Liabilities:
Deposits	1,947,537			1,945,691			—		1,945,691			—
Retail repurchase agreements	7,219			7,219			—		7,219			—
Federal Home Loan Bank advances	93,681			95,781			—		95,781			—
Long-term notes payable	5,415			5,415			—		—			5,415
Junior subordinated debentures	56,702			32,536			—		—			32,536
Accrued interest payable	367			367			—		349			18