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Fair Value Measurements | 12 Months Ended
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Dec. 31, 2011
Fair Value Measurements [Abstract] |
Fair Value Measurements | (20) FAIR VALUE MEASUREMENTS FASB ASC Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:
| • |  | Level 1 Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
| • |  | Level 2 Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset and liability, either directly or indirectly, for substantially the full term of the financial instrument.
| • |  | Level 3 Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity's own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.
A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company's financial assets and financial liabilities carried at fair value. Securities Available for Sale Securities classified as available for sale are reported at fair value. U.S. Treasuries are valued using Level 1 inputs. Other securities available for sale including U.S. Federal agencies, mortgage backed securities, and states and political subdivisions are valued using prices from an independent pricing service utilizing Level 2 data. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond's terms and conditions, among other things. The Company also invests in equity securities classified as available for sale for which observable information is not readily available. These securities are reported at fair value utilizing Level 3 inputs. For these securities, management determines the fair value based on replacement cost, the income approach or information provided by outside consultants or lead investors. The Company reviews the prices for Level 1 and Level 2 securities supplied by the independent pricing service for reasonableness and to ensure such prices are aligned with traditional pricing matrices. In general, the Company does not purchase investment portfolio securities that are esoteric or that have complicated structures. The Company's entire portfolio consists of traditional investments including U.S. Treasury obligations, Federal agency mortgage pass-through securities, general obligation municipal bonds and a small amount of municipal revenue bonds. Pricing for such instruments is fairly generic and is easily obtained. For in-state bond issues that have relatively low issue sizes and liquidity, the Company utilizes the same parameters adjusted for the specific issue. From time to time, the Company will validate, on a sample basis, prices supplied by the independent pricing service by comparison to prices obtained from third party sources. Derivatives Derivatives are reported at fair value utilizing Level 2 inputs. The Company obtains dealer and market quotations to value its oil and gas swaps and options. The Company utilizes dealer quotes and observable market data inputs to substantiate internal valuation models. Loans Held For Sale The Company originates mortgage loans to be sold. At the time of origination, the acquiring bank has already been determined and the terms of the loan, including interest rate, have already been set by the acquiring bank allowing the Company to originate the loan at fair value. Mortgage loans are generally sold within 30 days of origination. Loans held for sale are valued using Level 2 inputs. Gains or losses recognized upon the sale of the loans are determined on a specific identification basis. The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis as of December 31, 2011 and 2010, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
|  | Level 1 Inputs |  |  | Level 2 Inputs |  |  | Level 3 Inputs |  |  | Total Fair Value |
|  | (Dollars in thousands) |
December 31, 2011 |  |  |  |
Securities available for sale |  | $ | — |  |  | $ | 580,338 |  |  | $ | 12,162 |  |  | $ | 592,500 |
Derivative assets |  |  | — |  |  |  | 7,082 |  |  |  | — |  |  |  | 7,082 |
Derivative liabilities |  |  | — |  |  |  | 5,420 |  |  |  | — |  |  |  | 5,420 |
Loans held for sale |  |  | — |  |  |  | 12,126 |  |  |  | — |  |  |  | 12,126 |
December 31, 2010 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities available for sale |  | $ | 64,970 |  |  | $ | 645,985 |  |  | $ | 10,837 |  |  | $ | 721,792 |
Derivative assets |  |  | — |  |  |  | 5,229 |  |  |  | — |  |  |  | 5,229 |
Derivative liabilities |  |  | — |  |  |  | 3,664 |  |  |  | — |  |  |  | 3,664 |
Loans held for sale |  |  | — |  |  |  | 11,776 |  |  |  | — |  |  |  | 11,776 |
The changes in Level 3 assets measured at estimated fair value on a recurring basis during the years ended December 31, 2011 and 2010 were as follows:
|  | 2011 |  |  | 2010 |
|  | (Dollars in thousands) |
Balance at the beginning of the year |  | $ | 10,837 |  |  | $ | 9,506 |
Purchases, issuances and settlements |  |  | 92 |  |  |  | 914 |
Sales |  |  | (473 | ) |  |  | (751 | )
Losses included in earnings |  |  | (4 | ) |  |  | (200 | )
Total unrealized gains |  |  | 1,710 |  |  |  | 1,368 |
Balance at the end of the year |  | $ | 12,162 |  |  | $ | 10,837 |
The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Cash and Due from Banks; Federal Funds Sold and Interest-Bearing Deposits The carrying amounts of these short-term instruments are reasonable estimates of fair value. Securities For securities, which are generally traded in secondary markets, fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities making adjustments for credit or liquidity if applicable. The Company also invests in equity securities for which observable information is not readily available. These securities are reported at fair valued based on replacement cost, the income approach or information provided by outside consultants or lead advisors. Loans For certain homogeneous categories of loans, such as some residential mortgages, fair values are estimated using the quoted market prices for securities backed by similar loans, adjusted for differences in loan characteristics. For residential mortgage loans held for sale, the carrying amount is a reasonable estimate of fair value. The fair value of other types of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Derivatives Derivatives are reported at fair value using dealer quotes and observable market data. Deposits The fair values of transaction and savings accounts are the amounts payable on demand at the reporting date. The fair values of fixed-maturity certificates of deposit are estimated using the rates currently offered for deposits of similar remaining maturities. Short-term Borrowings The amounts payable on these short-term instruments are reasonable estimates of fair value. Long-term Borrowings The fair values of fixed-rate long-term borrowings are estimated using the rates that would be charged for borrowings of similar remaining maturities. Junior Subordinated Debentures The fair values of junior subordinated debentures are estimated using the rates that would be charged for junior subordinated debentures of similar remaining maturities. Loan Commitments and Letters of Credit The fair values of commitments are estimated using the fees currently charged to enter into similar agreements, taking into account the terms of the agreements. The fair values of letters of credit are based on fees currently charged for similar agreements. The estimated fair values of the Company's financial instruments are as follows:
|  | December 31, |
|  | 2011 |  |  | 2010 |
|  | Carrying Amount |  |  | Fair Value |  |  | Carrying Amount |  |  | Fair Value |
|  | (Dollars in thousands) |
FINANCIAL ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from banks |  | $ | 163,698 |  |  | $ | 163,698 |  |  | $ | 93,059 |  |  | $ | 93,059 |
Federal funds sold and interest-bearing deposits |  |  | 1,544,435 |  |  |  | 1,544,435 |  |  |  | 1,152,227 |  |  |  | 1,152,227 |
Securities |  |  | 614,977 |  |  |  | 615,458 |  |  |  | 743,803 |  |  |  | 744,432 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans (net of unearned interest) |  |  | 3,013,498 |  |  |  |  |  |  |  | 2,811,964 |  |  |  |  |
Allowance for loan losses |  |  | (37,656 | ) |  |  |  |  |  |  | (35,745 | ) |  |  |  |
Loans, net |  |  | 2,975,842 |  |  |  | 3,022,619 |  |  |  | 2,776,219 |  |  |  | 2,791,741 |
Derivative assets |  |  | 7,082 |  |  |  | 7,082 |  |  |  | 5,229 |  |  |  | 5,229 |
FINANCIAL LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  |  | 5,037,735 |  |  |  | 5,052,470 |  |  |  | 4,503,754 |  |  |  | 4,514,182 |
Short-term borrowings |  |  | 8,274 |  |  |  | 8,274 |  |  |  | 7,250 |  |  |  | 7,250 |
Long-term borrowings |  |  | 18,476 |  |  |  | 18,578 |  |  |  | 34,265 |  |  |  | 33,520 |
Derivative liabilities |  |  | 5,420 |  |  |  | 5,420 |  |  |  | 3,664 |  |  |  | 3,664 |
Junior subordinated debentures |  |  | 36,083 |  |  |  | 39,300 |  |  |  | 28,866 |  |  |  | 31,010 |
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loan commitments |  |  |  |  |  |  | 1,257 |  |  |  |  |  |  |  | 1,095 |
Letters of credit |  |  |  |  |  |  | 419 |  |  |  |  |  |  |  | 415 |
Non-financial Assets and Non-financial Liabilities The Company has no non-financial assets or non-financial liabilities measured at fair value on a recurring basis. Certain non-financial assets and non-financial liabilities measured at fair value on a nonrecurring basis include foreclosed assets (upon initial recognition or subsequent impairment), and intangible assets and other non-financial long-lived assets measured at fair value for impairment assessment. These items are evaluated at least annually for impairment, of which there were none as of December 31, 2011 or 2010. The overall levels of non-financial assets and non-financial liabilities were not considered to be significant to the Company at December 31, 2011 or 2010. The Company is required under current authoritative accounting guidance to disclose the estimated fair value of their financial instrument assets and liabilities including those subject to the requirements discussed above. For the Company, as for most financial institutions, substantially all of its assets and liabilities are considered financial instruments as defined. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Impaired loans are reported at the fair value of the underlying collateral if repayment is dependent on liquidation of the collateral. The impaired loans are adjusted to fair value through a specific allocation of the allowance for loan losses. Foreclosed assets, upon initial recognition, are measured and adjusted to fair value through charge-offs to the allowance for loan losses based upon the fair values of the foreclosed assets. Other real estate owned is remeasured at fair value subsequent to initial recognition, with any losses recognized in net expense from other real estate owned. The following table summarizes assets measured at fair value on a nonrecurring basis and the related gains or losses recognized during the year:
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total Fair Value |  |  | Gains (Losses) |
|  | (Dollars in thousands) |
Year Ended December 31, 2011 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans (less specific allowance) |  |  | — |  |  |  | — |  |  | $ | 18,173 |  |  | $ | 18,173 |  |  | $ | — |
Foreclosed assets |  |  | — |  |  |  | — |  |  |  | 531 |  |  |  | 531 |  |  |  | (4,205 | )
Other real estate owned |  |  | — |  |  |  | — |  |  |  | 16,109 |  |  |  | 16,109 |  |  |  | 1,057 |
Year Ended December 31, 2010 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans (less specific allowance) |  |  | — |  |  |  | — |  |  | $ | 10,510 |  |  | $ | 10,510 |  |  | $ | — |
Foreclosed assets |  |  | — |  |  |  | — |  |  |  | 223 |  |  |  | 223 |  |  |  | — |
Other real estate owned |  |  | — |  |  |  | — |  |  |  | 22,956 |  |  |  | 22,956 |  |  |  | (650 | )

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- Definition Tabular disclosure of the fair value measurement of assets and liabilities which includes [financial] instruments measured at fair value that are classified in stockholders' equity. Such assets and liabilities may be measured on a recurring or nonrecurring basis. The disclosures which may be required or desired include: (1) for assets and liabilities measured on a recurring basis, disclosure may include: (a) the fair value measurements at the reporting date; (b) the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3); (c) for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), 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); (ii) purchases, sales, issuances, and settlements (net); (iii) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs); (d) the amount of the total gains or losses for the period in subparagraph (c) (i) above included in earnings (or changes in net assets) that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of income (or activities); (e) the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period and (2) for assets and liabilities that are measured at fair value on a nonrecurring basis (for example, impaired assets) disclosure may include, in addition to (a) above: (a) the reasons for the fair value measurements recorded; (b) the same as (b) above; (c) for fair value measurements using significant unobservable inputs (Level 3), a description of the inputs and the information used to develop the inputs; and (d) the valuation technique(s) used to measure fair value and a discussion of changes, if any, in the valuation technique(s) used to measure similar assets and/or liabilities in prior periods. Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19279-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 157 -Paragraph 32 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 157 -Paragraph 33 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 107 -Paragraph 10 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19296-110258 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19207-110258 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 157 -Paragraph 6 -Footnote 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19190-110258 + Details
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