Fair Value of Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2017

Assets Measured at Fair Value on Recurring Basis

The following table presents the Company’s assets that are measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall as of March 31, 2017 and December 31, 2016 (in thousands):



			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2017
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	158,785		—		158,785		—
Obligations of states and political subdivisions	177,020		—		177,020		—
Mortgage-backed securities	352,713		—		352,713		—
Trust preferred securities	1,638		—		—		1,638
Other securities	4,165		133		4,032		—
Total available-for-sale securities	$	694,321	$	133	$	692,550	$	1,638
December 31, 2016
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	136,324		—		136,324		—
Obligations of states and political subdivisions	162,705		—		162,705		—
Mortgage-backed securities	314,991		—		314,991		—
Trust preferred securities	1,652		—		—		1,652
Other securities	4,176		144		4,032		—
Total available-for-sale securities	$	619,848	$	144	$	618,052	$	1,652

Fair Value of Assets Measured on a Recurring Basis Using Significant Unobservable Inputs

The change in fair value of assets measured on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2017 and 2016 is summarized as follows (in thousands):



	Trust Preferred Securities
	Three months ended
	March 31, 2017			March 31, 2016
Beginning balance	$	1,652		$	1,906
Transfers into Level 3	—			—
Transfers out of Level 3	—			—
Total gains or losses:
Included in net income	—			—
Included in other comprehensive income (loss)	23			(191		)
Purchases, issuances, sales and settlements:
Purchases	—			—
Issuances	—			—
Sales	—			—
Settlements	(37		)	(17		)
Ending balance	$	1,638		$	1,698
Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date	$	—		$	—

Assets Measured at Fair Value on a Nonrecurring Basis

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2017 and December 31, 2016 (in thousands):



	Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2017
Impaired loans (collateral dependent)	$	8,418	$	—	$	—	$	8,418
Foreclosed assets held for sale	—		—		—		—
December 31, 2016
Impaired loans (collateral dependent)	$	6,938	$	—	$	—	$	6,938
Foreclosed assets held for sale	173		—		—		173

Significant Assumptions Used in Valuation of Level 3 Financial Instruments

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements other than goodwill (in thousands).



March 31, 2017	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Trust Preferred Securities	$	1,638	Discounted cash flow	Discount rate	13.4%
				Constant prepayment rate (1)	1.3%
				Cumulative projected prepayments	22.1%
				Probability of default	0.5%
				Projected cures given deferral	0.0%
				Loss severity	97.6%
Impaired loans (collateral dependent)	$	8,418	Third party valuations	Discount to reflect realizable value	0	%	-	40%	(	20%	)



December 31, 2016	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Trust Preferred Securities	$	1,652	Discounted cash flow	Discount rate	13.6%
				Constant prepayment rate (1)	1.3%
				Cumulative projected prepayments	22.4%
				Probability of default	0.5%
				Projected cures given deferral	0.0%
				Loss severity	97.6%
Impaired loans (collateral dependent)	$	6,938	Third party valuations	Discount to reflect realizable value	0	%	-	40%	(	20%	)
Foreclosed assets held for sale	$	173	Third party valuations	Discount to reflect realizable value less estimated selling costs	0	%	-	40%	(	35%	)

(1) Every five years

Carrying Amounts and Estimated Fair Values of Financial Instruments Not Carried at Fair Value

The following tables present estimated fair values of the Company’s financial instruments at March 31, 2017 and December 31, 2016 in accordance with FAS 107-1 and APB 28-1, codified with ASC 805 (in thousands):



	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
March 31, 2017
Financial Assets
Cash and due from banks	$	112,759	$	112,759	$	112,759	$	—	$	—
Federal funds sold	491		491		491		—		—
Certificates of deposit investments	1,685		1,711		—		1,711		—
Available-for-sale securities	694,321		694,321		133		692,550		1,638
Held-to-maturity securities	74,256		73,754		—		73,754		—
Loans held for sale	1,578		1,578		—		1,578		—
Loans net of allowance for loan losses	1,776,238		1,772,522		—		—		1,772,522
Interest receivable	9,786		9,786		—		9,786		—
Federal Reserve Bank stock	4,128		4,128		—		4,128		—
Federal Home Loan Bank stock	2,554		2,554		—		2,554		—
Financial Liabilities
Deposits	$	2,329,529	$	2,334,652	$	—	$	1,989,612	$	345,040
Securities sold under agreements to repurchase	143,864		143,850		—		143,850		—
Interest payable	484		484		—		484		—
Federal Home Loan Bank borrowings	40,080		40,346		—		40,346		—
Other borrowings	13,125		13,125		—		13,125		—
Junior subordinated debentures	23,938		17,250		—		17,250		—



	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
December 31, 2016
Financial Assets
Cash and due from banks	$	137,002	$	137,002	$	137,002	$	—	$	—
Federal funds sold	38,900		38,900		38,900		—		—
Certificates of deposit investments	14,643		14,651		—		14,651		—
Available-for-sale securities	619,848		619,848		144		618,052		1,652
Held-to-maturity securities	74,231		73,096		—		73,096		—
Loans held for sale	1,175		1,175		—		1,175		—
Loans net of allowance for loan losses	1,808,064		1,795,764		—		—		1,795,764
Interest receivable	10,553		10,553		—		10,553		—
Federal Reserve Bank stock	3,949		3,949		—		3,949		—
Federal Home Loan Bank stock	4,389		4,389		—		4,389		—
Financial Liabilities
Deposits	$	2,329,887	$	2,331,725	$	—	$	1,976,806	$	354,919
Securities sold under agreements to repurchase	185,763		185,766		—		185,766		—
Interest payable	535		535		—		535		—
Federal Home Loan Bank borrowings	40,094		40,318		—		40,318		—
Other Borrowings	18,063		18,063		—		18,063		—
Junior subordinated debentures	23,917		17,068		—		17,068		—