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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value Measurements

Schedule of balance of assets and liabilities which are measured at fair value on a recurring basis

		March 31, 2017
		Level 1			Level 2			Level 3			Total
Assets:
Securities available-for-sale
U.S. government agencies mortgage-backed		$	-		$	38,558		$	-		$	38,558
States and political subdivisions			-			187,842			31,665			219,507
Corporate bonds			-			12,540			-			12,540
Collateralized mortgage obligations			-			105,480			2,844			108,324
Asset-backed securities			-			139,886			-			139,886
Collateralized loan obligations			-			92,239			-			92,239
Loans held-for-sale			-			3,933			-			3,933
Mortgage servicing rights			-			-			6,608			6,608
Other assets (Interest rate swap agreements)			-			675			-			675
Other assets (Mortgage banking derivatives)			-			287			-			287
Total		$	-		$	581,440		$	41,117		$	622,557
Liabilities:
Other liabilities (Interest rate swap agreements, including risk participation agreements)		$	-		$	1,520		$	-		$	1,520
Total		$	-		$	1,520		$	-		$	1,520

		December 31, 2016
		Level 1			Level 2			Level 3			Total
Assets:
Securities available-for-sale
U.S. government agencies mortgage-backed		$	-		$	41,534		$	-		$	41,534
States and political subdivisions			-			46,477			22,226			68,703
Corporate bonds			-			10,630			-			10,630
Collateralized mortgage obligations			-			167,808			3,119			170,927
Asset-backed securities			-			138,407			-			138,407
Collateralized loan obligations			-			101,637			-			101,637
Loans held-for-sale			-			4,918			-			4,918
Mortgage servicing rights			-			-			6,489			6,489
Other assets (Interest rate swap agreements)			-			673			-			673
Other assets (Mortgage banking derivatives)			-			287			-			287
Total		$	-		$	512,371		$	31,834		$	544,205
Liabilities:
Other liabilities (Interest rate swap agreements, including risk participation agreements)		$	-		$	1,667		$	-		$	1,667
Total		$	-		$	1,667		$	-		$	1,667

Schedule of changes in Level 3 assets and liabilities measured at fair value on a recurring basis

		Three Months Ended March 31, 2017
		Securities available-for-sale
		Collateralized			States and			Mortgage
		Mortgage			Political			Servicing
		Obligation			Subdivisions			Rights
Beginning balance January 1, 2017		$	3,119		$	22,226		$	6,489
Total gains or losses
Included in earnings (or changes in net assets)			13			-			(33)
Included in other comprehensive income			16			(8)			-
Purchases, issuances, sales, and settlements
Purchases			-			9,561			-
Issuances			-			-			252
Settlements			(304)			(114)			(100)
Ending balance March 31, 2017		$	2,844		$	31,665		$	6,608

		Three Months Ended March 31, 2016
			Securities available-for-sale
		States and			Mortgage
		Political			Servicing
		Subdivisions			Rights
Beginning balance January 1, 2016		$	111		$	5,847
Total gains or losses
Included in earnings (or changes in net assets)			-			(906)
Included in other comprehensive income			-			-
Purchases, issuances, sales, and settlements
Purchases			-			-
Issuances			-			246
Settlements			-			(135)
Ending balance March 31, 2016		$	111		$	5,052

Schedule of quantitative information about level 3 fair value measurements

The following table and commentary presents quantitative and qualitative information about Level 3 fair value measurements as of March 31, 2017:

Weighted

Measured at fair value

Unobservable

Average

on a recurring basis:

Fair Value

Valuation Methodology

Inputs

Range of Input

of Inputs

Mortgage servicing rights

$

6,608

Discounted Cash Flow

Discount Rate

10.0-37.6%

10.2

%

Prepayment Speed

6.5-77.8%

9.4

%

The following table and commentary presents quantitative and qualitative information about Level 3 fair value measurements as of December 31, 2016:

Weighted

Measured at fair value

Unobservable

Average

on a recurring basis:

Fair Value

Valuation Methodology

Inputs

Range of Input

of Inputs

Mortgage servicing rights

$

6,489

Discounted Cash Flow

Discount Rate

10.0 -17.0%

10.2

%

Prepayment Speed

6.5-77.8%

9.6

%

In addition to the above, Level 3 fair value measurement included $31.7 million for state and political subdivisions representing various local municipality securities and $2.8 million of collateralized mortgage obligations at March 31,2017.  Both of these were classified as securities available-for-sale, and were valued using a discount based on market spreads of similar assets, but the liquidity premium was an unobservable input.  The $111,000 on the state and political subdivisions line at March 31, 2016, under level 3 represents a security from a small, local municipality.  Given the small dollar amount and size of the municipality involved, this is categorized as Level 3 based on the payment stream received by the Company from the municipality.  That payment stream is otherwise an unobservable input.

Schedule of assets measured at fair value on a nonrecurring basis

		March 31, 2017
		Level 1			Level 2			Level 3			Total
Impaired loans1		$	-		$	-		$	-		$	-
Other real estate owned, net2			-			-			13,481			13,481
Total		$	-		$	-		$	13,481		$	13,481

1 Represents carrying value and related write-downs of loans for which adjustments are substantially based on the appraised value of collateral for collateral-dependent loans, had a carrying amount and a valuation allowance of $803,000, resulting in a decrease of specific allocations within the allowance for loan losses of $246,000 for the three months ending March 31, 2017.

2 OREO is measured at the lower of carrying or fair value less costs to sell, and had a net carrying amount of $13.5 million, which is made up of the outstanding balance of $24.7 million, net of a valuation allowance of $9.7 million and participations of $1.6 million, at March 31, 2017.

		December 31, 2016
		Level 1			Level 2			Level 3			Total
Impaired loans1		$	-		$	-		$	-		$	-
Other real estate owned, net2			-			-			11,916			11,916
Total		$	-		$	-		$	11,916		$	11,916

1 Represents carrying value and related write-downs of loans for which adjustments are substantially based on the appraised value of collateral for collateral-dependent loans, had a carrying amount and a valuation allowance of $1.0 million, resulting in an increase of specific allocations within the allowance for loan losses of $1.0 million for the year ending December 31, 2016.

2 OREO is measured at the lower of carrying or fair value less costs to sell, and had a net carrying amount of $11.9 million, which is made up of the outstanding balance of $23.5 million, net of a valuation allowance of $10.0 million and participations of $1.6 million, at December 31, 2016.

X

- Definition

Tabular disclosure of the fair value measurement of assets and liabilities 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, 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, issuances, 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 or liability.

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Tabular disclosure of the inputs and valuation techniques used to measure fair value, and a discussion of changes in valuation techniques and related inputs, if any, applied during the period to each separate class of assets, liabilities, and financial instruments classified in shareholders' equity that are measured on a recurring and/or nonrecurring basis.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
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Tabular disclosure of assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a nonrecurring basis in periods after initial recognition (for example, impaired assets). Disclosures may include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3).

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-Publisher FASB
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-Section 50
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Tabular disclosure of assets and liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by 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 (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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