Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2017

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


	December 31, 2017
	Level 1		Level 2		Level 3		Total
Assets:
Securities available-for-sale
U.S. Treasury	$	3,947	$	-	$	-	$	3,947
U.S. government agencies		-		13,061		-		13,061
U.S. government agencies mortgage-backed		-		12,214		-		12,214
States and political subdivisions		-		263,831		14,261		278,092
Corporate bonds		-		833		-		833
Collateralized mortgage obligations		-		63,671		2,268		65,939
Asset-backed securities		-		112,932		-		112,932
Collateralized loan obligations		-		54,421		-		54,421
Loans held-for-sale		-		4,067		-		4,067
Mortgage servicing rights		-		-		6,944		6,944
Interest rate swap agreements		-		727		-		727
Mortgage banking derivatives		-		238		-		238
Total	$	3,947	$	525,995	$	23,473	$	553,415

Liabilities:
Interest rate swap agreements, including risk participation agreements	$	-	$	2,014	$	-	$	2,014
Total	$	-	$	2,014	$	-	$	2,014


	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
Interest rate swap agreements		-		673		-		673
Mortgage banking derivatives		-		287		-		287
Total	$	-	$	512,371	$	31,834	$	544,205

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


	Year Ended December 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)		40		-		(270)
Included in other comprehensive income		21		(796)		-
Purchases, issuances, sales, and settlements
Purchases		-		16,712		-
Issuances		-		-		1,257
Settlements		(912)		(23,881)		(532)
Ending balance December 31, 2017	$	2,268	$	14,261	$	6,944


	Year Ended December 31, 2016
		Securities available-for-sale
	Collateralized		States and		Mortgage
	Mortgage		Political		Servicing
	Obligation		Subdivisions		Rights
Beginning balance January 1, 2016	$	-	$	111	$	5,847
Transfers into Level 3		3,201		7,813		-
Total gains or losses
Included in earnings (or changes in net assets)		-		-		(215)
Included in other comprehensive income		(82)		87		-
Purchases, issuances, sales, and settlements
Purchases		-		14,296		-
Issuances		-		-		1,561
Settlements		-		(81)		(704)
Ending balance December 31, 2016	$	3,119	$	22,226	$	6,489

Schedule of quantitative information about level 3 fair value measurements

The following table and commentary presents quantitative (dollars in thousands) and qualitative information about Level 3 fair value measurements as of December 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

6,944

Discounted Cash Flow

Discount Rate

10.0 - 34.3%

10.2

Prepayment Speed

7.0 - 68.4%

9.6

The following table and commentary presents quantitative (dollars in thousands) 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

Schedule of assets measured at fair value on a nonrecurring basis

For assets measured at fair value on a nonrecurring basis at December 31, 2017, and December 31, 2016, respectively, the following tables provide the level of valuation assumptions used to determine each valuation and the carrying value of the related assets:


	December 31, 2017
	Level 1		Level 2		Level 3		Total
Impaired loans1	$	-	$	-	$	5,113	$	5,113
Other real estate owned, net2		-		-		8,371		8,371
Total	$	-	$	-	$	13,484	$	13,484

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 of $5.3 million and a valuation allowance of $144,000, resulting in an increase of specific allocations within the ALLL of $856,000 for the year ending December 31, 2017.

OREO is measured at the lower of carrying or fair value less costs to sell, and had a net carrying amount of $8.4 million, which is made up of the outstanding balance of $17.4 million, net of a valuation allowance of $8.2 million and participations of $900,000, at December 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

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, resulting in a decrease of specific allocations within the provision for loan and lease losses of $1.0 million for the year ending December 31, 2016.

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 $14.1 million and participations of $1.7 million, at December 31, 2016.