FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2017

Schedule of carrying amount and estimated fair value of financial instruments



						Fair Value Measurement Using
(dollars in thousands)	Carrying Amount		Estimated Fair Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
September 30, 2017
Financial assets
Cash and due from banks	$	90,080	$	90,080		$	90,080	$	—		$	—
Interest-bearing deposits in other banks	18,195		18,195			18,195		—			—
Investment securities	1,547,777		1,545,819			794		1,532,927			12,098
Loans held for sale	10,828		10,828			—		10,828			—
Net loans and leases	3,585,153		3,576,442			—		25,029			3,551,413
Mortgage servicing rights	16,093		16,777			—		—			16,777
Federal Home Loan Bank stock	6,484		6,484			6,484		—			—
Accrued interest receivable	15,434		15,434			15,434		—			—

Financial liabilities
Deposits:
Noninterest-bearing demand	1,383,548		1,383,548			1,383,548		—			—
Interest-bearing demand and savings and money market	2,387,290		2,387,290			2,387,290		—			—
Time	1,156,659		1,152,757			—		—			1,152,757
Long-term debt	92,785		69,353			—		69,353			—
Accrued interest payable (included in other liabilities)	2,866		2,866			2,866		—			—

Off-balance sheet financial instruments
Commitments to extend credit	915,735		1,142			—		1,142			—
Standby letters of credit and financial guarantees written	13,252		199			—		199			—
Derivatives:
Interest rate lock commitments	2,787		(1		)	—		(1		)	—
Forward sale commitments	12,443		(6		)	—		(6		)	—



					Fair Value Measurement Using
(dollars in thousands)	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2016
Financial assets
Cash and due from banks	$	75,272	$	75,272	$	75,272	$	—	$	—
Interest-bearing deposits in other banks	9,069		9,069		9,069		—		—
Investment securities	1,461,515		1,458,213		660		1,445,357		12,196
Loans held for sale	31,881		31,881		—		31,881		—
Net loans and leases	3,468,259		3,426,976		—		30,723		3,396,253
Mortgage servicing rights	15,779		18,087		—		—		18,087
Federal Home Loan Bank stock	11,572		11,572		11,572		—		—
Accrued interest receivable	15,675		15,675		15,675		—		—

Financial liabilities
Deposits:
Noninterest-bearing demand	1,265,246		1,265,246		1,265,246		—		—
Interest-bearing demand and savings and money market	2,253,591		2,253,591		2,253,591		—		—
Time	1,089,364		1,088,436		—		—		1,088,436
Short-term borrowings	135,000		135,000		—		135,000		—
Long-term debt	92,785		68,186		—		68,186		—
Accrued interest payable (included in other liabilities)	1,556		1,556		1,556		—		—

Off-balance sheet financial instruments
Commitments to extend credit	825,304		1,046		—		1,046		—
Standby letters of credit and financial guarantees written	16,043		241		—		241		—
Derivatives:
Interest rate lock commitments	879		6		—		6		—
Forward sale commitments	32,497		136		—		136		—

Schedule of balances of assets and liabilities measured at fair value on a recurring basis

The following tables present the fair value of assets and liabilities measured on a recurring basis as of September 30, 2017 and December 31, 2016:



				Fair Value at Reporting Date Using
(dollars in thousands)	Fair Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
September 30, 2017
Available for sale securities:
Debt securities:
States and political subdivisions	$	184,354		$	—	$	172,256		$	12,098
Corporate securities	93,830			—		93,830			—
U.S. Treasury obligations and direct obligations of U.S Government agencies	25,978			—		25,978			—
Mortgage-backed securities:
Residential - U.S. Government sponsored entities	819,086			—		819,086			—
Commercial - U.S. Government agencies and sponsored entities	40,228			—		40,228			—
Residential - Non-government agencies	47,464			—		47,464			—
Commercial - Non-government agencies	138,371			—		138,371			—
Other	794			794		—			—
Total available for sale securities	1,350,105			794		1,337,213			12,098
Derivatives: Interest rate lock and forward sale commitments	(7		)	—		(7		)	—
Total	$	1,350,098		$	794	$	1,337,206		$	12,098



			Fair Value at Reporting Date Using
(dollars in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2016
Available for sale securities:
Debt securities:
States and political subdivisions	$	185,041	$	—	$	172,845	$	12,196
Corporate securities	99,389		—		99,389		—
U.S. Treasury obligations and direct obligations of U.S Government agencies	—		—		—		—
Mortgage-backed securities:
Residential - U.S. Government sponsored entities	769,986		—		769,986		—
Residential - Non-government agencies	51,547		—		51,547		—
Commercial - Non-government agencies	137,224		—		137,224		—
Other	660		660		—		—
Total available for sale securities	1,243,847		660		1,230,991		12,196
Derivatives: Interest rate lock and forward sale commitments	142		—		142		—
Total	$	1,243,989	$	660	$	1,231,133	$	12,196

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

For the nine months ended September 30, 2017 and 2016, the changes in Level 3 assets and liabilities measured at fair value on a recurring basis are summarized as follows:



(dollars in thousands)	Available for Sale Debt Securities: States and Political Subdivisions
Balance at December 31, 2016	$	12,196
Principal payments received	(268		)
Unrealized net gain included in other comprehensive income	170
Balance at September 30, 2017	$	12,098

Balance at December 31, 2015	$	12,479
Principal payments received	(268		)
Unrealized net gain included in other comprehensive income	822
Balance at September 30, 2016	$	13,033

Schedule of level of valuation assumptions used to determine the fair value of assets measured on a nonrecurring basis

the level of valuation assumptions used to determine the respective fair values as of September 30, 2017 and December 31, 2016:



			Fair Value Measurements Using
(dollars in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2017
Impaired loans ⁽¹⁾	$	25,029	$	—	$	25,029	$	—
Mortgage servicing rights	16,777		—		—		16,777
Other real estate ⁽²⁾	851		—		851		—

December 31, 2016
Impaired loans ⁽¹⁾	$	30,723	$	—	$	30,723	$	—
Mortgage servicing rights	18,087		—		—		18,087
Other real estate ⁽²⁾	791		—		791		—


⁽¹⁾	Represents carrying value and related write-downs of loans for which adjustments are based on agreed upon purchase prices for the loans or the appraised value of the collateral.


⁽²⁾	Represents other real estate that is carried at the lower of carrying value or fair value less costs to sell. Fair value is generally based upon independent market prices or appraised values of the collateral.