FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2018

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)
March 31, 2018
Financial assets
Cash and due from banks	$	59,905	$	59,905		$	59,905	$	—		$	—
Interest-bearing deposits in other banks	5,875		5,875			5,875		—			—
Investment securities	1,503,923		1,498,244			753		1,485,953			11,538
Loans held for sale	7,492		7,492			—		7,492			—
Net loans and leases	3,766,929		3,706,552			—		20,963			3,685,589
Mortgage servicing rights	15,821		18,463			—		—			18,463
Federal Home Loan Bank stock	9,007		9,007			9,007		—			—
Accrued interest receivable	16,070		16,070			16,070		—			—

Financial liabilities
Deposits:
Noninterest-bearing demand	1,349,029		1,349,029			1,349,029		—			—
Interest-bearing demand and savings and money market	2,479,947		2,479,947			2,479,947		—			—
Time	1,151,455		1,144,494			—		—			1,144,494
Short-term borrowings	56,000		56,000			—		56,000			—
Long-term debt	92,785		87,923			—		87,923			—
Accrued interest payable (included in other liabilities)	3,809		3,809			3,809		—			—

Off-balance sheet financial instruments
Commitments to extend credit	961,167		1,183			—		1,183			—
Standby letters of credit and financial guarantees written	12,108		182			—		182			—
Derivatives:
Interest rate lock commitments	3,126		13			—		13			—
Forward sale commitments	9,172		(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, 2017
Financial assets
Cash and due from banks	$	75,318	$	75,318		$	75,318	$	—		$	—
Interest-bearing deposits in other banks	6,975		6,975			6,975		—			—
Investment securities	1,496,644		1,494,092			825		1,481,473			11,794
Loans held for sale	16,336		16,336			—		16,336			—
Net loans and leases	3,720,614		3,684,834			—		21,280			3,663,554
Mortgage servicing rights	15,843		17,161			—		—			17,161
Federal Home Loan Bank stock	7,761		7,761			7,761		—			—
Accrued interest receivable	16,581		16,581			16,581		—			—

Financial liabilities
Deposits:
Noninterest-bearing demand	1,395,556		1,395,556			1,395,556		—			—
Interest-bearing demand and savings and money market	2,414,930		2,414,930			2,414,930		—			—
Time	1,145,868		1,140,064			—		—			1,140,064
Short-term borrowings	32,000		32,000			—		32,000			—
Long-term debt	92,785		70,139			—		70,139			—
Accrued interest payable (included in other liabilities)	3,698		3,698			3,698		—			—

Off-balance sheet financial instruments
Commitments to extend credit	917,405		1,140			—		1,140			—
Standby letters of credit and financial guarantees written	13,551		203			—		203			—
Derivatives:
Interest rate lock commitments	2,494		12			—		12			—
Forward sale commitments	18,748		(26		)	—		(26		)	—

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 March 31, 2018 and December 31, 2017:



			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)
March 31, 2018
Available-for-sale securities:
Debt securities:
States and political subdivisions	$	177,221	$	—	$	165,683	$	11,538
Corporate securities	68,058		—		68,058		—
U.S. Treasury obligations and direct obligations of U.S Government agencies	37,153		—		37,153		—
Mortgage-backed securities:
Residential - U.S. Government sponsored entities	811,322		—		811,322		—
Commercial - U.S. Government agencies and sponsored entities	53,457		—		53,457		—
Residential - Non-government agencies	44,440		—		44,440		—
Commercial - Non-government agencies	134,441		—		134,441		—
Total available-for-sale securities	1,326,092		—		1,314,554		11,538
Equity securities	753		753		—		—
Derivatives: Interest rate lock and forward sale commitments	7		—		7		—
Total	$	1,326,852	$	753	$	1,314,561	$	11,538



				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, 2017
Available-for-sale securities:
Debt securities:
States and political subdivisions	$	179,781		$	—	$	167,987		$	11,794
Corporate securities	74,278			—		74,278			—
U.S. Treasury obligations and direct obligations of U.S Government agencies	25,510			—		25,510			—
Mortgage-backed securities:
Residential - U.S. Government sponsored entities	800,683			—		800,683			—
Commercial - U.S. Government agencies and sponsored entities	39,725			—		39,725			—
Residential - Non-government agencies	46,763			—		46,763			—
Commercial - Non-government agencies	137,326			—		137,326			—
Total available-for-sale securities	1,304,066			—		1,292,272			11,794
Equity securities	825			825		—			—
Derivatives: Interest rate lock and forward sale commitments	(14		)	—		(14		)	—
Total	$	1,304,877		$	825	$	1,292,258		$	11,794

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

For the three months ended March 31, 2018 and 2017, 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, 2017	$	11,794
Principal payments received	(91		)
Unrealized net gain (loss) included in other comprehensive income	(165		)
Balance at March 31, 2018	$	11,538

Balance at December 31, 2016	$	12,196
Principal payments received	(89		)
Unrealized net gain (loss) included in other comprehensive income	34
Balance at March 31, 2017	$	12,141

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 March 31, 2018 and December 31, 2017:



			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)
March 31, 2018
Impaired loans ⁽¹⁾	$	20,963	$	—	$	20,963	$	—
Mortgage servicing rights	18,463		—		—		18,463
Other real estate ⁽²⁾	595		—		595		—

December 31, 2017
Impaired loans ⁽¹⁾	$	21,280	$	—	$	21,280	$	—
Mortgage servicing rights	17,161		—		—		17,161
Other real estate ⁽²⁾	851		—		851		—


⁽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.