Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2013

Financial Instruments Measured at Fair Value on a Recurring Basis

The following table summarizes financial instruments measured at fair value on a recurring basis as of December 31, 2013 and 2012, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value.



	December 31, 2013
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Securities available for sale
Obligations of U.S. Government-sponsored enterprises	$	—	$	93,530	$	—	$	93,530
Obligations of states and political subdivisions	—		45,903		3,040		48,943
Residential mortgage-backed securities	—		292,114		—		292,114
Total securities available for sale	$	—	$	431,547	$	3,040	$	434,587
State tax credits held for sale	—		—		16,491		16,491
Derivative financial instruments	—		1,000		—		1,000
Total assets	$	—	$	432,547	$	19,531	$	452,078

Liabilities
Derivative financial instruments	$	—	$	990	$	—	$	990
Total liabilities	$	—	$	990	$	—	$	990



	December 31, 2012
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Securities available for sale
Obligations of U.S. Government-sponsored enterprises	$	—	$	152,368	$	—	$	152,368
Obligations of states and political subdivisions	—		49,954		3,049		53,003
Residential mortgage-backed securities	—		434,841		—		434,841
Total securities available for sale	$	—	$	637,163	$	3,049	$	640,212
Portfolio loans	—		12,605		—		12,605
State tax credits held for sale	—		—		23,020		23,020
Derivative financial instruments	—		1,754		—		1,754
Total assets	$	—	$	651,522	$	26,069	$	677,591

Liabilities
Derivative financial instruments	$	—	$	1,979	$	—	$	1,979
Total liabilities	$	—	$	1,979	$	—	$	1,979

Fair Value, Financial Instruments, Unobservable Input Reconciliation

The transfer out of Level 3 is related to a newly issued mortgage-backed security purchased in the fourth quarter of 2011 which was originally priced using Level 3 assumptions. In the first quarter of 2012, a third party pricing service, utilizing Level 2 assumptions, became available as more data was available on the new security.



	Securities available for sale, at fair value
	Years ended December 31,
(in thousands)	2013			2012
Beginning balance	$	3,049		$	6,763
Total (losses) gains:
Included in other comprehensive income	(9		)	22
Purchases, sales, issuances and settlements:
Purchases	—			—
Transfer in and/or out of Level 3	—			(3,736		)
Ending balance	$	3,040		$	3,049

Change in unrealized (losses) gains relating to assets still held at the reporting date	$	(9	)	$	22



	State tax credits held for sale, at fair value
	Years ended December 31,
(in thousands)	2013			2012
Beginning balance	$	23,020		$	26,350
Total gains:
Included in earnings	564			1,192
Purchases, sales, issuances and settlements:
Sales	(7,093		)	(4,522		)
Ending balance	$	16,491		$	23,020

Change in unrealized gains relating to assets still held at the reporting date	$	(1,317	)	$	80

Fair Value Measurements, Nonrecurring

The following table presents financial instruments and non-financial assets measured at fair value on a non-recurring basis as of December 31, 2013 and 2012.



	December 31, 2013
	(1)		(1)		(1)		(1)
(in thousands)	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total (losses) gains for the year ended December 31, 2013
Impaired loans	$	7,031	$	—	$	—	$	7,031	$	(10,378	)
Other real estate	7,849		—		—		7,849		(1,443		)
Total	$	14,880	$	—	$	—	$	14,880	$	(11,821	)



	December 31, 2012
	(1)		(1)		(1)		(1)
(in thousands)	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total (losses) gains for the year ended December 31, 2012
Impaired loans	$	9,068	$	—	$	—	$	9,068	$	(15,276	)
Other real estate	11,749		—		—		11,749		(2,398		)
Total	$	20,817	$	—	$	—	$	20,817	$	(17,674	)

(1) The amounts represent only balances measured at fair value during the period and still held as of the reporting date.

Summary of Carrying Amount and Fair Values of Financial Instruments Reported on the Balance Sheets

Following is a summary of the carrying amounts and fair values of the Company’s financial instruments on the consolidated balance sheets at December 31, 2013 and 2012.



	December 31, 2013				December 31, 2012
(in thousands)	Carrying Amount		Estimated fair value		Carrying Amount		Estimated fair value
Balance sheet assets
Cash and due from banks	$	19,573	$	19,573	$	21,906	$	21,906
Federal funds sold	76		76		51		51
Interest-bearing deposits	196,220		196,220		95,413		95,413
Securities available for sale	434,587		434,587		640,212		640,212
Other investments, at cost	12,605		12,605		14,294		14,294
Loans held for sale	1,834		1,834		11,792		11,792
Derivative financial instruments	1,000		1,000		1,754		1,754
Portfolio loans, net	2,235,124		2,232,134		2,261,280		2,267,038
State tax credits, held for sale	48,457		52,159		61,284		66,822
Accrued interest receivable	7,303		7,303		8,497		8,497

Balance sheet liabilities
Deposits	2,534,953		2,540,822		2,658,851		2,669,113
Subordinated debentures	62,581		39,358		85,081		65,840
Federal Home Loan Bank advances	50,000		54,137		80,000		89,301
Other borrowings	214,331		214,377		245,070		245,224
Derivative financial instruments	990		990		1,979		1,979
Accrued interest payable	957		957		1,282		1,282

Estimate of the Fair Value of Financial Instruments Not Recorded at Fair Value on Balance Sheet

The following table presents the level in the fair value hierarchy for the estimated fair values of only the Company’s financial instruments that are not already on the condensed consolidated balance sheets at fair value at December 31, 2013, and December 31, 2012.



	Estimated Fair Value Measurement at Reporting Date Using						Balance at December 31, 2013
(in thousands)	Level 1		Level 2		Level 3
Financial Assets:
Portfolio loans, net	$	—	$	—	$	2,232,134	$	2,232,134
State tax credits, held for sale	—		—		35,668		35,668
Financial Liabilities:
Deposits	1,902,038		—		638,784		2,540,822
Subordinated debentures	—		39,358		—		39,358
Federal Home Loan Bank advances	—		54,137		—		54,137
Other borrowings	—		214,377		—		214,377

	Estimated Fair Value Measurement at Reporting Date Using						Balance at December 31, 2012
(in thousands)	Level 1		Level 2		Level 3
Financial Assets:
Portfolio loans, net	$	—	$	—	$	2,266,834	$	2,266,834
State tax credits, held for sale	—		—		43,802		43,802
Financial Liabilities:
Deposits	2,079,141		—		589,972		2,669,113
Subordinated debentures	—		65,840		—		65,840
Federal Home Loan Bank advances	—		89,301		—		89,301
Other borrowings	—		245,224		—		245,224

- Definition

Tabular disclosure of the fair value measurement of assets 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 (loss), 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, issues, 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.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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