Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2018

Summary of 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, 2018 and 2017, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value.



	December 31, 2018
(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	$	—	$	98,498	$	—	$	98,498
Obligations of states and political subdivisions	—		26,810		—		26,810
Residential mortgage-backed securities	—		586,136		—		586,136
U.S. Treasury Bills	—		9,925				9,925
Total securities available for sale	—		721,369		—		721,369
Other investments	121		—		—		121
Derivative financial instruments	—		3,023		—		3,023
Total assets	$	121	$	724,392	$	—	$	724,513

Liabilities
Derivative financial instruments	$	—	$	3,023	$	—	$	3,023
Total liabilities	$	—	$	3,023	$	—	$	3,023



	December 31, 2017
(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	$	—	$	99,224	$	—	$	99,224
Obligations of states and political subdivisions	—		34,642		—		34,642
Residential mortgage-backed securities	—		507,516		—		507,516
Total securities available for sale	—		641,382		—		641,382
State tax credits held for sale	—		—		400		400
Derivative financial instruments	—		3,589		—		3,589
Total assets	$	—	$	644,971	$	400	$	645,371

Liabilities
Derivative financial instruments	$	—	$	3,589	$	—	$	3,589
Total liabilities	$	—	$	3,589	$	—	$	3,589

Schedule of Level 3 Financial Instruments Measured at Fair Value on a Recurring Basis

The following table presents the changes in Level 3 financial instruments measured at fair value on a recurring basis as of December 31, 2018 and 2017.


•	Purchases, sales, issuances and settlements. There were no Level 3 purchases during the years ended December 31, 2018 and 2017.

•

Transfers in and/or out of Level 3. There were no transfers in and/or out of Level 3 for the year ending December 31, 2018. There was $3.1 million in Level 3 transfers to Level 2 for the year ending December 31, 2017 because more observable market data became available for the Auction Rate Securities. The Company’s policy is to recognize transfers into or out of a level as of the end of a reporting period. As a result, the transfers occurred on June 30, 2017.



	Securities available for sale, at fair value
	Years ended December 31,
(in thousands)	2018		2017
Beginning balance	$	—	$	3,089
Total gains:
Included in other comprehensive income	—		4
Transfer in and/or out of Level 3	—		(3,093		)
Ending balance	$	—	$	—

Change in unrealized gains relating to assets still held at the reporting date	$	—	$	—



	State tax credits held for sale, at fair value
	Years ended December 31,
(in thousands)	2018			2017
Beginning balance	$	400		$	3,585
Total gains:
Included in earnings	14			101
Purchases, sales, issuances and settlements:
Sales	(414		)	(3,286		)
Ending balance	$	—		$	400

Change in unrealized losses relating to assets still held at the reporting date	$	—		$	(885	)

Summary of Financial Instruments and Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis

The following table presents financial instruments and non-financial assets measured at fair value on a non-recurring basis as of December 31, 2018 and 2017.



	December 31, 2018
	(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 for the year ended December 31, 2018
Impaired loans	$	1,958	$	—	$	—	$	1,958	$	815
Other real estate	—		—		—		—		—
Total	$	1,958	$	—	$	—	$	1,958	$	815



	December 31, 2017
	(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 for the year ended December 31, 2017
Impaired loans	$	3,200	$	—	$	—	$	3,200	$	6,599
Other real estate	—		—		—		—		—
Total	$	3,200	$	—	$	—	$	3,200	$	6,599

(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, 2018 and 2017.



	December 31, 2018				December 31, 2017
(in thousands)	Carrying Amount		Estimated fair value		Carrying Amount		Estimated fair value
Balance sheet assets
Cash and due from banks	$	91,511	$	91,511	$	91,084	$	91,084
Federal funds sold	1,714		1,714		1,223		1,223
Interest-bearing deposits	106,512		106,512		63,661		63,661
Securities available for sale	721,369		721,369		641,382		641,382
Securities held to maturity	65,679		63,934		73,749		73,458
Other investments, at cost	26,654		26,654		26,661		26,661
Loans held for sale	392		392		3,155		3,155
Derivative financial instruments	3,023		3,023		3,589		3,589
Portfolio loans, net	4,306,525		4,253,239		4,054,473		4,096,741
State tax credits, held for sale	37,587		39,169		43,468		44,271
Accrued interest receivable	16,069		16,069		14,069		14,069

Balance sheet liabilities
Deposits	4,587,985		4,583,047		4,156,414		4,153,323
Subordinated debentures and notes	118,156		106,316		118,105		105,031
Federal Home Loan Bank advances	70,000		70,000		172,743		172,893
Other borrowings	223,450		223,260		253,674		253,530
Derivative financial instruments	3,023		3,023		3,589		3,589
Accrued interest payable	1,977		1,977		1,730		1,730

Schedule of Estimated Fair Values 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 consolidated balance sheets at fair value at December 31, 2018, and December 31, 2017.



	Estimated Fair Value Measurement at Reporting Date Using						Balance at December 31, 2018
(in thousands)	Level 1		Level 2		Level 3
Financial Assets:
Securities held to maturity	$	—	$	63,934	$	—	$	63,934
Portfolio loans, net	—		—		4,253,239		4,253,239
State tax credits, held for sale	—		—		39,169		39,169
Financial Liabilities:
Deposits	3,903,556		—		679,491		4,583,047
Subordinated debentures and notes	—		106,316		—		106,316
Federal Home Loan Bank advances	—		70,000		—		70,000
Other borrowings	—		223,260		—		223,260

	Estimated Fair Value Measurement at Reporting Date Using						Balance at December 31, 2017
(in thousands)	Level 1		Level 2		Level 3
Financial Assets:
Securities held to maturity	$	—	$	73,458	$	—	$	73,458
Portfolio loans, net	—		—		4,096,741		4,096,741
State tax credits, held for sale	—		—		43,871		43,871
Financial Liabilities:
Deposits	3,577,641		—		575,682		4,153,323
Subordinated debentures and notes	—		105,031		—		105,031
Federal Home Loan Bank advances	—		172,893		—		172,893
Other borrowings	—		253,530		—		253,530