Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value, Assets Measured on Recurring Basis

The following table presents the Company’s financial instruments measured at fair value on a recurring basis at September 30, 2013 and December 31, 2012:



(dollars in thousands)	Fair Value at September 30, 2013
	Level 1		Level 2		Level 3		Total
U.S. government agencies	$	—	$	85,915	$	—	$	85,915
Residential pass-through securities	—		168,819		—		168,819
Taxable state and political subdivisions	—		2,510		—		2,510
Tax exempt state and political subdivisions	—		72,399		—		72,399
Corporate obligations	5,798		4,950		—		10,748
Agency-issued collateralized mortgage obligations	—		35,738		—		35,738
Asset-backed securities	—		22,234		—		22,234
Investments in mutual funds and other equities	1,913		—		—		1,913
Total	$	7,711	$	392,565	$	—	$	400,276



(dollars in thousands)	Fair Value at December 31, 2012
	Level 1		Level 2		Level 3		Total
U.S. government agencies	$	—	$	88,586	$	—	$	88,586
Residential pass-through securities	—		168,423		—		168,423
Taxable state and political subdivisions	—		5,312		—		5,312
Tax exempt state and political subdivisions	—		58,985		—		58,985
Corporate obligations	2,985		7,450		—		10,435
Agency-issued collateralized mortgage obligations	—		14,046		—		14,046
Asset-backed securities	—		25,188		—		25,188
Investments in mutual funds and other equities	1,993		—		—		1,993
Total	$	4,978	$	367,990	$	—	$	372,968

Fair Value Measurements, Nonrecurring

The table below is a summary of fair value estimates for financial instruments at September 30, 2013 and December 31, 2012, excluding financial instruments recorded at fair value on a recurring and nonrecurring basis (summarized in the table above). The carrying amounts in the following table are recorded in the statement of financial condition under the indicated captions. The Company has excluded non-financial assets and non-financial liabilities such as Bank premises and equipment, deferred taxes and other liabilities.



(dollars in thousands)	September 30, 2013
			Fair value measurements using:
	Carrying value		Total		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	36,360	$	36,360	$	36,360	$	—	$	—
Interest-bearing deposits	75,145		75,145		75,145		—		—
Investment securities available for sale	400,276		400,276		7,711		392,565		—
FHLB stock	7,239		7,239		7,239		—		—
Loans held for sale	4,191		4,191		—		4,191		—
Non-covered loans	872,636		869,618		—		—		869,618
Covered loans	171,416		158,381		—		—		158,381
Bank owned life insurance	17,817		17,817		17,817		—		—
FDIC indemnification asset	25,439		34,564		—		—		34,564
Financial liabilities:
Deposits	1,429,279		1,434,047		1,048,262		385,785		—
Junior subordinated debentures	25,774		17,774		—		—		17,774



(dollars in thousands)	December 31, 2012
			Fair value measurements using:
	Carrying value		Total		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	32,145	$	32,145	$	32,145	$	—	$	—
Interest-bearing deposits	75,428		75,428		75,428		—		—
Investment securities available for sale	372,968		372,968		4,978		367,990		—
FHLB stock	7,441		7,441		7,441		—		—
Loans held for sale	18,043		18,043		—		18,043		—
Non-covered loans	853,134		858,660		—		—		858,660
Covered loans	217,339		234,396		—		—		234,396
Bank owned life insurance	17,704		17,704		17,704		—		—
FDIC indemnification asset	34,571		22,630		—		—		22,630
Financial liabilities:
Deposits	1,462,973		1,468,189		1,015,075		453,114		—
Junior subordinated debentures	25,774		12,155		—		—		12,155

Schedule of carrying value and fair value of financial instruments

The following table presents the carrying value of financial instruments by level within the fair value hierarchy, for which a non-recurring change in fair value has been recorded:



(dollars in thousands)	Fair Value at September 30, 2013
	Level 1		Level 2		Level 3		Total		Total losses for the period
Non-covered impaired loans ⁽¹⁾	$	—	$	—	$	30,625	$	30,625	$	(4,407	)
Non-covered other real estate owned ⁽²⁾	—		—		4,747		4,747		(542		)
Covered other real estate owned ⁽²⁾	—		—		4,109		4,109		(1,386		)
Total	$	—	$	—	$	39,481	$	39,481	$	(6,335	)



(dollars in thousands)	Fair Value at December 31, 2012
	Level 1		Level 2		Level 3		Total		Total losses for the period
Non-covered impaired loans ⁽¹⁾	$	—	$	—	$	38,299	$	38,299	$	(8,485	)
Non-covered other real estate owned ⁽²⁾	—		—		3,023		3,023		(844		)
Covered other real estate owned ⁽²⁾	—		—		13,460		13,460		(3,704		)
Total	$	—	$	—	$	54,782	$	54,782	$	(13,033	)

⁽¹⁾ Represents carrying value and related specific valuation allowances, which are included in the allowance for loan losses.

⁽²⁾ Represents the fair value and related losses of foreclosed real estate and other collateral owned that were measured at fair value subsequent to their initial classification as non-covered other real estate owned and covered other real estate owned.

- Definition

Tabular disclosure of assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a nonrecurring basis in periods after initial recognition (for example, impaired assets). Disclosures may include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3).

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- Definition

Tabular disclosure of assets, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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