Fair Value of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2015

Estimated fair values as of the periods indicated are as follows:



	September 30, 2015				December 31, 2014
(In Thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Level 1 inputs:
Cash, due from banks and deposits in other banks		$144,566		$144,566		$72,056		$72,056
Investment securities	36,958		36,958		45,570		45,570

Level 2 inputs:
Investment securities	198,219		198,287		238,361		238,468
Investment in Federal Home Loan Bank stock	1,816		1,816		3,404		3,404
Accrued interest receivable	3,476		3,476		3,373		3,373
Interest rate contracts	240		240		78		78

Level 3 inputs:
Loans and loans held for sale	1,040,277		1,038,911		968,370		974,366
Purchased receivables, net	13,732		13,732		15,254		15,254
Interest rate lock commitments	1,787		1,787		841		841
Mortgage servicing rights	1,199		1,199		1,010		1,010

Financial liabilities:
Level 2 inputs:
Deposits		$1,264,919		$1,264,995		$1,179,747		$1,180,136
Securities sold under repurchase agreements	33,413		33,413		19,843		19,843
Borrowings	12,458		12,491		26,304		26,485
Accrued interest payable	52		52		18		18
Interest rate contracts	535		535		158		158
Level 3 inputs:
RML earn-out liability	10,262		10,262		7,324		7,324
Junior subordinated debentures	18,558		17,254		18,558		17,239

Unrecognized financial instruments:
Commitments to extend credit⁽¹⁾		$242,506		$2,425		$219,349		$2,193
Standby letters of credit⁽¹⁾	8,122		81		6,004		60

⁽¹⁾Carrying amounts reflect the notional amount of credit exposure under these financial instruments.

Schedule Of Assets And Liabilities Measured At Fair Value On A Recurring Basis

The following table sets forth the balances as of the periods indicated of assets measured at fair value on a recurring basis:



(In Thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2015
Assets:
Available for sale securities
U.S. Treasury and government sponsored entities		$182,774		$15,166		$167,608		$—
Municipal securities	11,091		—		11,091		—
U.S. Agency mortgage-backed securities	874		—		874		—
Corporate bonds	38,537		21,792		16,745		—
Preferred stock	997		—		997		—
Total available for sale securities		$234,273		$36,958		$197,315		$—
Interest rate contracts		$240		$—		$240		$—
Interest rate lock commitments	1,787		—		—		1,787
Mortgage servicing rights	1,199		—		—		1,199
Total other assets		$3,226		$—		$240		$2,986
Liabilities:
Interest rate contracts		$535		$—		$535		$—
December 31, 2014
Assets:
Available for sale securities
U.S. Treasury and government sponsored entities		$226,190		$15,545		$210,645		$—
Municipal securities	12,124		—		12,124		—
U.S. Agency mortgage-backed securities	1,029		—		1,029		—
Corporate bonds	39,235		26,873		12,362		—
Preferred stock	3,152		3,152		—		—
Total available for sale securities		$281,730		$45,570		$236,160		$—
Interest rate contracts		$78		$—		$78		$—
Interest rate lock commitments	841		—		—		841
Mortgage servicing rights	1,010		—		—		1,010
Total other assets		$1,929		$—		$78		$1,851
Liabilities:
Interest rate contracts		$158		$—		$158		$—

Schedule Of Asset Impairment Or Valuation Adjustment Recognized At Fair Value On A Nonrecurring Basis

As of and for the nine months ending September 30, 2015 and 2014, no impairment or valuation adjustment was recognized for assets recognized at fair value on a nonrecurring basis, except for certain assets as shown in the following table. For loans measured for impairment, the Company classifies fair value measurements using observable inputs, such as external appraisals, as Level 2 valuations in the fair value hierarchy, and unobservable inputs, such as in-house evaluations, as Level 3 valuations in the fair value hierarchy.



(In Thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total (gains) losses
September 30, 2015
Loans measured for impairment		$1,249		$—		$—		$1,249		$437
Other real estate owned	830		—		—		830		360
Total		$2,079		$—		$—		$2,079		$797
September 30, 2014
Loans measured for impairment		$165		$—		$—		$165		($3	)
Other real estate owned	227		—		—		227		45
Total		$392		$—		$—		$392		$42

Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)

The following table provides a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company’s assets and liabilities classified as Level 3 and measured at fair value on a nonrecurring basis at September 30, 2015:



Financial Instrument	Valuation Technique	Unobservable Input	Weighted Average Rate Range
Loans measured for impairment	In-house valuation of real estate; discounted cash flow	Discount rate	25% - 100%
		Cash flows	NA⁽¹⁾
Other real estate owned	Fair value of collateral	Estimated selling and holding costs	7% - 25%
Interest rate lock commitment	External pricing model	Pull through rate	91.95	%
Mortgage servicing rights	Discounted cash flow	Constant prepayment rate	9.92% - 27.59%
		Discount rate	9.20% - 9.69%
RML earn-out liability	Discounted cash flow	Financial projections of mortgage operations	0.47% - 1.99%

⁽¹⁾ Fair value of impaired collateral dependent loans was calculated using contractual cash flows for specific impaired loan.