FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2017

FAIR VALUE OF FINANCIAL INSTRUMENTS

Schedule of assets and liabilities measured and recorded at fair value

Assets and liabilities measured and recorded at fair value, including financial assets for which the Company has elected the fair value option, on a recurring and nonrecurring basis as of June 30, 2017 and December 31, 2016, are summarized below (in thousands):

	June 30, 2017
			Quoted prices
			in active		Significant
			markets		other		Significant
			for identical		observable		unobservable
			assets		inputs		inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Assets and liabilities measured at fair value on a recurring basis:
Assets
Securities available for sale:
U.S. Treasury securities	$	25,936	$	25,936	$	—	$	—
Government sponsored entity debt securities		19,843		—		19,843		—
Agency mortgage-backed securities		242,550		—		242,550		—
State and municipal securities		40,182		—		40,182		—
Corporate securities		54,049		—		49,309		4,740
Equity securities		2,780		—		2,780		—
Loans held for sale		41,689		—		41,689		—
Interest rate lock commitments		7,396		—		7,396		—
Forward commitments to sell mortgage-backed securities		91		—		91		—
Interest rate swap contracts		126		—		126		—
Total	$	434,642	$	25,936	$	403,966	$	4,740
Liabilities
Interest rate swap contracts	$	126	$	—	$	126	$	—
Assets measured at fair value on a non-recurring basis:
Mortgage servicing rights	$	70,277	$	—	$	—	$	70,277
Impaired loans		6,153		—		1,210		4,943
Other real estate owned		134		—		134		—
Assets held for sale		1,748		—		1,748		—

	December 31, 2016
			Quoted prices
			in active		Significant
			markets		other		Significant
			for identical		observable		unobservable
			assets		inputs		inputs
	Total		(Level 1)		(Level 2)		(Level) 3
Assets and liabilities measured at fair value on a recurring basis:
Assets
Securities available for sale:
U.S. Treasury securities	$	75,901	$	75,901	$	—	$	—
Government sponsored entity debt securities		7,688		—		7,688		—
Agency mortgage-backed securities		90,070		—		90,070		—
Non-agency mortgage-backed securities		1		—		—		1
State and municipal securities		25,274		—		25,274		—
Corporate securities		47,405		—		39,925		7,480
Loans held for sale		70,565		—		70,565		—
Interest rate lock commitments		6,253		—		6,253		—
Forward commitments to sell mortgage-backed securities		125		—		125		—
Total	$	323,282	$	75,901	$	239,900	$	7,481
Liabilities
None
Assets measured at fair value on a non-recurring basis:
Impaired loans	$	10,202	$	—	$	6,635	$	3,567
Other real estate owned		165		—		165		—
Assets held for sale		1,550		—		1,550		—

Schedule of losses recognized on assets measured on a non-recurring basis

The following table presents losses recognized on assets measured on a non‑recurring basis for the three and six months ended June 30, 2017 and 2016 (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Mortgage servicing rights	$	1,650	$	2,775	$	1,726	$	5,020
Impaired loans		213		84		563		3,031
Other real estate owned		8		215		180		215
Assets held for sale		1,130		—		1,130		—
Total loss on assets measured on a nonrecurring basis	$	3,001	$	3,074	$	3,599	$	8,266

Schedule presenting activity for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)

The following table presents activity for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2017 (in thousands):

					Non-Agency
	Corporate				Mortgage-Backed
	Securities				Securities
	Three Months		Six Months		Three Months		Six Months
	Ended		Ended		Ended		Ended
	June 30,		June 30,		June 30,		June 30,
	2017				2017
Balance, beginning of period	$	7,734	$	7,480	$	—	$	1
Total realized in earnings (1)		85		180		—		—
Total unrealized in other comprehensive income		(3)		242		—		—
Net settlements (principal and interest)		(3,076)		(3,162)		—		(1)
Balance, end of period	$	4,740	$	4,740	$	—	$	—

(1) Amounts included in interest income from investment securities taxable in the consolidated statements of income.

The following table presents activity for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2016 (in thousands).

					Non-Agency
	Corporate				Mortgage-Backed
	Securities				Securities
	Three Months		Six Months		Three Months		Six Months
	Ended		Ended		Ended		Ended
	June 30,		June 30,		June 30,		June 30,
	2016				2016
Balance, beginning of period	$	6,736	$	—	$	2	$	—
Transferred from Level 2		—		6,749		—		2
Purchases of investment securities recognized as Level 3		3,000		3,000		—		—
Total realized in earnings (1)		85		158		—		—
Total unrealized in other comprehensive income		20		(2)		—		—
Net settlements (principal and interest)		(76)		(140)		—		—
Balance, end of period	$	9,765	$	9,765	$	2	$	2

(1) Amounts included in interest income from investment securities taxable in the consolidated statements of income.

Tabular presentation of summary of the carrying values and fair value estimates of certain financial instruments

	June 30, 2017
					Quoted prices
					in active		Significant
					markets		other		Significant
					for identical		observable		unobservable
	Carrying				assets		inputs		inputs
	Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets
Cash and due from banks	$	332,422	$	332,422	$	332,422	$	—	$	—
Federal funds sold		1,934		1,934		1,934		—		—
Investment securities available for sale		385,340		385,340		25,936		354,664		4,740
Investment securities held to maturity		75,371		79,612		—		79,612		—
Nonmarketable equity securities		28,891		28,891		—		28,891		—
Loans, net		3,168,639		3,170,384		—		—		3,170,384
Loans held for sale		41,689		41,689		—		41,689		—
Accrued interest receivable		10,322		10,322		—		10,322		—
Interest rate lock commitments		7,396		7,396		—		7,396		—
Forward commitments to sell mortgage-backed securities		91		91		—		91		—
Interest rate swap contracts		126		126		—		126		—
Liabilities
Deposits	$	3,333,031	$	3,330,855	$	—	$	3,330,855	$	—
Short-term borrowings		170,629		170,629		—		170,629		—
FHLB and other borrowings		400,304		399,365		—		399,365		—
Subordinated debt		54,556		49,966		—		49,966		—
Trust preferred debentures		45,156		43,108		—		43,108		—
Accrued interest payable		1,555		1,555		—		1,555		—
Interest rate swap contracts		126		126		—		126		—

	December 31, 2016
					Quoted prices
					in active		Significant
					markets		other		Significant
					for identical		observable		unobservable
	Carrying				assets		inputs		inputs
	Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets
Cash and due from banks	$	189,543	$	189,543	$	189,543	$	—	$	—
Federal funds sold		1,173		1,173		1,173		—		—
Investment securities available for sale		246,339		246,339		75,901		162,957		7,481
Investment securities held to maturity		78,672		81,952		—		81,952		—
Nonmarketable equity securities		19,485		19,485		—		19,485		—
Loans, net		2,305,114		2,305,206		—		—		2,305,206
Loans held for sale		70,565		70,565		—		70,565		—
Accrued interest receivable		8,202		8,202		—		8,202		—
Interest rate lock commitments		6,253		6,253		—		6,253		—
Forward commitments to sell mortgage-backed securities		125		125		—		125		—
Liabilities
Deposits	$	2,404,366	$	2,404,231	$	—	$	2,404,231	$	—
Short-term borrowings		131,557		131,557		—		131,557		—
FHLB and other borrowings		237,518		236,736		—		236,736		—
Subordinated debt		54,508		49,692		—		49,692		—
Trust preferred debentures		37,405		33,054		—		33,054		—
Accrued interest payable		1,045		1,045		—		1,045		—