Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2017

Estimated Fair Values of Financial Instruments

The estimated fair values of the Company’s financial instruments are as follows:

			Fair Value
June 30, 2017	Carrying amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	186,278	$	186,278	$	—	$	—	$	186,278
Available-for-sale securities		553,357		—		548,808		4,549		553,357
Federal Home Loan Bank Stock		7,743		—		—		7,743		7,743
Loans, net		1,947,727		—		1,933,996		518		1,934,514
Loans held for sale		427,416		—		427,416		—		427,416
Interest receivable		7,012		—		7,012		—		7,012
Mortgage servicing rights		48,464		—		—		48,464		48,464
Derivatives		10,891		—		10,891		—		10,891
Financial liabilities:
Deposits:
Without stated maturities	$	2,330,992	$	2,330,992	$	—	$	—	$	2,330,992
With stated maturities		396,601		—		393,788		—		393,788
Securities sold under agreement to repurchase		16,343		16,343		—		—		16,343
Interest payable		501		65		436		—		501
Long-term debt		43,790		—		48,426		—		48,426
Derivatives		1,350		—		1,350		—		1,350

			Fair Value
December 31, 2016	Carrying amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	136,327	$	136,327	$	—	$	—	$	136,327
Available-for-sale securities		582,183		—		577,634		4,549		582,183
Federal Home Loan Bank Stock		7,743		—		—		7,743		7,743
Loans, net		1,827,037		—		1,822,054		1,281		1,823,335
Loans held for sale		507,442		—		507,442		—		507,442
Interest receivable		7,241		—		7,241		—		7,241
Mortgage servicing rights, net		32,070		—		—		33,081		33,081
Derivatives		19,745		—		19,745		—		19,745
Financial liabilities:
Deposits:
Without stated maturities	$	2,280,531	$	2,280,531	$	—	$	—	$	2,280,531
With stated maturities		391,031		—		390,484		—		390,484
Securities sold under agreement to repurchase		21,561		21,561		—		—		21,561
Short term borrowings		150,000		150,000		—		—		150,000
Interest payable		620		237		383		—		620
Long-term debt		44,892		—		47,377		—		47,377
Derivatives		586		—		586		—		586

Balances and Levels of Assets Measured at Fair Value on Recurring Basis

The balances and levels of the assets measured at fair value on a recurring basis at June 30, 2017 are presented in the following tables:

At June 30, 2017	Quoted prices in active markets for identical assets (liabilities) (level 1)		Significant other observable inputs (level 2)		Significant unobservable inputs (level 3)		Total
Recurring valuations:
Financial assets:
Available-for-sale securities:
U.S. government agency securities	$	—	$	990	$	—	$	990
Mortgage-backed securities		—		410,708		—		410,708
Municipals, tax-exempt		—		122,698		—		122,698
Treasury securities		—		10,310		—		10,310
Equity securities		—		4,102		4,549		8,651
Total	$	—	$	548,808	$	4,549	$	553,357
Loans held for sale		—		427,416		—		427,416
Mortgage servicing rights		—		—		48,464		48,464
Derivatives		—		10,891		—		10,891
Financial Liabilities:
Derivatives	$	—	$	1,350	$	—	$	1,350

The balances and levels of the assets measured at fair value on a recurring basis at December 31, 2016 are presented in the following tables:

At December 31, 2016	Quoted prices in active markets for identical assets (liabilities) (level 1)		Significant other observable inputs (level 2)		Significant unobservable inputs (level 3)		Total
Recurring valuations:
Financial assets:
Available-for-sale securities:
U.S. government agency securities	$	—	$	985	$	—	$	985
Mortgage-backed securities		—		443,908		—		443,908
Municipals, tax-exempt		—		116,923		—		116,923
Treasury securities		—		11,757		—		11,757
Equity securities		—		4,061		4,549		8,610
Total	$	—	$	577,634	$	4,549	$	582,183
Loans held for sale		—		507,442		—		507,442
Derivatives		—		19,745		—		19,745
Financial Liabilities:
Derivatives	$	—	$	586	$	—	$	586

Balances and Levels of Assets Measured at Fair Value on Non-recurring Basis

The balances and levels of the assets measured at fair value on a non-recurring basis at June 30, 2017 are presented in the following tables:

At June 30, 2017	Quoted prices in active markets for identical assets (liabilities) (level 1)		Significant other observable inputs (level 2)		Significant unobservable inputs (level 3)		Total
Non-recurring valuations:
Financial assets:
Foreclosed assets	$	—	$	—	$	1,434	$	1,434
Impaired loans:
Commercial and industrial		—		—		367		367
Commercial real estate:
Non-owner occupied		—		—		151		151
Total	$	—	$	—	$	518	$	518

The balances and levels of the assets measured at fair value on a non-recurring basis at December 31, 2016 are presented in the following tables:

At December 31, 2016	Quoted prices in active markets for identical assets (liabilities) (level 1)		Significant other observable inputs (level 2)		Significant unobservable inputs (level 3)		Total
Non-recurring valuations:
Financial assets:
Foreclosed assets	$	—	$	—	$	2,315	$	2,315
Mortgage servicing rights		—		—		32,070		32,070
Impaired Loans:
Commercial and industrial		—		—		542		542
Commercial real estate:
Owner occupied		—		—		635		635
Non-owner occupied		—		—		—		—
Construction		—		—		—		—
Residential real estate:
1-4 family mortgage		—		—		103		103
Multifamily		—		—		—		—
Consumer and other		—		—		1		1
Total	$	—	$	—	$	1,281	$	1,281

Information About Significant Unobservable Inputs (Level 3) Used in Valuation of Assets Measured at Fair Value on Nonrecurring Basis

The following table presents information as of June 30, 2017 about significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a nonrecurring basis:

Financial instrument

Fair Value

Valuation technique

Significant Unobservable inputs

Range of

inputs

Impaired loans

518

Valuation of collateral

Discount for comparable sales

0%-30%

Foreclosed assets

1,434

Appraised value of property less costs to sell

Discount for costs to sell

0%-10%

The following table presents information as of December 31, 2016 about significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a nonrecurring basis:

Financial instrument	Fair Value		Valuation technique	Significant Unobservable inputs	Range of inputs
Impaired loans	$	1,281	Valuation of collateral	Discount for comparable sales	0%-30%
Foreclosed assets	$	2,315	Appraised value of property less costs to sell	Discount for costs to sell	0%-10%
Mortgage servicing rights, net	$	33,081	Discounted cash flows	See Note 6	See Note 6

Differences between Fair Value and Principal Balance for Loans Held for Sale Measured at Fair Value

The following table summarizes the differences between the fair value and the principal balance for loans held for sale measured at fair value as of June 30, 2017 and December 31, 2016:

June 30, 2017	Aggregate fair value		Aggregate Unpaid Principal Balance		Difference
Mortgage loans held for sale measured at fair value	$	427,416	$	412,007	$	15,409
Past due loans of 90 days or more		—		—		—
Nonaccrual loans		—		—		—

December 31, 2016
Mortgage loans held for sale measured at fair value	$	507,442	$	501,503	$	5,939
Past due loans of 90 days or more		—		—		—
Nonaccrual loans		—		—		—