Fair value of financial instruments (Tables)

3 Months Ended

Mar. 31, 2019

Estimated Fair Values of Financial Instruments

The following table contains the estimated fair values and the related carrying values of the Company's financial instruments. Items which are not financial instruments are not included.



	Fair Value
March 31, 2019	Carrying amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	195,414	$	195,414	$	—	$	—	$	195,414
Investment securities	670,835		—		670,835		—		670,835
Loans, net	3,756,977		—		—		3,746,515		3,746,515
Loans held for sale	248,054		—		248,054		—		248,054
Interest receivable	16,611		—		3,114		13,497		16,611
Mortgage servicing rights	64,031		—		—		64,031		64,031
Derivatives	19,002		—		19,002		—		19,002
Financial liabilities:
Deposits:
Without stated maturities	$	3,159,931	$	3,159,931	$	—	$	—	$	3,159,931
With stated maturities	1,143,260		—		1,147,498		—		1,147,498
Securities sold under agreement to repurchase and federal funds sold	36,695		36,695		—		—		36,695
Federal Home Loan Bank advances	161,553		—		161,654		—		161,654
Subordinated debt	30,930		—		30,000		—		30,000
Interest payable	7,112		294		6,818		—		7,112
Derivatives	12,400		—		12,400		—		12,400



	Fair Value
December 31, 2018	Carrying amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and cash equivalents	$	125,356	$	125,356	$	—	$	—	$	125,356
Investment securities	658,805		—		658,805		—		658,805
Loans, net	3,638,579		—		—		3,630,500		3,630,500
Loans held for sale	278,815		—		278,815		—		278,815
Interest receivable	14,503		—		2,848		11,655		14,503
Mortgage servicing rights	88,829		—		—		88,829		88,829
Derivatives	14,316		—		14,316		—		14,316
Financial liabilities:
Deposits:
Without stated maturities	$	3,051,972	$	3,051,972	$	—	$	—	$	3,051,972
With stated maturities	1,119,745		—		1,122,076		—		1,122,076
Securities sold under agreement to repurchase and federal funds sold	15,081		15,081		—		—		15,081
Federal Home Loan Bank advances	181,765		—		181,864		—		181,864
Subordinated debt	30,930		—		30,000		—		30,000
Interest payable	5,015		530		4,485		—		5,015
Derivatives	11,637		—		11,637		—		11,637

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 December 31, 2018 are presented in the following table:



At December 31, 2018	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	$	—	$	989	$	—	$	989
Mortgage-backed securities	—		508,580		—		508,580
Municipals, tax-exempt	—		138,887		—		138,887
Treasury securities	—		7,242		—		7,242
Equity securities	—		3,107		—		3,107
Total	$	—	$	658,805	$	—	$	658,805
Loans held for sale	$	—	$	278,815	$	—	$	278,815
Mortgage servicing rights	—		—		88,829		88,829
Derivatives	—		14,316		—		14,316
Financial Liabilities:
Derivatives	—		11,637		—		11,637

The balances and levels of the assets measured at fair value on a recurring basis at March 31, 2019 are presented in the following table:



March 31, 2019	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	$	—	$	993	$	—	$	993
Mortgage-backed securities	—		511,716		—		511,716
Municipals, tax-exempt	—		147,640		—		147,640
Treasury securities	—		7,305		—		7,305
Equity securities	—		3,181		—		3,181
Total	$	—	$	670,835	$	—	$	670,835
Loans held for sale	$	—	$	248,054	$	—	$	248,054
Mortgage servicing rights	—		—		64,031		64,031
Derivatives	—		19,002		—		19,002
Financial Liabilities:
Derivatives	—		12,400		—		12,400

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 March 31, 2019 are presented in the following table:



At March 31, 2019	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:
Other real estate owned	$	—	$	—	$	1,147	$	1,147
Impaired loans⁽¹⁾:
Commercial and industrial	$	—	$	—	$	3,186	$	3,186
Construction	—		—		6		6
Residential real estate:
1-4 family mortgage	—		—		260		260
Commercial real estate:
Owner occupied	—		—		272		272
Non-owner occupied	—		—		—		—
Consumer and other	—		—		—		—
Total	$	—	$	—	$	3,724	$	3,724

(1) Includes both impaired non-purchased loans and collateral-dependent PCI loans.

The balances and levels of the assets measured at fair value on a non-recurring basis at December 31, 2018 are presented in the following table:



At December 31, 2018	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:
Other real estate owned	$	—	$	—	$	2,266	$	2,266
Impaired Loans⁽¹⁾:
Commercial and industrial	$	—	$	—	$	732	$	732
Construction	—		—		832		832
Residential real estate:
1-4 family mortgage	—		—		146		146
Commercial real estate:
Owner occupied	—		—		87		87
Non-owner occupied	—		—		6,921		6,921
Total	$	—	$	—	$	8,718	$	8,718

(1) Includes both impaired non-purchased loans and collateral-dependent PCI loans.

Reconciliation for Assets and Liabilities Measured at Fair Value on Recurring Basis using Significant Unobservable Inputs or Level 3 Inputs

The following table provides a reconciliation for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs, or Level 3 inputs, during the three months ended March 31, 2019 and 2018:



	Available-for-sale securities
	Three Months Ended March 31,
	2019		2018
Balance at beginning of period	$	—	$	3,604
Reclassification of equity securities without a readily determinable fair value to other assets	—		(3,604		)
Balance at end of period	$	—	$	—

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 March 31, 2019 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⁾	$	3,724	Valuation of collateral	Discount for comparable sales	0%-30%
Other real estate owned	$	1,147	Appraised value of property less costs to sell	Discount for costs to sell	0%-15%

(1) Includes both impaired non-purchased loans and collateral-dependent PCI loans.

The following table presents information as of December 31, 2018 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⁾	$	8,718	Valuation of collateral	Discount for comparable sales	0%-30%
Other real estate owned	$	2,266	Appraised value of property less costs to sell	Discount for costs to sell	0%-15%

(1) Includes both impaired non-purchased loans and collateral-dependent PCI loans.

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 March 31, 2019 and December 31, 2018:



March 31, 2019	Aggregate fair value		Aggregate Unpaid Principal Balance		Difference
Mortgage loans held for sale measured at fair value	$	247,858	$	238,554	$	9,304
Past due loans of 90 days or more	—		—		—
Nonaccrual loans	196		196		—

December 31, 2018
Mortgage loans held for sale measured at fair value	$	278,418	$	267,907	$	10,511
Past due loans of 90 days or more	—		—		—
Nonaccrual loans	397		397		—