Fair Value (Tables)

3 Months Ended

Mar. 31, 2013

Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table summarizes assets and liabilities measured at fair value on a recurring basis as of March 31, 2013 and December 31, 2012, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:



			Fair Value Measurements at March 31, 2013, Using
	Assets/Liabilities Measured at Fair Value		Quoted Prices In Active Markets For Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(Dollars in thousands)	March 31, 2013		(Level 1)		(Level 2)		(Level 3)
U.S. Government sponsored entities	$	89,775	$	—	$	89,775	$	—
Mortgage-backed investments	198,647		—		198,647		—
Obligations of states and political subdivisions	73,474		—		73,474		—
Collateralized debt obligations	956		—		—		956
Other debt securities	14,199		—		14,199		—
Total securities available for sale	$	377,051	$	—	$	376,095	$	956
Mortgage derivative assets	278		—		—		278
	$	377,329	$	—	$	376,095	$	1,234

Interest rate swap liability	$	2,396	$	—	$	—	$	2,396
Mortgage derivative liabilities	125		—		—		125
	$	2,521	$	—	$	—	$	2,521



			Fair Value Measurements at December 31, 2012, Using
	Assets/Liabilities Measured at Fair Value		Quoted Prices In Active Markets For Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(Dollars in thousands)	December 31, 2012		(Level 1)		(Level 2)		(Level 3)
U.S. Government sponsored entities	$	72,615	$	—	$	72,615	$	—
Mortgage-backed investments	190,563		—		190,563		—
Obligations of states and political subdivisions	71,461		—		71,461		—
Collateralized debt obligations	946		—		—		946
Other debt securities	12,977		—		12,977		—
Total available for sale securities	$	348,562	$	—	$	347,616	$	946
Mortgage derivative assets	317		—		—		317
	$	348,879	$	—	$	347,616	$	1,263

Interest rate swap liability	$	2,484	$	—	$	—	$	2,484
Mortgage derivative liabilities	126		—		—		126
	$	2,610	$	—	$	—	$	2,610

Schedule of Activity in Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs

The following table reports the activity for the first three months of 2013 and 2012 in assets measured at fair value on a recurring basis using significant unobservable (Level 3) inputs.



(Dollars in thousands)	Three Months Ended
	March 31, 2013
	Collateralized Debt Obligations		Mortgage Derivatives			Interest Rate Swap
Beginning Balance	$	946	$	191		$	(2,484	)
Total gains or losses (realized/unrealized):
Other-than-temporary impairment included in earnings	—		—			—
Other-than-temporary impairment (included in) transferred from other comprehensive income	—		—			—
Other gains/losses included in other comprehensive income	10		—			(69		)
Net swap settlement recorded	—		—			157
IRLC and FSA issuances	—		618			—
IRLC and FSA expirations and fair value changes included in earnings	—		(155		)	—
IRLC transfers into closed loans/FSA transferred on sales	—		(501		)	—
Ending Balance	$	956	$	153		$	(2,396	)
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date	$	—	$	—		$	(157	)



	Three Months Ended
(Dollars in thousands)	March 31, 2012
	Collateralized Debt Obligations		Mortgage Derivatives			Interest Rate Swap
Beginning Balance	$	819	$	(22	)	$	(1,834	)
Total gains or losses (realized/unrealized):
Other-than-temporary impairment included in earnings	—		—			—
Other-than-temporary impairment (included in) transferred from other comprehensive income	—		—			—
Other gains/losses included in other comprehensive income	53		—			(40		)
Net swap settlement recorded	—		—			146
IRLC and FSA issuances	—		(353		)	—
IRLC and FSA expirations and fair value changes included in earnings	—		230			—
IRLC transfers into closed loans/FSA transferred on sales	—		226			—
Ending Balance	$	872	$	81		$	(1,728	)
The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date	$	—	$	—		$	(146	)

Schedule of Certain Quantitative Information About Valuation Techniques and Significant Unobservable Inputs

The following table summarizes certain quantitative information about valuation techniques and significant unobservable inputs used in determining Level 3 nonrecurring fair value measurements at March 31, 2013:

Fair Value at

Valuation

Unobservable

Weighted

(Dollars in thousands)

March 31, 2013

Techniques

Inputs

Range

Average

Impaired loans

9,761

Appraisals from comparable properties

Adjustments for market conditions since appraisal

$1 thousand -
$170 thousand

$40 thousand

Loan foreclosures

388

Appraisals from comparable properties

Adjustments for market conditions since appraisal

$5 thousand - $110 thousand

$42 thousand

Other real estate

1,711

Appraisals from comparable properties

Adjustments for market conditions since appraisal

$5 thousand - $165 thousand

$46 thousand

Note 2: (Continued)

Fair Value at

Valuation

Unobservable

Weighted

(Dollars in thousands)

December 31, 2012

Techniques

Inputs

Range

Average

Impaired loans

20,815

Appraisals from comparable properties

Adjustments for market conditions since appraisal

$1 thousand -
$956 thousand

$96 thousand

Loan foreclosures

2,562

Appraisals from comparable properties

Adjustments for market conditions since appraisal

$2 thousand - $292 thousand

$97 thousand

Other real estate

12,771

Appraisals from comparable properties

Adjustments for market conditions since appraisal

$1 thousand - $631 thousand

$95 thousand

The following table summarizes certain quantitative information about valuation techniques and significant unobservable inputs used in determining Level 3 fair value measurements at March 31, 2013:



	Fair Value at			Valuation	Unobservable			Weighted
(Dollars in thousands)	March 31, 2013			Techniques	Inputs	Range		Average
Collateralized debt obligations	$	956		Discounted cash flow	Discount margin Default rates	15.00% - 20.00% 0.25% - 0.53%		17.27% .31%
Mortgage interest rate lock agreements	47			Discounted cash flow	Pull-through rates	85.00	%	85.00	%
Mortgage forward sale agreements	106			Consensus pricing	Pull-through rates	85.00	%	85.00	%
Interest rate swap	(2,396		)	Discounted cash flow	Discount rate	.33% - .96%		0.55	%

The following table summarizes certain quantitative information about valuation techniques and significant unobservable inputs used in determining Level 3 fair value measurements at December 31, 2012:



	Fair Value at			Valuation	Unobservable			Weighted
(Dollars in thousands)	December 31, 2012			Techniques	Inputs	Range		Average
Collateralized debt obligations	$	946		Discounted cash flow	Discount margin Default rates	15.00% - 20.00% 0.25% - 0.98%		17.30% 0.45%
Mortgage interest rate lock agreements	86			Discounted cash flow	Pull-through rates	85.00	%	85.00	%
Mortgage forward sale agreements	105			Consensus pricing	Pull-through rates	85.00	%	85.00	%
Interest rate swap	(2,484		)	Discounted cash flow	Discount rate	0.31% - 0.83%		0.52	%

Schedule of Assets and Liabilities Measured at Fair Value on Nonrecurruing Basis

The following tables summarize assets and liabilities measured at fair value on a nonrecurring basis as of March 31, 2013, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:



			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(Dollars in thousands)	03/31/13 (a)		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	9,761	$	—	$	—	$	9,761
Loan foreclosures	388		—		—		388
Other real estate	1,711		—		—		1,711

The following tables summarize assets and liabilities measured at fair value on a nonrecurring basis as of December 31, 2012, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:



			Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(Dollars in thousands)	12/31/12 (a)		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	20,815	$	—	$	—	$	20,815
Loan foreclosures	2,562		—		—		2,562
Other real estate	12,771		—		—		12,771

(a)

These amounts represent the resulting carrying amounts on the consolidated statement of condition for impaired real estate-secured loans and other real estate for which fair value re-measurements took place during the period. Loan foreclosures represent the fair value portion of the carrying amounts of other real estate properties that were re-measured at the point of foreclosure during the period.

Schedule of Losses Recognized on Assets Measured on a Nonrecurring Basis

The following table summarizes losses recognized related to nonrecurring fair value measurements of individual assets or portfolios:



	Three Months Ended
	March 31
(Dollars in thousands)	2013		2012
Impaired loans (a)	$	683	$	2,847
Loan foreclosures (b)	125		379
Other real estate (c)	228		1,100


(a)	Represents additional impairments on loans which are based on the appraised value of the collateral. These impairments are accrued in the allowance for loan losses and charged to provision for loan loss expense.


(b)	Represents foreclosures of loans secured by real estate when the foreclosed value is lower than the carrying value of the loan. These amounts are charged to the allowance for loan losses with the fair value of the foreclosed property being recorded in other real estate.


(c)	Represents related losses of foreclosed properties that were measured at fair value subsequent to their initial acquisition.

Schedule of Carrying Amounts and Fair Values of Financial Instruments

The following tables present the carrying amounts and fair values of the Company’s financial instruments at March 31, 2013 and December 31, 2012:



							Fair Value Measurements at March 31, 2013, Using
	March 31, 2013						Quoted Prices In Active Markets For Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(Dollars in thousands)	Carrying			Estimated			Quoted Prices In Active Markets For Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Amount			Fair Value			(Level 1)		(Level 2)		(Level 3)
Financial assets:
Cash and short-term investments	$	74,133		$	74,133		$	74,133	$	—	$	—
Securities available for sale	377,051			377,051			—		376,095		956
Loans held for sale	17,573			17,682			—		—		17,682
Loans held for investment	969,388			876,285			—		—		876,285
Agency accounts receivable	155			155			155		—		—
Accrued interest receivable	5,863			5,863			13		1,742		4,108
Nonmarketable equity investments	2,022			2,022			—		—		2,022
Investments in unconsolidated VIEs	3,062			3,062			—		—		3,062
Mortgage derivative assets	278			278			—		—		278
Financial liabilities:
Noninterest-bearing deposits	252,453			252,453			252,453		—		—
NOW, MMDA and savings deposits	747,035			747,035			747,035		—		—
Certificates of deposit	353,287			358,614			—		—		358,614
Short-term borrowings	2,250			2,250			2,250		—		—
Other borrowings	34,877			36,019			—		—		36,019
Junior subordinated debt	30,928			26,232			—		—		26,232
Agency accounts payable	642			642			642		—		—
Accrued interest payable	628			628			31		—		597
Mortgage derivative liabilities	125			125			—		—		125
Other financial instruments:
Commitments to extend credit and letters of credit	(2		)	(368		)	—		—		(368		)
Interest rate swap	(2,396		)	(2,396		)	—		—		(2,396		)

Note 2: (Continued)



							Fair Value Measurements at December 31, 2012, Using
	December 31, 2012						Quoted Prices In Active Markets For Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(Dollars in thousands)	Carrying			Estimated
	Amount			Fair Value			(Level 1)		(Level 2)		(Level 3)
Financial assets:
Cash and short-term investments	$	159,124		$	159,124		$	159,124	$	—	$	—
Securities available for sale	348,562			348,562			—		347,616		946
Loans held for sale	21,014			21,398			—		—		21,398
Loans held for investment	957,981			860,071			—		—		860,071
Agency accounts receivable	151			151			151		—		—
Accrued interest receivable	5,683			5,683			7		1,682		3,994
Nonmarketable equity investments	2,201			2,201			—		—		2,201
Investments in unconsolidated VIEs	3,136			3,136			—		—		3,136
Mortgage derivative assets	317			317			—		—		317
Financial liabilities:
Noninterest-bearing deposits	276,295			276,295			276,295		—		—
NOW, MMDA and savings deposits	755,675			755,675			755,675		—		—
Certificates of deposit	370,705			377,459			—		—		377,459
Short-term borrowings	3,720			3,720			3,720		—		—
Other borrowings	36,007			37,441			—		—		37,441
Junior subordinated debt	30,928			25,795			—		—		25,795
Agency accounts payable	612			612			612		—		—
Accrued interest payable	661			661			23		—		638
Mortgage derivative liabilities	126			126			—		—		126
Other financial instruments:
Commitments to extend credit and letters of credit	(3		)	(346		)	—		—		(346		)
Interest rate swap	(2,484		)	(2,484		)	—		—		(2,484		)

- 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 the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

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-Name Statement of Financial Accounting Standard (FAS)

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