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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2013

Schedule of differences between the fair value carrying amount of mortgages held for sale measured at fair value and the aggregate unpaid principal amount

(Dollars in thousands)	Fair value carrying amount		Aggregate unpaid principal		Excess of fair value carrrying amount over (under) unpaid principal
September 30, 2013
Mortgages held for sale reported at fair value
Total Loans	$	7,157	$	7,106	$	51	(1)

December 31, 2012
Mortgages held for sale reported at fair value
Total Loans	$	10,879	$	10,293	$	586	(1)

(1) The excess of fair value carrying amount over unpaid principal is included in mortgage banking income and includes changes in fair value at and subsequent to funding, gains and losses on the related loan commitment prior to funding.

Schedule of assets and liabilities measured at fair value on a recurring basis

(Dollars in thousands)	Level 1		Level 2		Level 3		Total
September 30, 2013
Assets:
Investment securities available-for-sale:
U.S. Treasury and Federal agencies securities	$	19,693	$	376,600	$	—	$	396,293
U.S. States and political subdivisions securities	—		108,163		6,517		114,680
Mortgage-backed securities — Federal agencies	—		284,360		—		284,360
Corporate debt securities	—		31,123		—		31,123
Foreign government and other securities	—		707		—		707
Total debt securities	19,693		800,953		6,517		827,163
Marketable equity securities	7,185		—		—		7,185
Total investment securities available-for-sale	26,878		800,953		6,517		834,348
Trading account securities	177		—		—		177
Mortgages held for sale	—		7,157		—		7,157
Accrued income and other assets (Interest rate swap agreements)	—		10,902		—		10,902
Total	$	27,055	$	819,012	$	6,517	$	852,584

Liabilities:
Accrued expenses and other liabilities (Interest rate swap agreements)	$	—	$	11,110	$	—	$	11,110
Total	$	—	$	11,110	$	—	$	11,110

December 31, 2012
Assets:
Investment securities available-for-sale:
U.S. Treasury and Federal agencies securities	$	20,063	$	402,190	$	—	$	422,253
U.S. States and political subdivisions securities	—		97,736		7,701		105,437
Mortgage-backed securities — Federal agencies	—		312,407		—		312,407
Corporate debt securities	—		31,248		—		31,248
Foreign government and other securities	—		3,726		—		3,726
Total debt securities	20,063		847,307		7,701		875,071
Marketable equity securities	5,693		—		—		5,693
Total investment securities available-for-sale	25,756		847,307		7,701		880,764
Trading account securities	146		—		—		146
Mortgages held for sale	—		10,879		—		10,879
Accrued income and other assets (Interest rate swap agreements)	—		16,126		—		16,126
Total	$	25,902	$	874,312	$	7,701	$	907,915

Liabilities:
Accrued expenses and other liabilities (Interest rate swap agreements)	$	—	$	16,444	$	—	$	16,444
Total	$	—	$	16,444	$	—	$	16,444

Schedule of changes in investment securities available-for-sale Level 3 assets measured at fair value on a recurring basis

(Dollars in thousands)	U.S. States and political subdivisions securities
Beginning balance July 1, 2013	$	5,452
Total gains or losses (realized/unrealized):
Included in earnings	—
Included in other comprehensive income	56
Purchases	1,500
Issuances	—
Settlements	—
Maturities	(491		)
Transfers into Level 3	—
Transfers out of Level 3	—
Ending balance September 30, 2013	$	6,517

Beginning balance July 1, 2012	$	8,143
Total gains or losses (realized/unrealized):
Included in earnings	—
Included in other comprehensive income	72
Purchases	—
Issuances	—
Settlements	—
Maturities	(474		)
Transfers into Level 3	—
Transfers out of Level 3	—
Ending balance September 30, 2012	$	7,741

Schedule of carrying value of assets measured at fair value on a non-recurring basis

(Dollars in thousands)	Level 1		Level 2		Level 3		Total
September 30, 2013
Impaired loans - collateral based	$	—	$	—	$	7,608	$	7,608
Accrued income and other assets (partnership investments)	—		—		2,017		2,017
Accrued income and other assets (mortgage servicing rights)	—		—		4,878		4,878
Accrued income and other assets (repossessions)	—		—		2,811		2,811
Accrued income and other assets (other real estate)	—		—		5,953		5,953
Total	$	—	$	—	$	23,267	$	23,267

December 31, 2012
Impaired loans - collateral based	$	—	$	—	$	2,027	$	2,027
Accrued income and other assets (partnership investments)	—		—		2,032		2,032
Accrued income and other assets (mortgage servicing rights)	—		—		4,645		4,645
Accrued income and other assets (repossessions)	—		—		63		63
Accrued income and other assets (other real estate)	—		—		5,344		5,344
Total	$	—	$	—	$	14,111	$	14,111

Schedule of fair values of financial instruments

	Carrying or
(Dollars in thousands)	Contract Value		Fair Value		Level 1		Level 2		Level 3
September 30, 2013
Assets:
Cash and due from banks	$	90,090	$	90,090	$	90,090	$	—	$	—
Federal funds sold and interest bearing deposits with other banks	1,676		1,676		1,676		—		—
Investment securities, available-for-sale	834,348		834,348		26,878		800,953		6,517
Other investments and trading account securities	22,586		22,586		22,586		—		—
Mortgages held for sale	7,157		7,157		—		7,157		—
Loans and leases, net of reserve for loan and lease losses	3,383,611		3,408,703		—		—		3,408,703
Cash surrender value of life insurance policies	58,057		58,057		58,057		—		—
Mortgage servicing rights	4,878		7,656		—		—		7,656
Interest rate swaps	10,902		10,902		—		10,902		—
Liabilities:
Deposits	$	3,679,416	$	3,686,218	$	2,636,029	$	1,050,189	$	—
Short-term borrowings	221,442		221,442		152,714		68,728		—
Long-term debt and mandatorily redeemable securities	58,440		57,837		—		57,837		—
Subordinated notes	58,764		71,707		—		71,707		—
Interest rate swaps	11,110		11,110		—		11,110		—
Off-balance-sheet instruments *	—		166		—		166		—

December 31, 2012
Assets:
Cash and due from banks	$	83,232	$	83,232	$	83,232	$	—	$	—
Federal funds sold and interest bearing deposits with other banks	702		702		702		—		—
Investment securities, available-for-sale	880,764		880,764		25,756		847,307		7,701
Other investments and trading account securities	22,755		22,755		22,755		—		—
Mortgages held for sale	10,879		10,879		—		10,879		—
Loans and leases, net of reserve for loan and lease losses	3,244,242		3,287,976		—		—		3,287,976
Cash surrender value of life insurance policies	56,572		56,572		56,572		—		—
Mortgage servicing rights	4,645		5,760		—		—		5,760
Interest rate swaps	16,126		16,126		—		16,126		—
Liabilities:
Deposits	$	3,624,347	$	3,641,280	$	2,556,122	$	1,085,158	$	—
Short-term borrowings	169,188		169,188		161,138		8,050		—
Long-term debt and mandatorily redeemable securities	71,021		71,557		—		71,557		—
Subordinated notes	58,764		72,914		—		72,914		—
Interest rate swaps	16,444		16,444		—		16,444		—
Off-balance-sheet instruments *	—		188		—		188		—

* Represents estimated cash outflows required to currently settle the obligations at current market rates.

Recurring

Fair Value Measurements

Schedule of valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a recurring and non-recurring basis

			Valuation
(Dollars in thousands)	Fair Value		Methodology	Unobservable Inputs	Range of Inputs
September 30, 2013
Investment securities available-for sale
Adjustable rate securities	$	1,708	Discounted cash flows	Illiquidity adjustment	4.00% - 8.00%
				Term assumption (1)	5 yrs
				Coupon forecast assumption	0.37%

Direct placement municipal securities	4,809		Discounted cash flows	Credit spread assumption	1.16% - 1.66%
Total investment securities available-for-sale	$	6,517

December 31, 2012
Investment securities available-for sale
Adjustable rate securities	$	3,364	Discounted cash flows	Illiquidity adjustment	4.00% - 8.00%
				Term assumption (1)	5 yrs
				Coupon forecast assumption	0.50% - 0.88%

Direct placement municipal securities	4,337		Discounted cash flows	Credit spread assumption	1.22% - 1.95%
Total investment securities available-for-sale	$	7,701

(1) Term assumption is influenced by security call history

Non-recurring

Fair Value Measurements

Schedule of valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a recurring and non-recurring basis

(Dollars in thousands)	Carrying Value		Fair Value		Valuation Methodology	Unobservable Inputs	Range of Inputs
September 30, 2013
Impaired loans	$	7,608	$	7,608	Collateral based measurements including appraisals, trade publications, auction values	Discount for lack of marketability and current conditions	10% - 90%

Mortgage servicing rights	4,878		7,656		Discounted cash flows	Constant prepayment rate (CPR)	11.1% - 15.7%
						Discount rate	9.75% - 12.75%

Repossessions	2,811		2,957		Appraisals, trade publications and auction values	Discount for lack of marketability	0% - 3%

Other real estate	5,953		7,072		Appraisals	Discount for lack of marketability	0% - 74%

December 31, 2012
Impaired loans	$	2,027	$	2,027	Collateral based measurements including appraisals, trade publications, auction values	Discount for lack of marketability and current conditions	10% - 90%

Mortgage servicing rights	4,645		5,760		Discounted cash flows	Constant prepayment rate (CPR)	14.1% - 23.2%
						Discount rate	8.5% - 11.5%

Repossessions	63		59		Appraisals, trade publications and auction values	Discount for lack of marketability	0% - 45%

Other real estate	5,344		6,550		Appraisals	Discount for lack of marketability	0% - 68%

- 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.

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

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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- Definition

Tabular disclosure of the application of the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected, provide the aggregate carrying amount of ineligible items included in each line item in the balance sheet, if any; (b) the difference between the aggregate fair value and the aggregate unpaid principal balance (assuming contractual principal amounts and fair value option elected) of: (i) loans and long-term receivables (other than securities otherwise reported at fair value) and (ii) long-term debt instruments; (c) for loans held as assets for which the fair value option has been elected: (i) the aggregate fair value of loans that are 90 days or more past due, (ii) if the policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status, and (iii) the difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both; (2) for items included in the income statement: (a) the amounts of gains and losses from fair value changes included in earnings and in which line in the income statement those gains and losses are reported whether or not combined with gains and losses from items required to be accounted for at fair value; (b) for loans and other receivables held as assets, the estimated amount of gains or losses included in earnings attributable to changes in instrument-specific credit risk; (c) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk, the estimated amount of gains and losses from fair value changes included in earnings that are attributable to changes in the instrument-specific credit risk; and (3) certain other disclosures as required or determined to be provided.

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