FAIR VALUE MEASURES (Tables)

3 Months Ended

Mar. 31, 2017

Loans Held for Sale are Carried at Fair Value

The Company’s loans held for sale are carried at fair value and are comprised of the following:

(dollars in thousands)	March 31, 2017		December 31, 2016
Mortgage loans held for sale	$	86,635	$	105,924
SBA loans held for sale		19,002		-
Total loans held for sale	$	105,637	$	105,924

Difference Between Fair Value and Principal Balance for Mortgage Loans Held for Sale Measured at Fair Value

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

(dollars in thousands)	March 31, 2017		December 31, 2016
Aggregate fair value of mortgage loans held for sale	$	86,635	$	105,924
Aggregate unpaid principal balance		83,649		103,691
Past-due loans of 90 days or more		-		-
Nonaccrual loans		-		-

Fair Value Measurements of Assets and Liabilities Measured on Recurring Basis

The following table presents the fair value measurements of assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall as of March 31, 2017 and December 31, 2016:

	Fair Value Measurements on a Recurring Basis As of March 31, 2017
(dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
Financial assets:
U.S. government sponsored agencies	$	1,015	$	-	$	1,015	$	-
State, county and municipal securities		149,556		-		149,556		-
Corporate debt securities		44,902		-		43,402		1,500
Mortgage-backed securities		635,292		-		635,292		-
Loans held for sale		105,637		-		105,637		-
Mortgage banking derivative instruments		4,704		-		4,704		-
Total recurring assets at fair value	$	941,106	$	-	$	939,606	$	1,500

Financial liabilities:
Derivative financial instruments	$	806	$	-	$	806	$	-
Mortgage banking derivative instruments		572		-		572		-
Total recurring liabilities at fair value	$	1,378	$	-	$	1,378	$	-

	Fair Value Measurements on a Recurring Basis As of December 31, 2016
(dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
Financial assets:
U.S. government sponsored agencies	$	1,020	$	-	$	1,020	$	-
State, county and municipal securities		152,035		-		152,035		-
Corporate debt securities		32,172		-		30,672		1,500
Mortgage-backed securities		637,508		-		637,508		-
Loans held for sale		105,924		-		105,924		-
Mortgage banking derivative instruments		4,314		-		4,314		-
Total recurring assets at fair value	$	932,973	$	-	$	931,473	$	1,500

Financial liabilities:
Derivative financial instruments	$	978	$	-	$	978	$	-
Total recurring liabilities at fair value	$	978	$	-	$	978	$	-

Summary of Fair Value Measurements of Assets Measured at Fair Value on Non-Recurring Basis

The following table presents the fair value measurements of assets measured at fair value on a non-recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy as of March 31, 2017 and December 31, 2016:

	Fair Value Measurements on a Nonrecurring Basis
(dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
March 31, 2017
Impaired loans carried at fair value	$	27,643	$	-	$	-	$	27,643
Other real estate owned		2,841		-		-		2,841
Purchased other real estate owned		11,668		-		-		11,668
Total nonrecurring assets at fair value	$	42,152	$	-	$	-	$	42,152
December 31, 2016
Impaired loans carried at fair value	$	28,253	$	-	$	-	$	28,253
Other real estate owned		1,172		-		-		1,172
Purchased other real estate owned		12,540		-		-		12,540
Total nonrecurring assets at fair value	$	41,965	$	-	$	-	$	41,965

Summary of Significant Unobservable Inputs Used in Fair Value Measurement of Level 3 Assets and Liabilities

The following table shows significant unobservable inputs used in the fair value measurement of Level 3 assets and liabilities:

(dollars in thousands)	Fair Value		Valuation Technique	Unobservable Inputs	Range of Discounts	Weighted Average Discount
March 31, 2017
Recurring:
Investment securities available for sale	$	1,500	Discounted par values	Credit quality of underlying issuer	0%		0	%
Nonrecurring:
Impaired loans	$	27,643	Third-party appraisals and discounted cash flows	Collateral discounts and discount rates	15% - 99%		28	%
Other real estate owned	$	2,841	Third-party appraisals, sales contracts, broker price opinions	Collateral discounts and estimated costs to sell	15% - 83%		21	%
Purchased other real estate owned	$	11,668	Third-party appraisals	Collateral discounts and estimated costs to sell	10% - 74%		14	%

December 31, 2016
Recurring:
Investment securities available for sale	$	1,500	Discounted par values	Credit quality of underlying issuer	0%		0	%
Nonrecurring:
Impaired loans	$	28,253	Third-party appraisals and discounted cash flows	Collateral discounts and discount rates	15% - 100%		28	%
Other real estate owned	$	1,172	Third-party appraisals, sales contracts, broker price opinions	Collateral discounts and estimated costs to sell	15% - 74%		22	%
Purchased other real estate owned	$	12,540	Third-party appraisals	Collateral discounts and estimated costs to sell	10% - 74%		15	%

Carrying Amount and Estimated Fair Value of Financial Instruments

The carrying amount and estimated fair value of the Company’s financial instruments, not shown elsewhere in these financial statements, were as follows:

			Fair Value Measurements at March 31, 2017 Using:
(dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	127,164	$	127,164	$	-	$	-	$	127,164
Federal funds sold and interest-bearing accounts		232,045		232,045		-		-		232,045
Loans, net		5,268,621		-		-		5,289,414		5,289,414
Accrued interest receivable		20,412		20,412		-		-		20,412
Financial liabilities:
Deposits	$	5,642,369	$	-	$	5,642,757	$	-	$	5,642,757
Securities sold under agreements to repurchase		40,415		40,415		-		-		40,415
Other borrowings		525,669		-		526,914		-		526,914
Subordinated deferrable interest debentures		84,559		-		68,507		-		68,507
FDIC loss-share payable		6,489		-		-		8,002		8,002
Accrued interest payable		1,614		1,614		-		-		1,614

			Fair Value Measurements at December 31, 2016 Using:
(dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	127,164	$	127,164	$	-	$	-	$	127,164
Federal funds sold and interest-bearing accounts		71,221		71,221		-		-		71,221
Loans, net		5,212,153		-		-		5,236,034		5,236,034
Accrued interest receivable		22,278		22,278		-		-		22,278
Financial liabilities:
Deposits		5,575,163		-		5,575,288		-		5,575,288
Securities sold under agreements to repurchase		53,505		53,505		-		-		53,505
Other borrowings		492,321		-		492,321		-		492,321
Subordinated deferrable interest debentures		84,228		-		67,321		-		67,321
FDIC loss-share payable		6,313		-		-		8,243		8,243
Accrued interest payable		1,501		1,501		-		-		1,501

- 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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