Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2013

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 December 31, 2013 and 2012:


	Fair Value Measurements on a Recurring Basis As of December 31, 2013
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
U.S. government sponsored agencies	$	13,926	$	-	$	13,926	$	-
State, county and municipal securities		112,754		-		112,754		-
Collateralized debt obligations		1,480		1,480		-		-
Corporate debt securities		10,325		-		8,325		2,000
Mortgage-backed securities		347,750		182,461		165,289		-
Mortgage loans held for sale		67,278		-		67,278		-

Total recurring assets at fair value	$	553,513	$	183,941	$	367,572	$	2,000


Derivative financial instruments	$	370	$	-	$	370	$	-

Total recurring liabilities at fair value	$	370	$	-	$	370	$	-


	Fair Value Measurements on a Recurring Basis As of December 31, 2012
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
U.S. government sponsored agencies	$	6,870	$	-	$	6,870	$	-
State, county and municipal securities		114,390		4,854		109,536		-
Corporate debt securities		10,328		-		8,328		2,000
Mortgage backed securities		215,321		23,893		191,428		-
Mortgage loans held for sale		48,786		-		48,786		-

Total recurring assets at fair value	$	395,695	$	28,747	$	364,948	$	2,000

Derivative financial instruments	$	2,978	$	-	$	2,978	$	-

Total recurring liabilities at fair value	$	2,978	$	-	$	2,978	$	-

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 December 31, 2013 and 2012:


	Fair Value Measurements on a Nonrecurring Basis As of December 31, 2013
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans carried at fair value	$	42,546	$	-	$	-	$	42,546
Other real estate owned		33,351		-		-		33,351
Purchased, non-covered loans		448,753		-		-		448,753
Purchased, non-covered other real estate owned		4,276		-		-		4,276
Covered loans		390,237		-		-		390,237
Covered other real estate owned		45,893		-		-		45,893

Total nonrecurring assets at fair value	$	965,056	$	-	$	-	$	965,056


	Fair Value Measurements on a Nonrecurring Basis As of December 31, 2012
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in Thousands)
Impaired loans carried at fair value	$	52,514	$	-	$	-	$	52,514
Other real estate owned		39,850		-		-		39,850
Covered loans		507,712		-		-		507,712
Covered other real estate owned		88,273		-		-		88,273

Total nonrecurring assets at fair value	$	688,349	$	-	$	-	$	688,349

Summary of Significant Unobservable Inputs Used in the 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.


Measurements	Fair Value at December 31, 2013		Valuation Technique	Unobservable Inputs	Range
(Dollars in Thousands)
Nonrecurring:
Impaired loans	$	42,546	Third party appraisals and discounted cash flows	Collateral discounts and discount rates	4.00% - 75.00%
Other real estate owned	$	33,351	Third party appraisals	Collateral discounts and estimated costs to sell	10.00% - 74.00%
Purchased, non-covered loans	$	448,753	Third party appraisals and discounted cash flows	Collateral discounts and discount rates	1.00% - 40.00%
Purchased non-covered other real estate owned	$	4,276	Third party appraisals	Collateral discounts and estimated costs to sell	15.00% - 63.00%
Covered loans	$	390,237	Third party appraisals and discounted cash flows	Collateral discounts Discount rate	1.75% - 75.00%
Covered real estate owned	$	45,893	Third party appraisals	Collateral discounts and estimated costs to sell	10.00% - 86.00%
Recurring:
Investment securities available for sale	$	2,000	Discounted par values	Credit quality of underlying issuer	0.00%

Schedule of Company's Reconciliation of Level 3 Assets

The transfers between the fair value hierarchy levels during the years ended December 31, 2013 and 2012 involved the transferring of loans to impaired loans, impaired loans to other real estate owned and covered loans to covered other real estate owned. These transfers are reflected in the Company’s reconciliation of Level 3 assets below.


	Investment securities available for sale		Impaired loans carried at fair value			Other real estate owned			Purchased, non- covered loans		Purchased, non- covered other real estate owned		Covered loans			Covered other real estate owned
									(Dollars in Thousands)
Beginning balance, January 1, 2012	$	2,000	$	70,296		$	50,301		$	-	$	-	$	571,489		$	78,617
Total gains (losses) included in net income		-		-			(11,843	)		-		-		-			2,892
Purchases, sales, issuances, and settlements, net		-		-			(20,428	)		-		-		(20,479	)		(36,534	)
Transfers in or out of Level 3		-		-			4,038			-		-		-			-
Asset reclassification, within Level 3		-		(17,782	)		17,782			-		-		(43,298	)		43,298

Ending balance, December 31, 2012		2,000		52,514			39,850			-		-		507,712			88,273
Total gains (losses) included in net income		-		-			(5,883	)		-		-		-			(3,280	)
Purchases, sales, issuances, and settlements, net		-		(831	)		(9,753	)		448,753		4,276		(85,642	)		(57,818	)
Transfers in or out of Level 3		-		-			-			-		-		-			(13,115	)
Asset reclassification, within Level 3		-		(9,137	)		9,137			-		-		(31,833	)		31,833

Ending balance, December 31, 2013	$	2,000	$	42,546		$	33,351		$	448,753	$	4,276	$	390,237		$	45,893

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 December 31, 2013 Using:
	Carrying Amount		Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Financial assets:
Loans, net	$	2,435,067	$	-	$	1,565,919	$	881,536	$	2,447,455

Financial liabilities:
Deposits	$	2,999,231	$	-	$	3,000,061	$	-	$	3,000,061
Other borrowings	$	194,572	$	-	$	194,572	$	-	$	194,572

			Fair Value Measurements at December 31, 2012 Using:
	Carrying Amount		Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Financial assets:
Loans, net	$	1,934,754	$	-	$	1,406,366	$	560,226	$	1,966,592

Financial liabilities:
Deposits	$	2,624,663	$	-	$	2,624,883	$	-	$	2,624,883

- 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, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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