Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value Measurements

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

	December 31, 2012
	Level 1		Level 2		Level 3			Total
Assets:
Investment securities available-for-sale
U.S. Treasury	$	1,507	$	—	$	—		$	1,507
U.S. government agencies	—		49,850		—			49,850
U.S. government agency mortgage-backed	—		128,738		—			128,738
States and political subdivisions	—		15,723		132			15,855
Corporate Bonds	—		36,886		—			36,886
Collateralized mortgage obligations	—		169,600		—			169,600
Asset-backed securities			167,493		—			167,493
Collateralized debt obligations	—		—		9,957			9,957
Loans held-for-sale	—		9,571		—			9,571
Mortgage servicing rights	—		—		4,116			4,116
Other assets (Interest rate swap agreements net of swap credit valuation)	—		1,349		(47		)	1,302
Other assets (Mortgage banking derivatives)	—		567		—			567
Total	$	1,507	$	579,777	$	14,158		$	595,442
Liabilities:
Other liabilities (Interest rate swap agreements)	$	—	$	1,349	$	—		$	1,349
Other liabilities (Interest rate lock commitments to borrowers)	—		5		—			5
Total	$	—	$	1,354	$	—		$	1,354

	December 31, 2011
	Level 1		Level 2		Level 3			Total
Assets:
Investment securities available-for-sale
U.S. Treasury	$	1,524	$	—	$	—		$	1,524
U.S. government agencies	—		43,398		—			43,398
U.S. government agency mortgage-backed	—		154,007		—			154,007
States and political subdivisions	—		13,671		138			13,809
Corporate Bonds	—		31,389		—			31,389
Collateralized mortgage obligations	—		25,122		—			25,122
Asset-backed securities			28,341		—			28,341
Collateralized debt obligations	—		—		9,974			9,974
Loans held-for-sale	—		12,806		—			12,806
Mortgage servicing rights	—		—		3,487			3,487
Other assets (Interest rate swap agreements net of swap credit valuation)	—		3,152		(80		)	3,072
Other assets (Mortgage banking derivatives)	—		107		—			107
Total	$	1,524	$	311,993	$	13,519		$	327,036
Liabilities:
Other liabilities (Interest rate swap agreements)	$	—	$	3,152	$	—		$	3,152
Other liabilities (Interest rate lock commitments to borrowers)	—		50		—			50
Total	$	—	$	3,202	$	—		$	3,202

Schedule of changes in Level 3 assets and liabilities measured at fair value on a recurring basis

	Year Ended
	December 31, 2012
	Investment securities available-for-sale
	Collateralized Debt Obligations			States and Political Subdivisons			Mortgage Servicing Rights			Interest Rate Swap Valuation
Beginning balance January 1, 2012	$	9,974		$	138		$	3,487		$	(80	)
Transfers into Level 3	—			—			—			—
Transfers out of Level 3	—			—			—			—
Total gains or losses
Included in earnings (or changes in net assets)	172			—			(1,575		)	33
Included in other comprehensive income	(66		)	—			—			—
Purchases, issuances, sales, and settlements
Purchases	—			—			—			—
Issuances	—			—			2,204			—
Settlements	(123		)	(6		)	—			—
Expirations	—			—			—			—
Ending balance December 31, 2012	$	9,957		$	132		$	4,116		$	(47	)

	Year Ended
	December 31, 2011
	Investment securities available-for-sale
	Equity Securities			Collateralized Debt Obligations			States and political subdivisions			Mortgage Servicing Rights			Interest Rate Swap Valuation			Risk Participation Agreement
Beginning balance January 1, 2011	$	6		$	11,073		$	3,000		$	3,897		$	(108	)	$	(38	)
Transfers into Level 3	—			—			138			—			—			—
Transfers out of Level 3	—			—			(3,000		)	—			—			—
Total gains or losses
Included in earnings (or changes in net assets)	—			148			—			(1,571		)	28			38
Included in other comprehensive income	—			(1,122		)	—			—			—			—
Purchases, issuances, sales, and settlements
Purchases	—			—			—			—			—			—
Issuances	—			—			—			1,161			—			—
Settlements	(6		)	(125		)	—			—			—			—
Expirations	—			—			—			—			—			—
Ending balance December 31, 2011	$	—		$	9,974		$	138		$	3,487		$	(80	)	$	—

Schedule of quantitative information about level 3 fair value measurements

The following table and commentary presents quantitative (dollars in thousands) and qualitative information about Level 3 fair value measurements as of December 31, 2012:

Measured at fair value on a recurring basis:	Fair Value			Valuation Methodology	Unobservable Inputs	Range of Input	Weighted Average of Inputs
Collateralized Debt Obligations	$	9,957		Discounted Cash Flow	Discount Rate	Libor + 6%-7%	6.4%
					Prepayment %	0%-76%	16.4%
					Default range	3.1%-100%	19.1%
Mortgage Servicing rights	4,116			Discounted Cash Flow	Discount Rate	10.5%	10.5%
					Prepayment Speed	15.8%	15.8%
Interest Rate Swap Valuation	(47		)	Management estimate of credit risk exposure	Probability of Default	2%-31%	17.9%

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

	December 31, 2012
	Level 1		Level 2		Level 3		Total
Impaired loans(1)	$	—	$	—	$	21,543	$	21,543
Other real estate owned, net(2)	—		—		72,423		72,423
Total	$	—	$	—	$	93,966	$	93,966

(1)  Represents carrying value and related write-downs of loans for which adjustments are substantially based on the appraised value of collateral for collateral-dependent loans, had a carrying amount of $27.8 million, with a valuation allowance of $6.3 million, resulting in a decrease of specific allocations within the provision for loan losses of $6.8 million for the year ending December 31, 2012.  The carrying value of loans fully charged off is zero.

(2)  OREO is measured at the lower of carrying or fair value less costs to sell, had a net carrying amount of $72.4 million, which is made up of the outstanding balance of $109.7 million, net of a valuation allowance of $31.4 million and participations of $5.9 million, at December 31, 2012, resulting in a charge to expense of $16.4 million for the year ended December 31, 2012.

	December 31, 2011
	Level 1		Level 2		Level 3		Total
Impaired loans(1)	$	—	$	—	$	51,075	$	51,075
Other real estate owned, net(2)	—		—		93,290		93,290
Total	$	—	$	—	$	144,365	$	144,365

(1)   Represents carrying value and related write-downs of loans for which adjustments are substantially based on the appraised value of collateral for collateral-dependent loans, had a carrying amount of $64.1 million, with a valuation allowance of $13.0 million, resulting in a decrease of specific allocations within the provision for loan losses of $9.9 million for the year ending December 31, 2011.  The carrying value of loans fully charged off is zero.

(2)   OREO is measured at the lower of carrying or fair value less costs to sell, had a net carrying amount of $93.3 million, which is made up of the outstanding balance of $116.8 million, net of a valuation allowance of $23.5 million, at December 31, 2011, resulting in a charge to expense of $15.1 million for the year ended December 31, 2011.