Fair Value Disclosures (Tables)

6 Months Ended

Jun. 30, 2016

Assets and liabilities measured at fair value

Assets and liabilities measured at fair value, including financial assets for which we have elected the fair value option, were as follows:

			Fair Value Measurements Using
	Fair Value Measure- ments		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
June 30, 2016:
Measured at Fair Value on a Recurring Basis:
Assets
Trading securities	$	212	$	212	$	-	$	-
Securities available for sale
U.S. agency		31,679		-		31,679		-
U.S. agency residential mortgage-backed		182,063		-		182,063		-
U.S. agency commercial mortgage-backed		7,996		-		7,996		-
Private label mortgage-backed		26,246		-		26,246		-
Other asset backed		139,846		-		139,846		-
Obligations of states and political subdivisions		158,341		-		158,341		-
Corporate		49,527		-		49,527		-
Trust preferred		2,397		-		2,397		-
Foreign government		1,660		-		1,660		-
Loans held for sale		31,713		-		31,713		-
Derivatives (1)		3,307		-		3,307		-
Liabilities
Derivatives (2)		2,785		-		2,785		-

Measured at Fair Value on a Non-recurring basis:
Assets
Capitalized mortgage loan servicing rights (3)		10,007		-		-		10,007
Impaired loans (4)
Commercial
Income producing - real estate		649		-		-		649
Land, land development & construction-real estate		158		-		-		158
Commercial and industrial		1,638		-		-		1,638
Mortgage
1-4 Family		651		-		-		651
Other real estate (5)
Commercial
Land, land development & construction-real estate		176		-		-		176
Mortgage
1-4 Family		48		-		-		48
Resort lending		92		-		-		92

(1)	Included in accrued income and other assets

(2)	Included in accrued expenses and other liabilities

(3)	Only includes servicing rights that are carried at fair value due to recognition of a valuation allowance.

(4)	Only includes impaired loans with specific loss allocations based on collateral value.

(5)	Only includes other real estate with subsequent write downs to fair value.

			Fair Value Measurements Using
	Fair Value Measure- ments		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Un- observable Inputs (Level 3)
	(In thousands)
December 31, 2015:
Measured at Fair Value on a Recurring Basis:
Assets
Trading securities	$	148	$	148	$	-	$	-
Securities available for sale
U.S. agency		47,512		-		47,512		-
U.S. agency residential mortgage-backed		196,056		-		196,056		-
U.S. agency commercial mortgage-backed		34,028		-		34,028		-
Private label mortgage-backed		4,903		-		4,903		-
Other asset backed		116,904		-		116,904		-
Obligations of states and political subdivisions		144,984		-		144,984		-
Corporate		38,614		-		38,614		-
Trust preferred		2,483		-		2,483		-
Loans held for sale		27,866		-		27,866		-
Derivatives (1)		1,238		-		1,238		-
Liabilities
Derivatives (2)		619		-		619		-

Measured at Fair Value on a Non-recurring basis:
Assets
Capitalized mortgage loan servicing rights (3)		8,481		-		-		8,481
Impaired loans (4)
Commercial
Income producing - real estate		711		-		-		711
Land, land development & construction-real estate		40		-		-		40
Commercial and industrial		1,257		-		-		1,257
Mortgage
1-4 Family		421		-		-		421
Resort lending		129		-		-		129
Other real estate (5)
Commercial
Land, land development & construction-real estate		639		-		-		639
Commercial and industrial		165		-		-		165
Mortgage
1-4 Family		26		-		-		26
Resort lending		107		-		-		107
Home equity - 1st lien		14		-		-		14
Installment
Home equity - 1st lien		36		-		-		36

(1)	Included in accrued income and other assets

(2)	Included in accrued expenses and other liabilities

(3)	Only includes servicing rights that are carried at fair value due to recognition of a valuation allowance.

(4)	Only includes impaired loans with specific loss allocations based on collateral value.

(5)	Only includes other real estate with subsequent write downs to fair value.

Changes in fair value for financial assets

Changes in fair values for financial assets which we have elected the fair value option for the periods presented were as follows:

		Changes in Fair Values for the Six-Month Periods Ended June 30 for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
		2016						2015
		Net Gains (Losses) on Assets				Total Change in Fair Values Included in Current Period		Net Gains (Losses) on Assets						Total Change in Fair Values Included in Current Period
		Securities		Loans		Earnings		Securities			Loans			Earnings
	(In thousands)
Trading securities		$	64	$	-	$	64	$	(23	)	$	-		$	(23	)
Loans held for sale			-		478		478		-			(121	)		(121	)

Quantitative information about Level 3 fair value measurements measured on a non-recurring basis

Quantitative information about Level 3 fair value measurements measured on a non-recurring basis follows:

	Asset Fair Value		Valuation Technique	Unobservable Inputs	Weighted Average
	(In thousands)
June 30, 2016
Capitalized mortgage loan servicing rights	$	10,007	Present value of net servicing revenue	Discount rate		10.05	%
				Cost to service	$	80
				Ancillary income		24
				Float rate		0.98	%
Impaired loans
Commercial (1)		2,240	Sales comparison approach	Adjustment for differences between comparable sales		(1.5	)%
Mortgage		651	Sales comparison approach	Adjustment for differences between comparable sales		4.2
Other real estate
Commercial		176	Sales comparison approach	Adjustment for differences between comparable sales		(22.5	)
Mortgage and installment		140	Sales comparison approach	Adjustment for differences between comparable sales		73.8

December 31, 2015
Capitalized mortgage loan servicing rights	$	8,481	Present value of net servicing revenue	Discount rate		10.04	%
				Cost to service	$	80
				Ancillary income		24
				Float rate		1.73	%
Impaired loans
Commercial (1)		1,605	Sales comparison approach	Adjustment for differences between comparable sales		(2.1	)%
			Income approach	Capitalization rate		9.3
Mortgage		550	Sales comparison approach	Adjustment for differences between comparable sales		0.7
Other real estate
Commercial		804	Sales comparison approach	Adjustment for differences between comparable sales		(3.9	)
Mortgage and installment		183	Sales comparison approach	Adjustment for differences between comparable sales		75.6

(1)

In addition to the valuation techniques and unobservable inputs discussed above, at June 30, 2016 and December 31, 2015, we had an impaired collateral dependent commercial relationship that totaled $0.2 million and $0.4 million, respectively that was primarily secured by collateral other than real estate. Collateral securing this relationship primarily included machinery and equipment and inventory at June 30, 2016 and December 31, 2015. Valuation techniques at June 30, 2016 and December 31, 2015, included appraisals and discounting restructuring firm valuations based on estimates of value recovery of each particular asset type. Discount rates used ranged from 0% to 100% of stated values.

Aggregate fair value and aggregate remaining contractual principal balance for loans held for sale

The following table reflects the difference between the aggregate fair value and the aggregate remaining contractual principal balance outstanding for loans held for sale for which the fair value option has been elected for the periods presented.

	Aggregate Fair Value		Difference		Contractual Principal
	(In thousands)
Loans held for sale
June 30, 2016	$	31,713	$	1,192	$	30,521
December 31, 2015		27,866		714		27,152

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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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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