Fair Value Disclosures (Tables)

3 Months Ended

Mar. 31, 2017

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)
March 31, 2017:
Measured at Fair Value on a Recurring Basis:
Assets
Trading securities	$	331	$	331	$	-	$	-
Securities available for sale
U.S. agency		28,784		-		28,784		-
U.S. agency residential mortgage-backed		147,874		-		147,874		-
U.S. agency commercial mortgage-backed		12,195		-		12,195		-
Private label mortgage-backed		28,840		-		28,840		-
Other asset backed		145,795		-		145,795		-
Obligations of states and political subdivisions		180,250		-		180,250		-
Corporate		60,967		-		60,967		-
Trust preferred		2,653		-		2,653		-
Foreign government		1,606		-		1,606		-
Loans held for sale		37,613		-		37,613		-
Capitalized mortgage loan servicing rights		14,727		-		-		14,727
Derivatives (1)		2,145		-		2,145		-
Liabilities
Derivatives (2)		1,294		-		1,294		-

Measured at Fair Value on a Non-recurring basis:
Assets
Impaired loans (3)
Commercial
Income producing - real estate		294		-		-		294
Land, land development & construction-real estate		10		-		-		10
Commercial and industrial		1,213		-		-		1,213
Mortgage
1-4 family		169		-		-		169
Resort lending		225		-		-		225
Other real estate (4)
Commercial
Income producing - real estate (5)		2,863		-		2,863		-
Land, land development & construction-real estate		176		-		-		176
Mortgage
1-4 family		146		-		-		146
Resort lending		18		-		-		18

(1)	Included in accrued income and other assets

(2)	Included in accrued expenses and other liabilities

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

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

(5)	Level 2 valuation is based on a signed purchase agreement.

			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, 2016:
Measured at Fair Value on a Recurring Basis:
Assets
Trading securities	$	410	$	410	$	-	$	-
Securities available for sale
U.S. agency		28,988		-		28,988		-
U.S. agency residential mortgage-backed		156,289		-		156,289		-
U.S. agency commercial mortgage-backed		12,632		-		12,632		-
Private label mortgage-backed		34,727		-		34,727		-
Other asset backed		146,709		-		146,709		-
Obligations of states and political subdivisions		170,899		-		170,899		-
Corporate		56,180		-		56,180		-
Trust preferred		2,579		-		2,579		-
Foreign government		1,613		-		1,613		-
Loans held for sale		35,946		-		35,946		-
Derivatives (1)		2,251		-		2,251		-
Liabilities
Derivatives (2)		975		-		975		-

Measured at Fair Value on a Non-recurring basis:
Assets
Capitalized mortgage loan servicing rights (3)		8,163		-		-		8,163
Impaired loans (4)
Commercial
Income producing - real estate		255		-		-		255
Land, land development & construction-real estate		54		-		-		54
Commercial and industrial		1,342		-		-		1,342
Mortgage
1-4 family		361		-		-		361
Other real estate (5)
Commercial
Income producing - real estate (6)		2,863		-		2,863		-
Land, land development & construction-real estate		176		-		-		176
Mortgage
1-4 family		98		-		-		98
Resort lending		133		-		-		133

(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.

(6)	Level 2 valuation is based on a signed purchase agreement.

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 Three-Month Periods Ended March 31 for Items Measured at Fair Value Pursuant to Election of the Fair Value Option
		2017											2016
		Net Gains (Losses) on Assets					Mortgage Loan Servicing, net			Total Change in Fair Values Included in Current Period Earnings			Net Gains (Losses) on Assets					Total Change in Fair Values Included in Current Period
		Securities			Loans		Mortgage Loan Servicing, net						Securities			Loans		Earnings
	(In thousands)
Trading securities		$	(79	)	$	-	$	-		$	(79	)	$	(12	)	$	-	$	(12	)
Loans held for sale			-			581		-			581			-			127		127
Capitalized mortgage loan servicing rights			-			-		(264	)		(264	)		-			-		-

Reconciliation for all assets and (liabilities) measured at fair value on a recurring basis using significant unobservable inputs (Level 3)

A reconciliation for all assets and (liabilities) measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31 follows:

	Capitalized Mortgage Loan Servicing Rights
	Three Months Ended March 31,
	2017			2016

Beginning balance	$	-		$	-
Change in accounting		14,213			-
Beginning balance, as adjusted		14,213			-
Total losses realized and unrealized:
Included in results of operations		(264	)		-
Included in other comprehensive income		-			-
Purchases, issuances, settlements, maturities and calls		778			-
Transfers in and/or out of Level 3		-			-
Ending balance	$	14,727		$	-

Amount of total losses for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities still held at March 31	$	(264	)	$	-

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

	Asset Fair Value		Valuation Technique	Unobservable Inputs	Weighted Average
	(In thousands)
March 31, 2017
Capitalized mortgage
loan servicing rights	$	14,727	Present value of net	Discount rate		10.08	%
			servicing revenue	Cost to service	$	81
				Ancillary income		24
				Float rate		2.05	%

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

	Asset Fair Value		Valuation Technique	Unobservable Inputs	Weighted Average
March 31, 2017	(In thousands)
Impaired loans
Commercial	$	1,517	Sales comparison approach	Adjustment for differences
				between comparable sales		(2.1	)%
Mortgage		394	Sales comparison approach	Adjustment for differences
				between comparable sales		(2.8	)
Other real estate
Commercial		176	Sales comparison approach	Adjustment for differences
				between comparable sales		(22.5	)
Mortgage		164	Sales comparison approach	Adjustment for differences
				between comparable sales		(13.1	)

December 31, 2016
Capitalized mortgage
loan servicing rights	$	8,163	Present value of net servicing revenue	Discount rate		10.07	%
				Cost to service	$	83
				Ancillary income		24
				Float rate		1.97	%
Impaired loans
Commercial (1)		1,446	Sales comparison approach	Adjustment for differences
				between comparable sales		(1.5	)%
Mortgage		361	Sales comparison approach	Adjustment for differences
				between comparable sales		(4.7	)
Other real estate
Commercial		176	Sales comparison approach	Adjustment for differences
				between comparable sales		(22.5	)
Mortgage		231	Sales comparison approach	Adjustment for differences
				between comparable sales		(5.1	)

(1)

In addition to the valuation techniques and unobservable inputs discussed above, at December 31, 2016, we had an impaired collateral dependent commercial relationship that totaled $0.2 million that was primarily secured by collateral other than real estate. Collateral securing this relationship primarily included machinery and equipment and inventory. Valuation techniques 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
March 31, 2017	$	37,613	$	1,018	$	36,595
December 31, 2016		35,946		437		35,509

- 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.

+ References + Details

- 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.

+ References + Details