Fair Value of Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2016

Assets Measured at Fair Value on Recurring Basis

The following table presents the Company’s assets that are 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, 2016 and December 31, 2015 (in thousands):



			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2016
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	81,548	$	—	$	81,548	$	—
Obligations of states and political subdivisions	111,128		—		111,128		—
Mortgage-backed securities	319,892		—		319,892		—
Trust preferred securities	1,698		—		—		1,698
Other securities	4,073		87		3,986		—
Total available-for-sale securities	$	518,339	$	87	$	516,554	$	1,698
December 31, 2015
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	90,141	$	—	$	90,141	$	—
Obligations of states and political subdivisions	110,717		—		110,717		—
Mortgage-backed securities	312,054		—		312,054		—
Trust preferred securities	1,906		—		—		1,906
Other securities	4,030		64		3,966		—
Total available-for-sale securities	$	518,848	$	64	$	516,878	$	1,906

Fair Value of Assets Measured on a Recurring Basis Using Significant Unobservable Inputs

The change in fair value of assets measured on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2016 and 2015 is summarized as follows (in thousands):



	Trust Preferred Securities
	March 31, 2016			March 31, 2015
Beginning balance	$	1,906		$	364
Transfers into Level 3	—			—
Transfers out of Level 3	—			—
Total gains or losses:
Included in net income	—			—
Included in other comprehensive income (loss)	(191		)	1,847
Purchases, issuances, sales and settlements:
Purchases	—			—
Issuances	—			—
Sales	—			—
Settlements	(17		)	(45		)
Ending balance	$	1,698		$	2,166
Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date	$	—		$	—

Assets Measured at Fair Value on a Nonrecurring Basis

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2016 and December 31, 2015 (in thousands):



	Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2016
Impaired loans (collateral dependent)	$	594	$	—	$	—	$	594
Foreclosed assets held for sale	27		—		—		27
December 31, 2015
Impaired loans (collateral dependent)	$	294	$	—	$	—	$	294
Foreclosed assets held for sale	423		—		—		423

Significant Assumptions Used in Valuation of Level 3 Financial Instruments

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements other than goodwill (in thousands).



March 31, 2016	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Trust Preferred Securities	$	1,698	Discounted cash flow	Discount rate	11.4%
				Constant prepayment rate (1)	1.3%
				Cumulative projected prepayments	23.6%
				Probability of default	0.4%
				Projected cures given deferral	100.0%
				Loss severity	97.3%
Impaired loans (collateral dependent)	$	594	Third party valuations	Discount to reflect realizable value	0	%	-	40%	(	20%	)
Foreclosed assets held for sale	$	27	Third party valuations	Discount to reflect realizable value less estimated selling costs	0	%	-	40%	(	35%	)



December 31, 2015	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Trust Preferred Securities	$	1,906	Discounted cash flow	Discount rate	11.4%
				Constant prepayment rate (1)	1.3%
				Cumulative projected prepayments	23.6%
				Probability of default	0.4%
				Projected cures given deferral	100.0%
				Loss severity	97.3%
Impaired loans (collateral dependent)	$	294	Third party valuations	Discount to reflect realizable value	0	%	-	40%	(	20%	)
Foreclosed assets held for sale	$	423	Third party valuations	Discount to reflect realizable value less estimated selling costs	0	%	-	40%	(	35%	)

(1) Every five years

Carrying Amounts and Estimated Fair Values of Financial Instruments Not Carried at Fair Value

The following tables present estimated fair values of the Company’s financial instruments at March 31, 2016 and December 31, 2015 in accordance with FAS 107-1 and APB 28-1, codified with ASC 805 (in thousands):



	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
March 31, 2016
Financial Assets
Cash and due from banks	$	79,208	$	79,208	$	79,208	$	—	$	—
Federal funds sold	491		491		491		—		—
Certificates of deposit investments	34,730		34,826		—		34,826		—
Available-for-sale securities	518,339		518,339		87		516,554		1,698
Held-to-maturity securities	97,382		98,362		—		98,362		—
Loans held for sale	1,738		1,738		—		1,738		—
Loans net of allowance for loan losses	1,260,431		1,260,043		—		—		1,260,043
Interest receivable	7,592		7,592		—		7,592		—
Federal Reserve Bank stock	2,272		2,272		—		2,272		—
Federal Home Loan Bank stock	3,391		3,391		—		3,391		—
Financial Liabilities
Deposits	$	1,740,354	$	1,740,651	$	—	$	1,501,530	$	239,121
Securities sold under agreements to repurchase	116,689		116,701		—		116,701		—
Interest payable	367		367		—		367		—
Federal Home Loan Bank borrowings	20,000		20,805		—		20,805		—
Junior subordinated debentures	20,620		13,026		—		13,026		—



December 31, 2015
Financial Assets
Cash and due from banks	$	115,292	$	115,292	$	115,292	$	—	$	—
Federal funds sold	492		492		492		—		—
Certificates of deposit investments	25,000		25,056		—		25,056		—
Available-for-sale securities	518,848		518,848		64		516,878		1,906
Held-to-maturity securities	85,208		85,737		—		85,737		—
Loans held for sale	968		968		—		968		—
Loans net of allowance for loan losses	1,266,345		1,265,126		—		—		1,265,126
Interest receivable	8,085		8,085		—		8,085		—
Federal Reserve Bank stock	2,272		2,272		—		2,272		—
Federal Home Loan Bank stock	3,391		3,391		—		3,391		—
Financial Liabilities
Deposits	$	1,732,568	$	1,732,463	$	—	$	1,489,130	$	243,333
Securities sold under agreements to repurchase	128,842		128,843		—		128,843		—
Interest payable	356		356		—		356		—
Federal Home Loan Bank borrowings	20,000		20,422		—		20,422		—
Junior subordinated debentures	20,620		13,207		—		13,207		—