Fair Value of Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2020

Assets Measured at Fair Value on Recurring Basis

The following table presents the Company’s assets and liabilities 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, 2020 and December 31, 2019 (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, 2020
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	56,689	$	—	$	56,689	$	—
Obligations of states and political subdivisions	163,502		—		162,712		790
Mortgage-backed securities	395,511		—		395,511		—
Other securities	2,099		146		1,953		—
Total available-for-sale securities	617,801		146		616,865		790
Derivative assets:
Interest rate swaps	1,002		—		1,002		—
	$	618,803	$	146	$	617,867	$	790
Derivative liabilities:
Interest rate swaps	$	2,710	$	—	$	2,710	$	—
December 31, 2019
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	107,320	$	—	$	107,320	$	—
Obligations of states and political subdivisions	178,433		—		177,460		973
Mortgage-backed securities	396,126		—		396,126		—
Other securities	4,169		219		3,950		—
Total available-for-sale securities	$	686,048	$	219	$	684,856	$	973
Derivative liabilities:
Interest rate swaps	$	325	$	—	$	325	$	—

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



	Obligation of State and Political Subdivisions
	Three months ended
	March 31, 2020			March 31, 2019
Beginning balance	$	973		$	967
Transfers into Level 3	—			—
Transfers out of Level 3	—			—
Total gains or losses:
Included in net income	1			1
Included in other comprehensive income (loss)	—			—
Purchases, issuances, sales and settlements:
Purchases	—			—
Issuances	—			—
Sales	(184		)	—
Settlements	—			—
Ending balance	$	790		$	968
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	$	—		$	—

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, 2020 and 2019 is summarized as follows (in thousands):

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, 2020 and December 31, 2019 (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, 2020
Impaired loans (collateral dependent)	$	9,514	$	—	$	—	$	9,514
Foreclosed assets held for sale	160		—		—		160
Mortgage servicing rights	1,296		—		—		1,296
December 31, 2019
Impaired loans (collateral dependent)	$	12,727	$	—	$	—	$	12,727
Foreclosed assets held for sale	935		—		—		935
Mortgage servicing rights	1,444		—		—		1,444

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 at March 31, 2020 and December 31, 2019 (in thousands).



March 31, 2020	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans (collateral dependent)	$	9,514	Third party valuations	Discount to reflect realizable value	0	%	-	40%	(	20%	)
Foreclosed assets held for sale	160		Third party valuations	Discount to reflect realizable value less estimated selling costs	0	%	-	40%	(	35%	)
Mortgage servicing rights	1,296		Third party valuations	Discount to reflect realizable value	9.0	%	-	11.0%	(	9.1%	)



December 31, 2019	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans (collateral dependent)	$	12,727	Third party valuations	Discount to reflect realizable value	0	%	-	40%	(	20%	)
Foreclosed assets held for sale	935		Third party valuations	Discount to reflect realizable value less estimated selling costs	0	%	-	40%	(	35%	)
Mortgage servicing rights	1,444		Third party valuations	Discount to reflect realizable value	9.5	%	-	12.5%	(	9.7%	)

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, 2020 and December 31, 2019 in accordance with ASC 825 (in thousands):



	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
March 31, 2020
Financial Assets
Cash and due from banks	$	181,100	$	181,100	$	181,100	$	—	$	—
Federal funds sold	927		927		927		—		—
Certificates of deposit investments	4,380		4,380		—		4,380		—
Available-for-sale securities	617,801		617,801		146		616,865		790
Held-to-maturity securities	24,563		24,806		—		24,806		—
Loans held for sale	1,251		1,251		—		1,251		—
Loans net of allowance for loan losses	2,710,171		2,627,881		—		—		2,627,881
Interest receivable	15,422		15,422		—		15,422		—
Federal Reserve Bank stock	9,401		9,401		—		9,401		—
Federal Home Loan Bank stock	5,450		5,450		—		5,450		—
Financial Liabilities
Deposits	$	2,908,627	$	2,920,736	$	—	$	2,353,150	$	567,586
Securities sold under agreements to repurchase	231,649		231,699		—		231,699		—
Interest payable	2,029		2,029		—		2,029		—
Federal Home Loan Bank borrowings	119,921		124,463		—		124,463		—
Other borrowings	5,000		5,000		—		5,000		—
Junior subordinated debentures	18,900		14,632		—		14,632		—



December 31, 2019
Financial Assets
Cash and due from banks	$	84,154	$	84,154	$	84,154	$	—	$	—
Federal funds sold	926		926		926		—		—
Certificates of deposit investments	4,625		4,625		—		4,625		—
Available-for-sale securities	686,048		686,048		219		684,856		973
Held-to-maturity securities	69,542		69,572		—		69,572		—
Loans held for sale	1,820		1,820		—		1,820		—
Loans net of allowance for loan losses	2,666,616		2,622,053		—		—		2,622,053
Interest receivable	15,577		15,577		—		15,577		—
Federal Reserve Bank stock	9,401		9,401		—		9,401		—
Federal Home Loan Bank stock	4,105		4,105		—		4,105		—
Financial Liabilities
Deposits	$	2,917,366	$	2,924,144	$	—	$	2,332,866	$	591,278
Securities sold under agreements to repurchase	208,109		208,016		—		208,016		—
Interest payable	2,261		2,261		—		2,261		—
Federal Home Loan Bank borrowings	113,895		114,510		—		114,510		—
Other borrowings	5,000		5,000		5,000		—		—
Junior subordinated debentures	18,858		15,596		—		15,596		—