Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2013

Fair values of financial assets and liabilities measured on a recurring basis

The following table presents assets and liabilities that are measured at fair value on a recurring basis as of the dates presented:



	Level 1		Level 2		Level 3		Totals
September 30, 2013
Financial assets:
Securities available for sale:
Obligations of other U.S. Government agencies and corporations	$	—	$	6,086	$	—	$	6,086
Residential mortgage-backed securities:
Government agency mortgage backed securities	—		220,930		—		220,930
Government agency collateralized mortgage obligations	—		149,356		—		149,356
Commercial mortgage-backed securities:
Government agency mortgage backed securities	—		42,379		—		42,379
Government agency collateralized mortgage obligations	—		5,111		—		5,111
Trust preferred securities	—		—		16,753		16,753
Other debt securities	—		20,241		—		20,241
Other equity securities	—		3,877		—		3,877
Total securities available for sale	—		447,980		16,753		464,733
Derivative instruments:
Interest rate contracts	—		1,488		—		1,488
Interest rate lock commitments	—		2,376		—		2,376
Total derivative instruments	—		3,864		—		3,864
Mortgage loans held for sale	—		28,466		—		28,466
Total financial assets	$	—	$	480,310	$	16,753	$	497,063
Financial liabilities:
Derivative instruments:
Interest rate swaps	$	—	$	1,904	$	—	$	1,904
Interest rate contracts	—		1,488		—		1,488
Forward commitments	—		1,392		—		1,392
Total derivative instruments	—		4,784		—		4,784
Total financial liabilities	$	—	$	4,784	$	—	$	4,784



	Level 1		Level 2		Level 3		Totals
December 31, 2012
Financial assets:
Securities available for sale:
Obligations of other U.S. Government agencies and corporations	$	—	$	2,442	$	—	$	2,442
Residential mortgage-backed securities:
Government agency mortgage backed securities	—		144,817		—		144,817
Government agency collateralized mortgage obligations	—		117,521		—		117,521
Commercial mortgage-backed securities:
Government agency mortgage backed securities	—		45,058		—		45,058
Government agency collateralized mortgage obligations	—		5,407		—		5,407
Trust preferred securities	—		—		15,068		15,068
Other debt securities	—		22,930		—		22,930
Other equity securities	—		3,068		—		3,068
Total securities available for sale	—		341,243		15,068		356,311
Derivative instruments:
Interest rate contracts	—		3,083		—		3,083
Interest rate lock commitments	—		1,571		—		1,571
Total derivative instruments	—		4,654		—		4,654
Mortgage loans held for sale	—		34,845		—		34,845
Total financial assets	$	—	$	380,742	$	15,068	$	395,810
Financial liabilities:
Derivative instruments:
Interest rate swaps	$	—	$	2,164	$	—	$	2,164
Interest rate contracts	—		3,152		—		3,152
Forward commitments	—		198		—		198
Total derivative instruments	—		5,514		—		5,514
Total financial liabilities	$	—	$	5,514	$	—	$	5,514

Reconciliation for assets and liabilities measured at fair value on a recurring basis

The following tables provide a reconciliation for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs, or Level 3 inputs, during the three and nine months ended September 30, 2013 and 2012, respectively:



	Securities available for sale
Three Months Ended September 30, 2013	Trust preferred securities			Other equity securities		Total
Balance at July 1, 2013	$	15,960		$	—	$	15,960
Realized gains included in net income	—			—		—
Unrealized gains included in other comprehensive income	875			—		875
Purchases	—			—		—
Sales	—			—		—
Issues	—			—		—
Settlements	(82		)	—		(82		)
Transfers into Level 3	—			—		—
Transfers out of Level 3	—			—		—
Balance at September 30, 2013	$	16,753		$	—	$	16,753



	Securities available for sale
Three Months Ended September 30, 2012	Trust preferred securities		Other equity securities			Total
Balance at July 1, 2012	$	12,672	$	2,790		$	15,462
Realized gains included in net income	—		—			—
Unrealized gains included in other comprehensive income	2,670		243			2,913
Reclassification adjustment	—		—			—
Purchases	—		—			—
Sales	—		—			—
Issues	—		—			—
Settlements	—		—			—
Transfers into Level 3	—		—			—
Transfers out of Level 3	—		(3,033		)	(3,033		)
Balance at September 30, 2012	$	15,342	$	—		$	15,342



	Securities available for sale
Nine Months Ended September 30, 2013	Trust preferred securities			Other equity securities		Total
Balance at January 1, 2013	$	15,068		$	—	$	15,068
Realized gains included in net income	—			—		—
Unrealized gains included in other comprehensive income	2,669			—		2,669
Purchases	—			—		—
Sales	—			—		—
Issues	—			—		—
Settlements	—			—		—
Transfers into Level 3	(984		)	—		(984		)
Transfers out of Level 3	—			—		—
Balance at September 30, 2013	$	16,753		$	—	$	16,753

Significant unobservable inputs (Level 3) used in valuation of assets and liabilities measured at fair value on recurring basis

The following table presents information as of September 30, 2013 about significant unobservable inputs (Level 3) used in the valuation of assets and liabilities measured at fair value on a recurring basis:



Financial instrument	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range of Inputs
Trust preferred securities	$	16,753	Discounted cash flows	Default rate	0-100%

Impaired loans measured at fair value on a nonrecurring basis

The following table provides the fair value measurement for assets measured at fair value on a nonrecurring basis that were still held on the Consolidated Balance Sheets as of the dates presented and the level within the fair value hierarchy each is classified:



September 30, 2013	Level 1		Level 2		Level 3		Totals
Impaired loans	$	—	$	—	$	8,574	$	8,574
OREO	—		—		16,650		16,650
Total	$	—	$	—	$	25,224	$	25,224



December 31, 2012	Level 1		Level 2		Level 3		Totals
Impaired loans	$	—	$	—	$	20,178	$	20,178
OREO	—		—		33,761		33,761
Total	$	—	$	—	$	53,939	$	53,939

OREO measured at fair value on a nonrecurring basis

The following table presents OREO measured at fair value on a nonrecurring basis that was still held in the Consolidated Balance Sheets as of the dates presented:



	September 30, 2013			December 31, 2012
OREO covered under loss-share agreements:
Carrying amount prior to remeasurement	$	13,946		$	19,254
Impairment recognized in results of operations	(500		)	(901		)
Increase in FDIC loss-share indemnification asset	(2,001		)	(3,602		)
Receivable from other guarantor	—			(41		)
Fair value	$	11,445		$	14,710
OREO not covered under loss-share agreements:
Carrying amount prior to remeasurement	$	6,401		$	22,277
Impairment recognized in results of operations	(1,196		)	(3,226		)
Fair value	$	5,205		$	19,051

Significant unobservable inputs (Level 3) used in valuation of assets and liabilities measured at fair value on non recurring basis



Financial instrument	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range of Inputs
Impaired loans	$	8,574	Appraised value of collateral less estimated costs to sell	Estimated costs to sell	4-10%
OREO	16,650		Appraised value of property less estimated costs to sell	Estimated costs to sell	4-10%

Summarizes differences between fair value and principal balance for mortgage loans held for sale measure at fair value

The following table summarizes the differences between the fair value and the principal balance for mortgage loans held for sale measured at fair value as of:



September 30, 2013	Aggregate Fair Value		Aggregate Unpaid Principal Balance		Difference
Mortgage loans held for sale measured at fair value	$	28,466	$	28,096	$	370
Past due loans of 90 days or more	—		—		—
Nonaccrual loans	—		—		—

Assets and liabilities not measured and reported at fair value on a recurring basis or nonrecurring basis

The carrying amounts and estimated fair values of the Company’s financial instruments, including those assets and liabilities that are not measured and reported at fair value on a recurring basis or nonrecurring basis, were as follows as of the dates presented:



			Fair Value
As of September 30, 2013	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	233,149	$	233,149	$	—	$	—	$	233,149
Securities held to maturity	440,055		—		438,014		—		438,014
Securities available for sale	464,733		—		447,980		16,753		464,733
Mortgage loans held for sale	28,466		—		28,466		—		28,466
Loans covered under loss-share agreements	195,997		—		—		195,458		195,458
Loans not covered under loss-share agreements, net	3,685,535		—		—		3,644,023		3,644,023
FDIC loss-share indemnification asset	27,825		—		—		27,825		27,825
Mortgage servicing rights	8,336		—		—		8,974		8,974
Derivative instruments	3,869		—		3,869		—		3,869
Financial liabilities
Deposits	$	4,834,756	$	3,284,858	$	1,558,356	$	—	$	4,843,214
Short-term borrowings	6,649		6,649		—		—		6,649
Federal Home Loan Bank advances	76,429		—		82,356		—		82,356
Junior subordinated debentures	94,089		—		71,723		—		71,723
Derivative instruments	4,899		—		4,899		—		4,899



			Fair Value
As of December 31, 2012	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	132,420	$	132,420	$	—	$	—	$	132,420
Securities held to maturity	317,766		—		334,475		—		334,475
Securities available for sale	356,311		—		341,243		15,068		356,311
Mortgage loans held for sale	34,845		—		34,845		—		34,845
Loans covered under loss-share agreements	237,088		—		—		235,890		235,890
Loans not covered under loss-share agreements, net	2,528,818		—		—		2,452,937		2,452,937
FDIC loss-share indemnification asset	44,153		—		—		44,153		44,153
Mortgage servicing rights	4,233		—		—		4,259		4,259
Derivative instruments	4,654		—		4,654		—		4,654
Financial liabilities
Deposits	$	3,461,221	$	2,268,568	$	1,200,785	$	—	$	3,469,353
Short-term borrowings	5,254		5,254		—		—		5,254
Federal Home Loan Bank advances	83,843		—		99,870		—		99,870
Junior subordinated debentures	75,609		—		27,985		—		27,985
Derivative instruments	5,514		—		5,514		—		5,514

- 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 fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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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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