Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2014

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, 2014
Financial assets:
Securities available for sale:
Obligations of other U.S. Government agencies and corporations	$	—	$	6,113	$	—	$	6,113
Residential mortgage-backed securities:
Government agency mortgage backed securities	—		290,684		—		290,684
Government agency collateralized mortgage obligations	—		154,972		—		154,972
Commercial mortgage-backed securities:
Government agency mortgage backed securities	—		47,087		—		47,087
Government agency collateralized mortgage obligations	—		5,326		—		5,326
Trust preferred securities	—		—		19,573		19,573
Other debt securities	—		18,389		—		18,389
Other equity securities	—		3,479		—		3,479
Total securities available for sale	—		526,050		19,573		545,623
Derivative instruments:
Interest rate swaps	—		—		—		—
Interest rate contracts	—		1,083		—		1,083
Interest rate lock commitments	—		1,630		—		1,630
Forward commitments	—		29		—		29
Total derivative instruments	—		2,742		—		2,742
Mortgage loans held for sale	—		30,451		—		30,451
Total financial assets	$	—	$	559,243	$	19,573	$	578,816
Financial liabilities:
Derivative instruments:
Interest rate swaps	$	—	$	2,472	$	—	$	2,472
Interest rate contracts	—		1,083		—		1,083
Interest rate lock commitments	—		—		—		—
Forward commitments	—		237		—		237
Total derivative instruments	—		3,792		—		3,792
Total financial liabilities	$	—	$	3,792	$	—	$	3,792



	Level 1		Level 2		Level 3		Totals
December 31, 2013
Financial assets:
Securities available for sale:
Obligations of other U.S. Government agencies and corporations	$	—	$	6,068	$	—	$	6,068
Residential mortgage-backed securities:
Government agency mortgage backed securities	—		259,992		—		259,992
Government agency collateralized mortgage obligations	—		146,545		—		146,545
Commercial mortgage-backed securities:
Government agency mortgage backed securities	—		42,041		—		42,041
Government agency collateralized mortgage obligations	—		5,066		—		5,066
Trust preferred securities	—		—		17,671		17,671
Other debt securities	—		19,554		—		19,554
Other equity securities	—		4,317		—		4,317
Total securities available for sale	—		483,583		17,671		501,254
Derivative instruments:
Interest rate swap	—		208		—		208
Interest rate contracts	—		1,812		—		1,812
Interest rate lock commitments	—		464		—		464
Forward commitments	—		335		—		335
Total derivative instruments	—		2,819		—		2,819
Mortgage loans held for sale	—		33,440		—		33,440
Total financial assets	$	—	$	519,842	$	17,671	$	537,513
Financial liabilities:
Derivative instruments:
Interest rate swaps	$	—	$	1,428	$	—	$	1,428
Interest rate contracts	—		1,812		—		1,812
Interest rate lock commitments	—		52		—		52
Forward commitments	—		24		—		24
Total derivative instruments	—		3,316		—		3,316
Total financial liabilities	$	—	$	3,316	$	—	$	3,316

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, 2014 and 2013, respectively:



	Securities available for sale
Three Months Ended September 30, 2014	Trust preferred securities			Other equity securities		Total
Balance at July 1, 2014	$	18,309		$	—	$	18,309
Realized gains included in net income	—			—		—
Unrealized gains included in other comprehensive income	1,896			—		1,896
Purchases	—			—		—
Sales	—			—		—
Issues	—			—		—
Settlements	(632		)	—		(632		)
Transfers into Level 3	—			—		—
Transfers out of Level 3	—			—		—
Balance at September 30, 2014	$	19,573		$	—	$	19,573



	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
Reclassification adjustment	—			—		—
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
Nine Months Ended September 30, 2014	Trust preferred securities			Other equity securities		Total
Balance at January 1, 2014	$	17,671		$	—	$	17,671
Realized gains included in net income	16			—		16
Unrealized gains included in other comprehensive income	2,695			—		2,695
Purchases	—			—		—
Sales	—			—		—
Issues	—			—		—
Settlements	(809		)	—		(809		)
Transfers into Level 3	—			—		—
Transfers out of Level 3	—			—		—
Balance at September 30, 2014	$	19,573		$	—	$	19,573



	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
Reclassification adjustment	—			—		—
Purchases	—			—		—
Sales	—			—		—
Issues	—			—		—
Settlements	(984		)	—		(984		)
Transfers into Level 3	—			—		—
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, 2014 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	$	19,573	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, 2014	Level 1		Level 2		Level 3		Totals
Impaired loans	$	—	$	—	$	7,048	$	7,048
OREO	—		—		7,151		7,151
Total	$	—	$	—	$	14,199	$	14,199



December 31, 2013	Level 1		Level 2		Level 3		Totals
Impaired loans	$	—	$	—	$	11,900	$	11,900
OREO	—		—		36,306		36,306
Total	$	—	$	—	$	48,206	$	48,206

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, 2014			December 31, 2013
OREO covered under loss-share agreements:
Carrying amount prior to remeasurement	$	4,299		$	13,067
Impairment recognized in results of operations	(353		)	(707		)
Increase in FDIC loss-share indemnification asset	(1,413		)	(2,829		)
Receivable from other guarantor	(127		)	(768		)
Fair value	$	2,406		$	8,763
OREO not covered under loss-share agreements:
Carrying amount prior to remeasurement	$	6,060		$	30,436
Impairment recognized in results of operations	(1,315		)	(2,893		)
Fair value	$	4,745		$	27,543

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	$	7,048	Appraised value of collateral less estimated costs to sell	Estimated costs to sell	4-10%
OREO	7,151		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, 2014	Aggregate Fair Value		Aggregate Unpaid Principal Balance		Difference
Mortgage loans held for sale measured at fair value	$	30,451	$	30,276	$	175
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, 2014	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	141,594	$	141,594	$	—	$	—	$	141,594
Securities held to maturity	434,705		—		444,926		—		444,926
Securities available for sale	545,623		—		526,050		19,573		545,623
Mortgage loans held for sale	30,451		—		30,451		—		30,451
Loans covered under loss-share agreements	155,319		—		—		155,839		155,839
Loans not covered under loss-share agreements, net	3,802,120		—		—		3,708,781		3,708,781
FDIC loss-share indemnification asset	17,033		—		—		17,033		17,033
Mortgage servicing rights	11,038		—		—		12,159		12,159
Derivative instruments	2,742		—		2,742		—		2,742
Financial liabilities
Deposits	$	4,763,670	$	3,408,037	$	1,363,925	$	—	$	4,771,962
Short-term borrowings	65,646		65,646		—		—		65,646
Federal Home Loan Bank advances	67,540		—		131,157		—		131,157
Junior subordinated debentures	94,477		—		82,888		—		82,888
Derivative instruments	3,792		—		3,792		—		3,792



			Fair Value
As of December 31, 2013	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	246,648	$	246,648	$	—	$	—	$	246,648
Securities held to maturity	412,075		—		408,567		—		408,567
Securities available for sale	501,254		—		483,583		17,671		501,254
Mortgage loans held for sale	33,440		—		33,440		—		33,440
Loans covered under loss-share agreements	181,674		—		—		182,244		182,244
Loans not covered under loss-share agreements, net	3,651,679		—		—		3,590,446		3,590,446
FDIC loss-share indemnification asset	26,273		—		—		26,273		26,273
Mortgage servicing rights	8,994		—		—		9,840		9,840
Derivative instruments	2,819		—		2,819		—		2,819
Financial liabilities
Deposits	$	4,841,912	$	3,327,688	$	1,520,667	$	—	$	4,848,355
Short-term borrowings	228		2,283		—		—		2,283
Federal Home Loan Bank advances	75,405		—		80,989		—		80,989
Junior subordinated debentures	94,187		—		78,301		—		78,301
Derivative instruments	3,316		—		3,316		—		3,316

- 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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