Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2018

Assets and liabilities measured at fair value 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
March 31, 2018
Financial assets:
Securities available for sale:
Obligations of other U.S. Government agencies and corporations	$	—	$	3,528	$	—	$	3,528
Obligations of states and political subdivisions	—		226,342		—		$	226,342
Residential mortgage-backed securities:
Government agency mortgage backed securities	—		409,470		—		409,470
Government agency collateralized mortgage obligations	—		237,666		—		237,666
Commercial mortgage-backed securities:
Government agency mortgage backed securities	—		27,502		—		27,502
Government agency collateralized mortgage obligations	—		9,872		—		9,872
Trust preferred securities	—		—		10,045		10,045
Other debt securities	—		23,940		—		23,940
Total securities available for sale	—		938,320		10,045		948,365
Derivative instruments:
Interest rate contracts	—		3,636		—		3,636
Interest rate lock commitments	—		4,940		—		4,940
Forward commitments	—		735		—		735
Total derivative instruments	—		9,311		—		9,311
Mortgage loans held for sale	—		204,472		—		204,472
Total financial assets	$	—	$	1,152,103	$	10,045	$	1,162,148
Financial liabilities:
Derivative instruments:
Interest rate swaps	$	—	$	1,385	$	—	$	1,385
Interest rate contracts	—		3,636		—		3,636
Interest rate lock commitments	—		4		—		4
Forward commitments	—		925		—		925
Total derivative instruments	—		5,950		—		5,950
Total financial liabilities	$	—	$	5,950	$	—	$	5,950



	Level 1		Level 2		Level 3		Totals
December 31, 2017
Financial assets:
Securities available for sale:
Obligations of other U.S. Government agencies and corporations	$	—	$	3,564	$	—	$	3,564
Obligations of states and political subdivisions	—		234,481		—		234,481
Residential mortgage-backed securities:
Government agency mortgage backed securities	—		193,950		—		193,950
Government agency collateralized mortgage obligations	—		176,639		—		176,639
Commercial mortgage-backed securities:
Government agency mortgage backed securities	—		31,170		—		31,170
Government agency collateralized mortgage obligations	—		5,006		—		5,006
Trust preferred securities	—		—		9,388		9,388
Other debt securities	—		17,290		—		17,290
Total securities available for sale	—		662,100		9,388		671,488
Derivative instruments:
Interest rate contracts	—		3,171		—		3,171
Interest rate lock commitments	—		2,756		—		2,756
Forward commitments	—		50		—		50
Total derivative instruments	—		5,977		—		5,977
Mortgage loans held for sale	—		108,316		—		108,316
Total financial assets	$	—	$	776,393	$	9,388	$	785,781
Financial liabilities:
Derivative instruments:
Interest rate swaps	$	—	$	2,536	$	—	$	2,536
Interest rate contracts	—		3,171		—		3,171
Interest rate lock commitments	—		4		—		4
Forward commitments	—		328		—		328
Total derivative instruments	—		6,039		—		6,039
Total financial liabilities	$	—	$	6,039	$	—	$	6,039

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 months ended March 31, 2018 and 2017, respectively:



Three Months Ended March 31, 2018	Trust preferred securities
Balance at January 1, 2018	$	9,388
Accretion included in net income	9
Unrealized gains included in other comprehensive income	669
Purchases	—
Sales	—
Issues	—
Settlements	(21		)
Transfers into Level 3	—
Transfers out of Level 3	—
Balance at March 31, 2018	$	10,045



Three Months Ended March 31, 2017	Trust preferred securities
Balance at January 1, 2017	$	18,389
Accretion included in net income	8
Unrealized gains included in other comprehensive income	537
Purchases	—
Sales	—
Issues	—
Settlements	(1,111		)
Transfers into Level 3	—
Transfers out of Level 3	—
Balance at March 31, 2017	$	17,823

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 March 31, 2018 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	$	10,045	Discounted cash flows	Default rate	0-100%

Assets 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:



March 31, 2018	Level 1		Level 2		Level 3		Totals
Impaired loans	$	—	$	—	$	4,228	$	4,228
OREO	—		—		1,636		1,636
Total	$	—	$	—	$	5,864	$	5,864



December 31, 2017	Level 1		Level 2		Level 3		Totals
Impaired loans	$	—	$	—	$	9,251	$	9,251
OREO	—		—		7,392		7,392
Total	$	—	$	—	$	16,643	$	16,643

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:



	March 31, 2018			December 31, 2017
Carrying amount prior to remeasurement	$	1,951		$	8,732
Impairment recognized in results of operations	(315		)	(1,340		)
Fair value	$	1,636		$	7,392

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	$	4,228	Appraised value of collateral less estimated costs to sell	Estimated costs to sell	4-10%
OREO	1,636		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 March 31, 2018:



	Aggregate Fair Value		Aggregate Unpaid Principal Balance		Difference
Mortgage loans held for sale measured at fair value	$	204,472	$	199,539	$	4,933
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 March 31, 2018	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	250,978	$	250,978	$	—	$	—	$	250,978
Securities available for sale	948,365		—		938,320		10,045		948,365
Mortgage loans held for sale	204,472		—		204,472		—		204,472
Loans, net	7,651,669		—		—		7,482,089		7,482,089
Mortgage servicing rights	40,216		—		—		53,426		53,426
Derivative instruments	9,311		—		9,311		—		9,311
Financial liabilities
Deposits	$	8,357,769	$	6,504,003	$	1,843,895	$	—	$	8,347,898
Short-term borrowings	57,753		57,753		—		—		57,753
Other long-term borrowings	86		86		—		—		86
Federal Home Loan Bank advances	7,276		—		7,362		—		7,362
Junior subordinated debentures	86,018		—		77,692		—		77,692
Subordinated notes	114,059		—		116,763		—		116,763
Derivative instruments	5,950		—		5,950		—		5,950



			Fair Value
As of December 31, 2017	Carrying Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	281,453	$	281,453	$	—	$	—	$	281,453
Securities available for sale	671,488		—		662,100		9,388		671,488
Mortgage loans held for sale	108,316		—		108,316		—		108,316
Loans, net	7,574,111		—		—		7,514,185		7,514,185
Mortgage servicing rights	39,339		—		—		47,868		47,868
Derivative instruments	5,977		—		5,977		—		5,977
Financial liabilities
Deposits	$	7,921,075	$	6,114,391	$	1,809,085	$	—	$	7,923,476
Short-term borrowings	89,814		89,814		—		—		89,814
Other long-term borrowings	98		98		—		—		98
Federal Home Loan Bank advances	7,493		—		7,661		—		7,661
Junior subordinated debentures	85,881		—		69,702		—		69,702
Subordinated notes	114,074		—		118,650		—		118,650
Derivative instruments	6,039		—		6,039		—		6,039

- 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 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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