Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2014

Assets and Liabilities Measured at Fair Value on Recurring Basis

The following tables present our assets and liabilities that are measured at fair value on a recurring basis by fair value hierarchy level at June 30, 2014 and December 31, 2013. There were no transfers between Level 1 and Level 2 for items measured at fair value on a recurring basis during the periods presented.



	June 30, 2014
(dollars in thousands)	Level 1		Level 2		Level 3		Total
ASSETS
Securities available-for-sale:
Obligations of U.S. government corporations and agencies	$	—	$	270,248	$	—	$	270,248
Collateralized mortgage obligations of U.S. government corporations and agencies	—		94,604		—		94,604
Residential mortgage-backed securities of U.S. government corporations and agencies	—		46,389		—		46,389
Commercial mortgage-backed securities of U.S. government corporations and agencies	—		39,920		—		39,920
Obligations of states and political subdivisions	—		128,313		—		128,313
Marketable equity securities	179		8,835		—		9,014
Total securities available-for-sale	179		588,309		—		588,488
Trading securities held in a Rabbi Trust	3,117		—		—		3,117
Total securities	3,296		588,309		—		591,605
Derivative financial assets:
Interest rate swaps	—		14,082		—		14,082
Interest rate lock commitments	—		292		—		292
Forward sale contracts	—		—		—		—
Total Assets	$	3,296	$	602,683	$	—	$	605,979
LIABILITIES
Derivative financial liabilities:
Interest rate swaps	$	—	$	14,050	$	—	$	14,050
Forward sale contracts	—		59		—		$	59
Total Liabilities	$	—	$	14,109	$	—	$	14,109



	December 31, 2013
(dollars in thousands)	Level 1		Level 2		Level 3		Total
ASSETS
Securities available-for-sale:
Obligations of U.S. government corporations and agencies	$	—	$	234,751	$	—	$	234,751
Collateralized mortgage obligations of U.S. government corporations and agencies	—		63,774		—		63,774
Residential mortgage-backed securities of U.S. government corporations and agencies	—		48,669		—		48,669
Commercial mortgage-backed securities of U.S. government corporations and agencies	—		39,052		—		39,052
Obligations of states and political subdivisions	—		114,264		—		114,264
Marketable equity securities	202		8,713		—		8,915
Total securities available-for-sale	202		509,223		—		509,425
Trading securities held in a Rabbi Trust	2,864		—		—		2,864
Total securities	3,066		509,223		—		512,289
Derivative financial assets:
Interest rate swaps	—		13,698		—		13,698
Interest rate lock commitments	—		85		—		85
Forward sale contracts	—		34		—		34
Total Assets	$	3,066	$	523,040	$	—	$	526,106
LIABILITIES
Derivative financial liabilities:
Interest rate swaps	$	—	$	13,647	$	—	$	13,647
Total Liabilities	$	—	$	13,647	$	—	$	13,647

Changes in Assets Classified as Level 3 in Fair Value Hierarchy

The following table presents the changes in assets measured at fair value on a recurring basis for which we have utilized Level 3 inputs to determine the fair value:



	Three Months Ended June 30,					Six Months Ended June 30,
(dollars in thousands)	2014		2013			2014		2013
Balance at beginning of period	$	—	$	312		$	—	$	300
Total gains included in other comprehensive income⁽¹⁾	—		32			—		44
Net purchases, sales, issuances and settlements	—		—			—		—
Transfers out of Level 3	—		(344		)	—		(344		)
Balance at end of period	$	—	$	—		$	—	$	—

⁽¹⁾ Changes in estimated fair value of available-for-sale investments are recorded in accumulated other comprehensive income (loss), while realized gains and losses from sales are recorded in security gains (losses), net in the Consolidated Statements of Comprehensive Income.

Assets Measured at Estimated Fair Value on Nonrecurring Basis by Fair Value Hierarchy



	June 30, 2014								December 31, 2013
(dollars in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
ASSETS
Loans held for sale	$	—	$	—	$	1,300	$	1,300	$	—	$	—	$	1,516	$	1,516
Impaired loans	—		—		14,483		14,483		—		—		19,197		19,197
Other real estate owned	—		—		317		317		—		—		317		317
Mortgage servicing rights	—		—		1,211		1,211		—		—		1,025		1,025
Total Assets	$	—	$	—	$	17,311	$	17,311	$	—	$	—	$	22,055	$	22,055

Carrying Values and Fair Values of Financial Instruments

The carrying values and fair values of our financial instruments at June 30, 2014 and December 31, 2013 are presented in the following tables:



	Carrying Value⁽¹⁾		Fair Value Measurements at June 30, 2014
(dollars in thousands)			Total		Level 1		Level 2		Level 3
ASSETS
Cash and due from banks, including interest-bearing deposits	$	130,235	$	130,235	$	130,235	$	—	$	—
Securities available-for-sale	588,488		588,488		179		588,309		—
Loans held for sale	3,102		3,121		—		—		3,121
Portfolio loans, net of unearned income	3,725,079		3,691,807		—		—		3,691,807
Bank owned life insurance	61,348		61,348		—		61,348		—
FHLB and other restricted stock	15,818		15,818		—		—		15,818
Trading securities held in a Rabbi Trust	3,117		3,117		3,117		—		—
Mortgage servicing rights	2,743		2,890		—		—		2,890
Interest rate swaps	14,082		14,082		—		14,082		—
Interest rate lock commitments	292		292		—		292		—
LIABILITIES
Deposits	$	3,865,246	$	3,867,540	$	—	$	—	$	3,867,540
Securities sold under repurchase agreements	25,269		25,269		—		—		25,269
Short-term borrowings	185,000		185,000		—		—		185,000
Long-term borrowings	20,636		21,779		—		—		21,779
Junior subordinated debt securities	45,619		45,619		—		—		45,619
Interest rate swaps	14,050		14,050		—		14,050		—
Forward sale contracts	59		59		—		59		—
⁽¹⁾ As reported in the Consolidated Balance Sheets

	Carrying Value⁽¹⁾		Fair Value Measurements at December 31, 2013
(dollars in thousands)			Total		Level 1		Level 2		Level 3
ASSETS
Cash and due from banks, including interest-bearing deposits	$	108,356	$	108,356	$	108,356	$	—	$	—
Securities available-for-sale	509,425		509,425		202		509,223		—
Loans held for sale	2,136		2,139		—		—		2,139
Portfolio loans, net of unearned income	3,566,199		3,538,072		—		—		3,538,072
Bank owned life insurance	60,480		60,480		—		60,480		—
FHLB and other restricted stock	13,629		13,629		—		—		13,629
Trading securities held in a Rabbi Trust	2,864		2,864		2,864		—		—
Mortgage servicing rights	2,919		3,143		—		—		3,143
Interest rate swaps	13,698		13,698		—		13,698		—
Interest rate lock commitments	85		85		—		85		—
Forward sale contracts	34		34		—		34		—
LIABILITIES
Deposits	$	3,672,308	$	3,673,624	$	—	$	—	$	3,673,624
Securities sold under repurchase agreements	33,847		33,847		—		—		33,847
Short-term borrowings	140,000		140,000		—		—		140,000
Long-term borrowings	21,810		22,924		—		—		22,924
Junior subordinated debt securities	45,619		45,619		—		—		45,619
Interest rate swaps	13,647		13,647		—		13,647		—

⁽¹⁾ As reported in the Consolidated Balance Sheets

- 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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