Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Related to Mortgage Loans Held For Sale, Commitments to Originate and Commitments to Sell Disclosures

The aggregate principal amount of the residential real estate mortgage loans held for sale was $11.5 million and $48.4 million, respectively, at December 31, 2013 and 2012. The aggregate fair value of this portfolio was $11.6 million and $50.1 million, respectively, at December 31, 2013 and 2012. As of December 31, 2013 and 2012, the difference between the aggregate fair value and the aggregate principal amount of mortgage loans held for sale amounted to $181 thousand and $1.7 million, respectively. There were no mortgage loans held for sale 90 days or more past due as of December 31, 2013 and 2012.

The following table presents the changes in fair value related to mortgage loans held for sale, commitments to originate fixed-rate residential real estate mortgage loans to be sold and commitments to sell fixed-rate residential real estate mortgage loans for the periods indicated. Changes in fair values are reported as a component of net gains on loan sales and commissions on loans originated for others in the Consolidated Statements of Income.

(Dollars in thousands)
Years ended December 31,	2013			2012			2011
Mortgage loans held for sale		($1,505	)		$970			$716
Commitments to originate	(2,121		)	649			1,968
Commitments to sell	3,618			(1,611		)	(3,119		)
Total changes in fair value		($8	)		$8			($435	)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Items Recorded at Fair Value on a Recurring Basis

The tables below present the balances of assets and liabilities reported at fair value on a recurring basis.

(Dollars in thousands)							Assets/Liabilities at Fair Value
	Fair Value Measurements Using
December 31, 2013	Level 1		Level 2		Level 3
Assets:
Securities available for sale:
Obligations of U.S. government-sponsored enterprises		$—		$55,115		$—		$55,115
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises	—		238,355		—		238,355
States and political subdivisions	—		62,859		—		62,859
Trust preferred securities:
Individual name issuers	—		24,684		—		24,684
Collateralized debt obligations	—		547		—		547
Corporate bonds	—		11,343		—		11,343
Mortgage loans held for sale	—		11,636		—		11,636
Derivative assets (1)
Interest rate swap contracts with customers	—		2,733		—		2,733
Forward loan commitments	—		402		—		402
Total assets at fair value on a recurring basis		$—		$407,674		$—		$407,674
Liabilities:
Derivative liabilities (1)
Mirror swap contracts with customers		$—		$2,703		$—		$2,703
Interest rate risk management swap contracts	—		1,012		—		1,012
Forward loan commitments	—		583		—		583
Total liabilities at fair value on a recurring basis		$—		$4,298		$—		$4,298

(1) Derivative assets are included in other assets and derivative liabilities are reported in other liabilities in the Consolidated Balance Sheets.

(Dollars in thousands)							Assets/Liabilities at Fair Value
	Fair Value Measurements Using
December 31, 2012	Level 1		Level 2		Level 3
Assets:
Securities available for sale:
Obligations of U.S. government-sponsored enterprises		$—		$31,670		$—		$31,670
Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises	—		231,233		—		231,233
States and political subdivisions	—		72,620		—		72,620
Trust preferred securities:
Individual name issuers	—		24,751		—		24,751
Collateralized debt obligations	—		—		843		843
Corporate bonds	—		14,381		—		14,381
Mortgage loans held for sale	—		40,243		9,813		50,056
Derivative assets (1)
Interest rate swap contracts with customers	—		3,851		—		3,851
Forward loan commitments	—		2,469		44		2,513
Total assets at fair value on a recurring basis		$—		$421,218		$10,700		$431,918
Liabilities:
Derivative liabilities (1)
Mirror swap contracts with customers		$—		$3,952		$—		$3,952
Interest rate risk management swap contracts	—		1,619		—		1,619
Forward loan commitments	—		4,005		186		4,191
Total liabilities at fair value on a recurring basis		$—		$9,576		$186		$9,762

(1) Derivatives assets are included in other assets and derivative liabilities are reported in other liabilities in the Consolidated Balance Sheets.

Schedule of Changes in Level Three Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents the changes in Level 3 assets and liabilities measured at fair value on a recurring basis during the periods indicated.

Years ended December 31,	2013												2012
(Dollars in thousands)	Securities Available for Sale (1)			Mortgage Loans Held for Sale (2)			Derivative Assets / (Liabilities) (3)			Total			Securities Available for Sale (1)			Mortgage Loans Held for Sale (2)		Derivative Assets / (Liabilities) (3)			Total
Balance at beginning of period		$843			$9,813			($142	)		$10,514			$887			$—		$—			$887
Gains and losses (realized and unrealized):
Included in earnings (4)	(3,489		)	(150		)	142			(3,497		)	(221		)	—		—			(221		)
Included in other comprehensive income	3,326			—			—			3,326			177			—		—			177
Purchases	—			—			—			—			—			—		—			—
Issuances	—			12,692			—			12,692			—			9,813		(142		)	9,671
Sales	—			(22,355		)	—			(22,355		)	—			—		—			—
Settlements	(133		)	—			—			(133		)	—			—		—			—
Transfers into Level 3	—			—			—			—			—			—		—			—
Transfers out of Level 3	(547		)	—			—			(547		)	—			—		—			—
Balance at end of period		$—			$—			$—			$—			$843			$9,813		($142	)		$10,514

(1) During the periods indicated, Level 3 securities available for sale were comprised of pooled trust preferred debt securities, in the form of collateralized debt obligations.

(2) During the periods indicated, Level 3 mortgage loans held for sale consisted of certain mortgage loans whose fair value was determined utilizing a discounted cash flow analysis.

(3) During the periods indicated, Level 3 derivative assets / liabilities consisted of forward loan commitments (interest rate lock commitments and commitments to sell fixed-rate residential mortgages) whose fair value was determined utilizing a discounted cash flow analysis.

(4) Losses included in earnings for Level 3 securities available for sale were included in net impairment losses recognized in earnings in the Consolidated Statements of Income. Losses included in earnings for Level 3 mortgage loans held for sale and derivative assets and liabilities were included in net gains on loan sales and commissions on loans originated for others in the Consolidated Statements of Income.

Quantitative Information About Level 3 Assets Measured at Fair Value on a Recurring Basis

The following table presents additional quantitative information about assets measured at fair value on a recurring basis for which the Corporation utilized Level 3 inputs to determine fair value at December 31, 2012.

(Dollars in thousands)
	Fair Value			Valuation Technique	Unobservable Input	Range of Inputs Utilized (Weighted Average)
Trust preferred securities:
Collateralized debt obligations		$843		Discounted Cash Flow	Discount Rate	16.75%
					Cumulative Default %	3.3% - 100% (25.7%)
					Loss Given Default %	85% - 100% (90.9%)
Mortgage loans held for sale		$9,813		Discounted Cash Flow	Interest Rate	2.875% - 4.95% (3.71%)
					Credit Risk Adjustment	0.25%
Forward loan commitments - assets		$44		Discounted Cash Flow	Interest Rate	3.25% - 3.875% (3.56%)
					Credit Risk Adjustment	0.25%
Forward loan commitments - liabilities		($186	)	Discounted Cash Flow	Interest Rate	3.25% - 3.875% (3.69%)
					Credit Risk Adjustment	0.25%

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The following table presents the carrying value of certain assets measured at fair value on a nonrecurring basis during the year ended December 31, 2013.

(Dollars in thousands)	Carrying Value at December 31, 2013
	Level 1		Level 2		Level 3		Total
Assets:
Collateral dependent impaired loans		$—		$—		$11,177		$11,177
Property acquired through foreclosure or repossession	—		—		435		435
Total assets at fair value on a nonrecurring basis		$—		$—		$11,612		$11,612

The allowance for loan losses on the collateral dependent impaired loans included above amounted to $453 thousand at December 31, 2013.

The following table presents the carrying value of certain assets measured at fair value on a nonrecurring basis during the year ended December 31, 2012.

(Dollars in thousands)	Carrying Value at December 31, 2012
	Level 1		Level 2		Level 3		Total
Assets:
Collateral dependent impaired loans		$—		$—		$9,550		$9,550
Property acquired through foreclosure or repossession	—		—		1,073		1,073
Total assets at fair value on a nonrecurring basis		$—		$—		$10,623		$10,623

Quantitative Information About Level 3 Assets Measured at Fair Value on a Nonrecurring Basis

The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis for which the Corporation has utilized Level 3 inputs to determine fair value.

(Dollars in thousands)	December 31, 2013
	Fair Value		Valuation Technique	Unobservable Input	Range of Inputs Utilized (Weighted Average)
Collateral dependent impaired loans		$11,177	Appraisals of collateral	Discount for costs to sell	1% - 45% (11%)
				Appraisal adjustments (1)	0% - 50% (2%)
Property acquired through foreclosure or repossession		$435	Appraisals of collateral	Discount for costs to sell	2% - 10% (9%)
				Appraisal adjustments (1)	0% - 22% (13%)

(Dollars in thousands)	December 31, 2012
	Fair Value		Valuation Technique	Unobservable Input	Range of Inputs Utilized (Weighted Average)
Collateral dependent impaired loans		$9,550	Appraisals of collateral	Discount for costs to sell	0% - 50% (11%)
				Appraisal adjustments (1)	0% - 27% (18%)
Property acquired through foreclosure or repossession		$1,073	Appraisals of collateral	Discount for costs to sell	0% - 10% (5%)
				Appraisal adjustments (1)	15% - 34% (21%)

(1) Management may adjust appraisal values to reflect market value declines or other discounts resulting from its knowledge of the property.

Carrying Amounts and Estimated Fair Values of Financial Instruments

The following tables present the carrying amount, estimated fair value and placement in the fair value hierarchy of the Corporation’s financial instruments as of December 31, 2013 and 2012. The tables exclude financial instruments for which the carrying value approximates fair value. Financial assets for which the fair value approximates carrying value include cash and cash equivalents, FHLBB stock, accrued interest receivable and bank-owned life insurance. Financial liabilities for which the fair value approximates carrying value include non-maturity deposits, other borrowings and accrued interest payable.

(Dollars in thousands)					Fair Value Measurements
December 31, 2013	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Securities held to maturity		$29,905		$29,865		$—		$29,865		$—
Loans, net of allowance for loan losses	2,434,998		2,479,527		—		—		2,479,527
Loan servicing rights (1)	2,698		2,767		—		—		2,767
Financial Liabilities:
Time deposits		$790,762		$797,748		$—		$797,748		$—
FHLBB advances	288,082		308,317		—		308,317		—
Junior subordinated debentures	22,681		16,282		—		16,282		—

(1) The carrying value of loan servicing rights is net of $69 thousand in reserves as of December 31, 2013. The estimated fair value does not include such adjustment.

(Dollars in thousands)					Fair Value Measurements
December 31, 2012	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Securities held to maturity		$40,381		$41,420		$—		$41,420		$—
Loans, net of allowance for loan losses	2,263,130		2,350,153		—		—		2,350,153
Loan servicing rights (1)	1,110		1,275		—		—		1,275
Financial Liabilities:
Time deposits		$870,232		$879,705		$—		$879,705		$—
FHLBB advances	361,172		392,805		—		392,805		—
Junior subordinated debentures	32,991		23,371		—		23,371		—

(1) The carrying value of loan servicing rights is net of $165 thousand in reserves as of December 31, 2012. The estimated fair value does not include such adjustment.