Fair Value (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of December 31, 2013 and December 31, 2012, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:



	Fair Value		Readily Available Market Prices (Level 1)		Observable Market Data (Level 2)		Company Determined Fair Value (Level 3)
At December 31, 2013:
Financial Assets:
AFS debt securities:
Obligations of states and political subdivisions	$	31,207	$	—	$	31,207	$	—
Mortgage-backed securities issued or guaranteed by U.S. government sponsored enterprises	395,903		—		395,903		—
Collateralized mortgage obligations issued or guaranteed by U.S. government sponsored enterprises	374,435		—		374,435		—
Private issue collateralized mortgage obligations	6,932		—		6,932		—
Trading account assets	2,488		2,488		—		—
Customer interest rate swap agreement	114		—		114		—
Financial Liabilities:
Interest rate swap agreements	3,911		—		3,911		—
Customer interest rate swap agreement	114		—		114		—
At December 31, 2012:
Financial Assets:
AFS debt securities:
Obligations of states and political subdivisions	$	33,040	$	—	$	33,040	$	—
Mortgage-backed securities issued or guaranteed by U.S. government sponsored enterprises	358,148		—		358,148		—
Collateralized mortgage obligations issued or guaranteed by U.S. government sponsored enterprises	381,688		—		381,688		—
Private issue collateralized mortgage obligations	8,174		—		8,174		—
Trading account assets	2,300		2,300		—		—
Customer interest rate swap agreement	496		—		496		—
Financial Liabilities:
Interest rate swap agreements	11,580		—		11,580		—
Customer interest rate swap agreement	496		—		496		—

Summary of Assets Measured at Fair Value on Non Recurring Basis

The table below highlights financial and non-financial assets measured and recorded at fair value on a non-recurring basis as of December 31, 2013 and December 31, 2012. Not included in the table below because they are not recorded at fair value are: (i) impaired loans of $19.4 million and $22.3 million at December 31, 2013 and 2012, respectively; (ii) MSR's reported of $322,000 and $60,000 at December 31, 2013 and 2012, respectively; and (iii) OREO properties of $612,000 at December 31, 2013 (all OREO properties were carried at fair value at December 31, 2012).



	Fair Value		Readily Available Market Prices (Level 1)		Observable Market Data (Level 2)		Company Determined Fair Value (Level 3)
At December 31, 2013:
Financial assets:
Collateral-dependent impaired loans	$	8,557	$	—	$	—	$	8,557
MSRs⁽¹⁾	404				404
Non-financial assets:
Other real estate owned	1,583		—		—		1,583
At December 31, 2012:
Financial assets:
Collateral-dependent impaired loans	$	4,862	$	—	$	—	$	4,862
MSRs⁽¹⁾	482		—		482		—
Non-financial assets:
Other real estate owned	1,313		—		—		1,313

(1) Represents MSRs deemed to be impaired and a valuation allowance was established to carry at fair value at December 31, 2013 and 2012.

Valuation Methodology and Unobservable Inputs for Level Three Assets Measured at Fair Value on Non Recurring Basis

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a non-recurring basis at December 31, 2013 and 2012:



	Fair Value		Valuation Methodology	Unobservable input	Discount Range (Weighted-Average)
December 31, 2013:
Collateral-dependent impaired loans:
Partially charged-off	$	1,874	Market approach appraisal of collateral	Management adjustment of appraisal	0 - 85%	(14%)
Specifically reserved⁽¹⁾	6,683		Market approach appraisal of collateral	Management adjustment of appraisal	7 - 90%	(22%)
Other real estate owned	1,583		Market approach appraisal of collateral	Management adjustment of appraisal	0 - 41%	(16%)
				Estimated selling costs	6 - 10%	(10%)
December 31, 2012:
Collateral-dependent impaired loans:
Partially charged-off	$	2,767	Market approach appraisal of collateral	Management adjustment of appraisal	0 - 37%	(10%)
Specifically reserved⁽¹⁾	2,095		Market approach appraisal of collateral	Management adjustment of appraisal	19 - 63%	(44%)
Other real estate owned	1,313		Market approach appraisal of collateral	Management adjustment of appraisal	0 - 42%	(19%)
				Estimated selling costs	10%	—

(1) The specific reserve for collateral-dependent impaired loans is determined by any loan-to-value ratio in excess of 80% for consumer loans and any loan-to-value ratio in excess of 75% for commercial loans. Appraisals are received on impaired loans in accordance with the Company's internal policy. As such, adjustments to the appraised fair value are made, as necessary, should the appraisal not be current. Adjustments are made to the appraised fair value to reflect changes in known factors, including, but not limited to, property condition, property location, and costs to sell the collateral.

Carrying Amounts and Estimated Fair Value for Financial Instrument Assets and Liabilities

The following table presents the carrying amounts and estimated fair value for financial instrument assets and liabilities at December 31, 2013:



					Fair Value Measurement at December 31, 2013
	Carrying Amount		Fair Value		Readily Available Market Prices (Level 1)		Observable Market Prices (Level 2)		Company Determined Market Prices (Level 3)
Financial assets:
Cash and due from banks	$	51,355	$	51,355	$	51,355	$	—	$	—
AFS securities	808,477		808,477		—		808,477		—
FHLB and FRB stock	19,724		19,724		19,724		—		—
Trading account assets	2,488		2,488		2,488		—		—
Residential real estate loans	563,425		577,153		—		—		577,153
Commercial real estate loans	536,107		535,961		—		—		535,961
Commercial loans	172,105		171,432		—		—		171,432
Home equity loans	269,888		271,041		—		—		271,041
Consumer loans	17,287		17,662		—		—		17,662
MSRs⁽¹⁾	726		1,494		—		1,494		—
Interest receivable	5,808		5,808		—		5,808		—
Investment in CCTA and UBCT	1,331		1,331		—		—		1,331
Customer interest rate swap agreement	114		114		—		114		—
Financial liabilities:
Deposits	$	1,813,824	$	1,817,199	$	1,324,221	$	492,978	$	—
FHLB advances	56,112		59,118		—		59,118		—
Commercial repurchase agreements	30,142		32,038		—		32,038		—
Other borrowed funds	399,916		400,144		400,144		—		—
Junior subordinated debentures	43,922		43,922		—		43,922		—
Interest payable	567		567		567		—		—
Interest rate swap agreements	3,911		3,911		—		3,911		—
Customer interest rate swap agreement	114		114		—		114		—

(1) Reported fair value represents all MSRs currently being serviced by the Company at December 31, 2013, regardless of carrying amount.

The following table presents the carrying amounts and estimated fair value for financial instrument assets and liabilities at December 31, 2012:



					Fair Value Measurement at December 31, 2012
	Carrying Amount		Fair Value		Readily Available Market Prices (Level 1)		Observable Market Prices (Level 2)		Company Determined Market Prices (Level 3)
Financial assets:
Cash and due from banks	$	58,290	$	58,290	$	58,290	$	—	$	—
AFS securities	781,050		781,050		—		781,050		—
FHLB and FRB stock	21,034		21,034		21,034		—		—
Trading account assets	2,300		2,300		2,300		—		—
Residential real estate loans	564,184		591,139		—		—		591,139
Commercial real estate loans	501,037		492,602		—		—		492,602
Commercial loans	183,680		179,519		—		—		179,519
Home equity loans	275,498		277,194		—		—		277,194
Consumer loans	16,423		16,866		—		—		16,866
MSRs⁽¹⁾	542		879		—		879		—
Interest receivable	6,215		6,215		—		6,215		—
Investment in CCTA and UBCT	1,331		1,331		—		—		1,331
Customer interest rate swap agreement	496		496		—		496		—
Financial liabilities:
Deposits	$	1,929,469	$	1,936,446	$	1,339,290	$	597,156	$	—
FHLB advances	56,404		60,813		—		60,813		—
Commercial repurchase agreements	66,187		69,067		—		69,067		—
Other borrowed funds	193,753		193,753		193,753		—		—
Junior subordinated debentures	43,819		43,819		—		43,819		—
Interest payable	905		905		905		—		—
Interest rate swap agreements	11,580		11,580		—		11,580		—
Customer interest rate swap agreement	496		496		—		496		—

(1) Reported fair value represents all MSRs currently being serviced by the Company at December 31, 2012, regardless of carrying amount.

- 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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