Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value of Financial Instruments [Abstract]

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques

For Level 3 assets and liabilities measured at fair value on a recurring and non-recurring basis as of September 30, 2014, the significant unobservable inputs used in the fair value measurements were as follows:

(in thousands)		Fair Value at September 30, 2014	Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Value
Recurring:
Investment Securities – available for sale	$	24,406	Discounted Cash Flow	Discount Rate	Range of Libor+ 5.00% to 12%
Cash Flow Hedge	$	(228)	Discounted Cash Flow	Reuters Third Party Market Quote	99.9%                       (weighted avg 99.9%)
Non-recurring:
Impaired Loans	$	8,099	Market Comparable Properties	Marketability Discount	10% (1)                (weighted avg 10%)
Other Real Estate Owned	$	1,767	Market Comparable Properties	Marketability Discount	10% (1)                (weighted avg 10%)

NOTE:

(1) Range would include discounts taken since appraisal and estimated values

Assets and Liabilities Measured at Fair Value on a Recurring and Nonrecurring Basis

For assets measured at fair value on a recurring and non-recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2014 and December 31, 2013 are as follows:

			Fair Value Measurements at September 30, 2014 Using
		Assets Measured at Fair Value	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)		09/30/2014	(Level 1)		(Level 2)		(Level 3)
Recurring:
Investment securities available-for-sale:
U.S. Treasuries	$	29,618		$	29,618
U.S. government agencies	$	38,759		$	38,759
Residential mortgage-backed agencies	$	46,123		$	46,123
Commercial mortgage-backed agencies	$	26,545		$	26,545
Collateralized mortgage obligations	$	9,368		$	9,368
Obligations of states and political subdivisions	$	48,016		$	48,016
Collateralized debt obligations	$	24,406				$	24,406
Financial Derivative	$	(228)				$	(228)
Non-recurring:
Impaired loans	$	8,099				$	8,099
Other real estate owned	$	1,767				$	1,767

			Fair Value Measurements at December 31, 2013 Using
		Assets Measured at Fair Value	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)		12/31/2013	(Level 1)		(Level 2)		(Level 3)
Recurring:
Investment securities available-for-sale:
U.S. government agencies	$	92,035		$	92,035
Residential mortgage-backed agencies	$	112,444		$	112,444
Commercial mortgage-backed agencies	$	29,905		$	29,905
Collateralized mortgage obligations	$	29,390		$	29,390
Obligations of states and political subdivisions	$	55,277		$	55,277
Collateralized debt obligations	$	17,538				$	17,538
Financial Derivative	$	(457)				$	(457)
Non-recurring:
Impaired loans	$	8,613				$	8,613
Other real estate owned	$	5,591				$	5,591

Reconciliation of Fair Valued Assets Measured on a Recurring Basis

The following tables show a reconciliation of the beginning and ending balances for fair valued assets measured on a recurring basis using Level 3 significant unobservable inputs for the nine- and three-month periods ended September 30, 2014 and 2013:

		Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
(In thousands)		Investment Securities Available for Sale		Cash Flow Hedge
Beginning balance January 1, 2014	$	17,538	$	(457)
Total gains realized/unrealized:
Included in other comprehensive income		6,868		229
Ending balance September 30, 2014	$	24,406	$	(228)
The amount of total gains or losses for the period
included in earnings attributable to the change in
realized/unrealized gains or losses related to assets
still held at the reporting date	$	0	$	0

		Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
(in thousands)		Investment Securities Available for Sale		Cash Flow Hedge
Beginning balance January 1, 2013	$	11,442	$	(849)
Total gains realized/unrealized:
Included in other comprehensive income		4,831		301
Ending balance September 30, 2013	$	16,273	$	(548)
The amount of total gains or losses for the period
included in earnings attributable to the change in
realized/unrealized gains or losses related to assets
still held at the reporting date	$	0	$	0

		Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
(in thousands)		Investment Securities Available for Sale		Cash Flow Hedge
Beginning balance July 1, 2014	$	23,921	$	(272)
Total gains realized/unrealized:
Included in other comprehensive income		485		44
Ending balance September 30, 2014	$	24,406	$	(228)
The amount of total gains or losses for the period
included in earnings attributable to the change in
realized/unrealized gains or losses related to assets
still held at the reporting date	$	0	$	0

		Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
(in thousands)		Investment Securities Available for Sale		Cash Flow Hedge
Beginning balance July 1, 2013	$	15,030	$	(619)
Total gains realized/unrealized:
Included in other comprehensive income		1,243		71
Ending balance September 30, 2013	$	16,273	$	(548)
The amount of total gains or losses for the period
included in earnings attributable to the change in
realized/unrealized gains or losses related to assets
still held at the reporting date	$	0	$	0

Fair Value by Balance Sheet Grouping

The following tables present fair value information about financial instruments, whether or not recognized in the Consolidated Statement of Financial Condition, for which it is practicable to estimate that value. The actual carrying amounts and estimated fair values of the Corporation’s financial instruments that are included in the Consolidated Statement of Financial Condition are as follows:

	September 30, 2014					Fair Value Measurements
	Carrying		Fair		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Cash and due from banks	$	42,916	$	42,916	$	42,916
Interest bearing deposits in banks		8,224		8,224		8,224
Investment securities - AFS		222,835		222,835			$	198,429	$	24,406
Investment securities - HTM		106,961		106,426				103,950		2,476
Restricted bank stock		7,524		7,524				7,524
Loans, net		812,857		816,589						816,589
Accrued interest receivable		3,785		3,785				3,785
Financial Liabilities:
Deposits – non-maturity		670,602		670,602				670,602
Deposits – time deposits		302,431		308,014				308,014
Short-term borrowed funds		47,994		41,372				41,372
Long-term borrowed funds		182,623		187,646				187,646
Accrued interest payable		886		886				886
Financial derivative		228		228						228
Off balance sheet financial instruments		0		0		0

	December 31, 2013					Fair Value Measurements
	Carrying		Fair		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets:
Cash and due from banks	$	32,895	$	32,895	$	32,895
Interest bearing deposits in banks		10,168		10,168		10,168
Investment securities - AFS		336,589		336,589			$	319,051	$	17,538
Investment securities - HTM		3,900		3,590						3,590
Restricted bank stock		7,913		7,913				7,913
Loans, net		796,646		799,937						799,937
Accrued interest receivable		4,342		4,342				4,342
Financial Liabilities:
Deposits- non-maturity		650,761		650,761				650,761
Deposits- time deposits		326,642		333,256				333,256
Short-term borrowed funds		43,676		43,676				43,676
Long-term borrowed funds		182,672		189,135				189,135
Accrued interest payable		7,647		7,647				7,647
Financial derivative		457		457						457
Off balance sheet financial instruments		0		0		0