Fair Value of Financial Instruments

FASB ASC 825, “Disclosures about Fair Value of Financial Instruments” requires disclosure of the fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate such value. The methodologies for estimating the fair value of financial assets and financial liabilities measured at fair value on a recurring and non-recurring basis are discussed above. The estimated fair value amounts have been determined by management using available market information and appropriate valuation methodologies, are based on the exit price notion set forth by ASU 2016-1 effective January 1, 2018, and are applied to this disclosure on a prospective basis. Estimated fair value of assets and liabilities carried at cost as of December 31, 2017 were based on an entry price notion. In cases where quoted market prices are not available, fair values are based on estimates using present value or other market value techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. The aggregate fair value amounts presented below do not represent the underlying value of the Corporation.

The carrying amount and fair value of the Corporation’s financial instruments are as follows:



		As of June 30, 2018				As of December 31, 2017
(dollars in thousands)	Fair Value Hierarchy Level*	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	Level 1	$	47,242	$	47,242	$	60,024	$	60,024
Investment securities - available for sale	See Note 19	531,075		531,075		689,202		689,202
Investment securities - trading	See Note 19	8,175		8,175		4,610		4,610
Investment securities – held to maturity	Level 2	7,838		7,547		7,932		7,851
Loans held for sale	Level 2	4,204		4,204		3,794		3,794
Net portfolio loans and leases	Level 3	3,370,103		3,304,479		3,268,333		3,293,802
MSRs	Level 3	5,511		6,695		5,861		6,397
Interest rate swaps	Level 2	6,318		6,318		1,895		1,895
RPAs purchased	Level 2	65		65		21		21
Other assets	Level 3	46,567		46,567		46,799		46,799
Total financial assets		$	4,027,098	$	3,962,367	$	4,088,471	$	4,114,395
Financial liabilities:
Deposits	Level 2	$	3,358,915	$	3,340,565	$	3,373,798	$	3,368,276
Short-term borrowings	Level 2	227,059		227,059		237,865		237,865
Long-term FHLB advances	Level 2	87,808		86,963		139,140		138,685
Subordinated notes	Level 2	98,491		97,629		98,416		95,044
Junior subordinated debentures	Level 2	21,497		23,675		21,416		19,366
Interest rate swaps	Level 2	6,269		6,269		1,895		1,895
RPAs sold	Level 2	1		1		3		3
Other liabilities	Level 3	57,928		57,928		49,071		49,071
Total financial liabilities		$	3,857,968	$	3,840,089	$	3,921,604	$	3,910,205

* See Note 19 in the Notes to Unaudited Consolidated Financial Statements for a description of hierarchy levels.