FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures

Assets and Liabilities Measured at Fair Value on Recurring Basis

	Fair Value Measurements at
	September 30, 2019 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Financial assets:
Available-for-sale debt securities:
U.S. Treasury securities and U.S. Government agencies	$	—	$	257,302	$	—	$	257,302
Private label mortgage backed security		—		—		3,595		3,595
Mortgage backed securities - residential		—		230,694		—		230,694
Collateralized mortgage obligations		—		66,580		—		66,580
Corporate bonds		—		9,844		—		9,844
Trust preferred security		—		—		4,000		4,000
Total available-for-sale debt securities	$	—	$	564,420	$	7,595	$	572,015
Equity securities with readily determinable fair value:
Freddie Mac preferred stock	$	—	$	882	$	—	$	882
Community Reinvestment Act mutual fund		2,485		—		—		2,485
Total equity securities with readily determinable fair value	$	2,485	$	882	$	—	$	3,367
Mortgage loans held for sale	$	—	$	32,739	$	—	$	32,739
Consumer loans held for investment		—		—		1,187		1,187
Rate lock loan commitments		—		1,193		—		1,193
Mandatory forward contracts		—		211		—		211
Interest rate swap agreements		—		6,483		—		6,483
Financial liabilities:
Interest rate swap agreements	$	—	$	6,620	$	—	$	6,620

	Fair Value Measurements at
	December 31, 2018 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Financial assets:
Available-for-sale debt securities:
U.S. Treasury securities and U.S. Government agencies	$	—	$	216,873	$	—	$	216,873
Private label mortgage backed security		—		—		3,712		3,712
Mortgage backed securities - residential		—		169,209		—		169,209
Collateralized mortgage obligations		—		72,811		—		72,811
Corporate bonds		—		9,058		—		9,058
Trust preferred security		—		—		4,075		4,075
Total available-for-sale debt securities	$	—	$	467,951	$	7,787	$	475,738
Equity securities with readily determinable fair value:
Freddie Mac preferred stock	$	—	$	410	$	—	$	410
Community Reinvestment Act mutual fund		2,396		—		—		2,396
Total equity securities with readily determinable fair value	$	2,396	$	410	$	—	$	2,806
Mortgage loans held for sale	$	—	$	8,971	$	—	$	8,971
Consumer loans held for investment		—		—		1,922		1,922
Rate lock loan commitments		—		356		—		356
Interest rate swap agreements		—		1,264		—		1,264
Financial liabilities:
Mandatory forward contracts	$	—	$	262	$	—	$	262
Interest rate swap agreements		—		1,149		—		1,149

Assets Measured at Fair Value on a Non-Recurring Basis

	Fair Value Measurements at
	September 30, 2019 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Impaired loans:
Residential real estate:
Owner occupied	$	—	$	—	$	3,716	$	3,716
Nonowner occupied		—		—		16		16
Commercial real estate		—		—		3,750		3,750
Commercial & industrial		—		—		339		339
Home equity		—		—		470		470
Total impaired loans*	$	—	$	—	$	8,291	$	8,291
Premises	$	—	$	—	$	1,471	$	1,471

	Fair Value Measurements at
	December 31, 2018 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Consumer loans held for sale	$	—	$	—	$	1,249	$	1,249
Impaired loans:
Residential real estate:
Owner occupied	$	—	$	—	$	4,708	$	4,708
Nonowner occupied		—		—		1,007		1,007
Commercial real estate		—		—		1,255		1,255
Commercial & industrial		—		—		609		609
Home equity		—		—		356		356
Total impaired loans*	$	—	$	—	$	7,935	$	7,935
Premises	$	—	$	—	$	1,694	$	1,694

* The difference between the carrying value and the fair value of impaired loans measured at fair value is reconciled in a subsequent table of this Footnote.

Impaired collateral dependent loans classified with Level 3 fair value hierarchy

(in thousands)	September 30, 2019		December 31, 2018
Carrying amount of loans measured at fair value	$	7,293	$	7,380
Estimated selling costs considered in carrying amount		1,013		913
Valuation allowance		(15)		(358)
Total fair value	$	8,291	$	7,935

Provisions for loss on collateral dependent impaired loans

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2019		2018		2019		2018
Provisions on collateral-dependent, impaired loans	$	1,419	$	117	$	1,442	$	901

Schedule of Impairment charges on premises and equipment

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2019		2018		2019		2018
Impairment charges on premises	$	66	$	126	$	198	$	356

Carrying amount and estimated exit-price fair values of financial instruments

			Fair Value Measurements at
			September 30, 2019:
									Total
	Carrying								Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Assets:
Cash and cash equivalents	$	397,072	$	397,072	$	—	$	—	$	397,072
Available-for-sale debt securities		572,015		—		564,420		7,595		572,015
Held-to-maturity debt securities		63,315		—		63,872		—		63,872
Equity securities with readily determinable fair values		3,367		2,485		882		—		3,367
Mortgage loans held for sale, at fair value		32,739		—		32,739		—		32,739
Consumer loans held for sale, at the lower of cost or fair value		18,504		—		18,504		—		18,504
Loans held for sale in connection with sale of banking centers, at the lower of cost or fair value		130,770		—		130,770		—		130,770
Loans, net		4,617,122		—		—		4,695,637		4,695,637
Federal Home Loan Bank stock		32,242		—		—		—		NA
Accrued interest receivable		13,699		—		13,699		—		13,699
Rate lock loan commitments		1,193		—		1,193		—		1,193
Mandatory forward contracts		211		—		211		—		211
Interest rate swap agreements		6,483		—		6,483		—		6,483
Liabilities:
Noninterest-bearing deposits	$	1,031,553		—	$	1,031,553		—	$	1,031,553
Transaction deposits		2,109,821		—		2,109,821		—		2,109,821
Time deposits		593,378		—		597,044		—		597,044
Deposits held for assumption in connection with sale of banking centers		142,384		—		142,563		—		142,563
Securities sold under agreements to repurchase and other short-term borrowings		167,949		—		167,949		—		167,949
Federal Home Loan Bank advances		1,170,000		—		1,169,392		—		1,169,392
Subordinated note		41,240		—		31,421		—		31,421
Accrued interest payable		2,362		—		2,362		—		2,362
Interest rate swap agreements		6,620		—		6,620		—		6,620

			Fair Value Measurements at
			December 31, 2018:
									Total
	Carrying								Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Assets:
Cash and cash equivalents	$	351,474	$	351,474	$	—	$	—	$	351,474
Available-for-sale debt securities		475,738		—		467,951		7,787		475,738
Held-to-maturity debt securities		65,227		—		64,858		—		64,858
Equity securities with readily determinable fair values		2,806		2,396		410		—		2,806
Mortgage loans held for sale, at fair value		8,971		—		8,971		—		8,971
Consumer loans held for sale, at the lower of cost or fair value		12,838		—		12,838		—		12,838
Loans, net		4,103,552		—		—		4,062,457		4,062,457
Federal Home Loan Bank stock		32,067		—		—		—		NA
Accrued interest receivable		13,942		—		13,942		—		13,942
Rate lock loan commitments		356		—		356		—		356
Interest rate swap agreements		1,264		—		1,264		—		1,264
Liabilities:
Noninterest-bearing deposits	$	1,003,969		—	$	1,003,969		—	$	1,003,969
Transaction deposits		2,035,701		—		2,035,701		—		2,035,701
Time deposits		416,475		—		412,477		—		412,477
Securities sold under agreements to repurchase and other short-term borrowings		182,990		—		182,990		—		182,990
Federal Home Loan Bank advances		810,000		—		804,251		—		804,251
Subordinated note		41,240		—		33,724		—		33,724
Accrued interest payable		1,084		—		1,084		—		1,084
Mandatory forward contracts		262		—		262		—		262
Interest rate swap agreements		1,149		—		1,149		—		1,149

Nonrecurring basis

Fair Value Disclosures

Fair value inputs quantitative information

					Range
	Fair		Valuation	Unobservable	(Weighted
September 30, 2019 (dollars in thousands)	Value		Technique	Inputs	Average)
Impaired loans - residential real estate owner occupied	$	3,716	Sales comparison approach	Adjustments determined for differences between comparable sales	0% - 62%  (12%)
Impaired loans - residential real estate nonowner occupied	$	16	Sales comparison approach	Adjustments determined for differences between comparable sales	5%  (5%)
Impaired loans - commercial real estate	$	3,750	Sales comparison approach	Adjustments determined for differences between comparable sales	1% - 10%  (4%)
Impaired loans - commercial & industrial	$	339	Sales comparison approach	Adjustments determined for differences between comparable sales	3% - 4%  (3%)
Impaired loans - home equity	$	470	Sales comparison approach	Adjustments determined for differences between comparable sales	2% (2%)
Premises	$	1,471	Sales comparison approach	Adjustments determined for differences between comparable sales	36% - 76%  (48%)

					Range
	Fair		Valuation	Unobservable	(Weighted
December 31, 2018 (dollars in thousands)	Value		Technique	Inputs	Average)
Consumer loans held for sale	$	1,249	Sales comparison approach	Adjustments determined for differences between comparable sales	6%  (6%)
Impaired loans - residential real estate owner occupied	$	4,708	Sales comparison approach	Adjustments determined for differences between comparable sales	0% - 67% (9%)
Impaired loans - residential real estate nonowner occupied	$	1,007	Sales comparison approach	Adjustments determined for differences between comparable sales	0% - 27% (15%)
Impaired loans - commercial real estate	$	123	Sales comparison approach	Adjustments determined for differences between comparable sales	21% (21%)
Impaired loans - commercial real estate	$	1,132	Income approach	Adjustments for differences between net operating income expectations	17%  (17%)
Impaired loans - commercial & industrial	$	609	Sales comparison approach	Adjustments determined for differences between comparable sales	3% (3%)
Impaired loans - home equity	$	356	Sales comparison approach	Adjustments determined for differences between comparable sales	0% - 22%  (8%)
Premises	$	1,694	Sales comparison approach	Adjustments determined for differences between comparable sales	27% - 72%  (40%)

Private label mortgage backed security

Fair Value Disclosures

Reconciliation of the Bank's investments measured at fair value on a recurring basis using significant unobservable inputs

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2019		2018		2019		2018
Balance, beginning of period	$	3,615	$	3,926	$	3,712	$	4,449
Total gains or losses included in earnings:
Net change in unrealized gain		(24)		(2)		(58)		(19)
Recovery of actual losses previously recorded		38		39		113		114
Principal paydowns		(34)		(114)		(172)		(695)
Balance, end of period	$	3,595	$	3,849	$	3,595	$	3,849

Private label mortgage backed security | Recurring basis

Fair Value Disclosures

Fair value inputs quantitative information

	Fair		Valuation
September 30, 2019 (dollars in thousands)	Value		Technique	Unobservable Inputs	Range
Private label mortgage backed security	$	3,595	Discounted cash flow	(1) Constant prepayment rate	3.0% - 4.5%
				(2) Probability of default	1.8% - 7.1%
				(3) Loss severity	50% - 75%

	Fair		Valuation
December 31, 2018 (dollars in thousands)	Value		Technique	Unobservable Inputs	Range
Private label mortgage backed security	$	3,712	Discounted cash flow	(1) Constant prepayment rate	6.5% - 8.9%
				(2) Probability of default	1.8% - 4.7%
				(3) Loss severity	50% - 75%

Trust preferred security

Fair Value Disclosures

Reconciliation of the Bank's investments measured at fair value on a recurring basis using significant unobservable inputs

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2019		2018		2019		2018
Balance, beginning of period	$	4,000	$	4,150	$	4,075	$	3,600
Total gains or losses included in earnings:
Discount accretion		10		10		31		30
Net change in unrealized gain		(10)		90		(106)		620
Balance, end of period	$	4,000	$	4,250	$	4,000	$	4,250

Mortgage loans held for sale

Fair Value Disclosures

Schedule of aggregate fair value, contractual balance and unrealized gain

(in thousands)	September 30, 2019		December 31, 2018
Aggregate fair value	$	32,739	$	8,971
Contractual balance		32,243		8,676
Unrealized gain		496		295

Schedule of gains and losses from changes in fair value included in earnings

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2019		2018		2019		2018
Interest income	$	212	$	133	$	484	$	308
Change in fair value		155		(110)		201		33
Total included in earnings	$	367	$	23	$	685	$	341

Consumer loans

Fair Value Disclosures

Schedule of aggregate fair value, contractual balance and unrealized gain

(in thousands)	September 30, 2019		December 31, 2018
Aggregate fair value	$	1,187	$	1,922
Contractual balance		1,384		2,170
Unrealized (loss) gain		(197)		(248)

Schedule of gains and losses from changes in fair value included in earnings

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2019		2018		2019		2018
Interest income	$	94	$	130	$	295	$	457
Change in fair value		14		21		51		(406)
Total included in earnings	$	108	$	151	$	346	$	51

Consumer loans | Recurring basis

Fair Value Disclosures

Fair value inputs quantitative information

	Fair		Valuation
September 30, 2019 (dollars in thousands)	Value		Technique	Unobservable Inputs	Rate
Consumer loans held for investment	$	1,187	Discounted Cash Flows	(1) Constant prepayment rate	25.0%
				(2) Probability of default	21.0%
				(3) Loss severity	21.0%

	Fair		Valuation
December 31, 2018 (dollars in thousands)	Value		Technique	Unobservable Inputs	Rate
Consumer loans held for investment	$	1,922	Discounted Cash Flows	(1) Constant prepayment rate	15.0%
				(2) Probability of default	45.0%
				(3) Loss severity	20.0%