FAIR VALUE (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures

Assets and Liabilities Measured at Fair Value on Recurring Basis

	Fair Value Measurements at
	December 31, 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	$	—	$	134,640	$	—	$	134,640
Private label mortgage backed security		—		—		3,495		3,495
Mortgage backed securities - residential		—		255,847		—		255,847
Collateralized mortgage obligations		—		63,371		—		63,371
Corporate bonds		—		10,002		—		10,002
Trust preferred security		—		—		4,000		4,000
Total available-for-sale debt securities	$	—	$	463,860	$	7,495	$	471,355
Equity securities with readily determinable fair value:
Freddie Mac preferred stock	$	—	$	714	$	—	$	714
Community Reinvestment Act mutual fund		2,474		—		—		2,474
Total equity securities with readily determinable fair value	$	2,474	$	714	$	—	$	3,188
Mortgage loans held for sale	$	—	$	19,224	$	—	$	19,224
Consumer loans held for sale		—		—		598		598
Consumer loans held for investment		—		—		998		998
Rate lock loan commitments		—		789		—		789
Interest rate swap agreements		—		5,062		—		5,062
Financial liabilities:
Mandatory forward contracts	$	—	$	131	$	—	$	131
Interest rate swap agreements		—		5,166		—		5,166

	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
	December 31, 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	$	—	$	—	$	3,598	$	3,598
Nonowner occupied		—		—		14		14
Commercial real estate		—		—		3,276		3,276
Commercial & industrial		—		—		1,562		1,562
Home equity		—		—		470		470
Total impaired loans*	$	—	$	—	$	8,920	$	8,920
Premises	$	—	$	—	$	836	$	836

	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

December 31, (in thousands)	2019		2018
Carrying amount of loans measured at fair value	$	7,729	$	7,380
Estimated selling costs considered in carrying amount		1,193		913
Valuation allowance		(2)		(358)
Total fair value	$	8,920	$	7,935

Provisions for loss on collateral dependent impaired loans

Years Ended December 31, (in thousands)	2019		2018		2017
Provisions on collateral-dependent, impaired loans	$	3,039	$	1,629	$	169

Other Real Estate Owned

December 31, (in thousands)	2019		2018		2017
Other real estate owned carried at fair value	$	—	$	—	$	83
Other real estate owned carried at cost		113		160		32
Total carrying value of other real estate owned	$	113	$	160	$	115
Other real estate owned write-downs during the years ended	$	—	$	—	$	155

Schedule of Impairment charges on premises and equipment

Years Ended December 31, (in thousands)	2019		2018		2017
Impairment charges on premises	$	256	$	482	$	1,175

Carrying amount and estimated fair values of financial instruments

			Fair Value Measurements at
			December 31, 2019:
									Total
	Carrying								Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Assets:
Cash and cash equivalents	$	385,303	$	385,303	$	—	$	—	$	385,303
Available-for-sale debt securities		471,355		—		463,860		7,495		471,355
Held-to-maturity debt securities		62,531		—		63,156		—		63,156
Equity securities with readily determinable fair values		3,188		2,474		714		—		3,188
Mortgage loans held for sale, at fair value		19,224		—		19,224		—		19,224
Consumer loans held for sale, at fair value		598		—		—		598		598
Consumer loans held for sale, at the lower of cost or fair value		11,646		—		—		11,646		11,646
Loans, net		4,389,800		—		—		4,381,396		4,381,396
Federal Home Loan Bank stock		30,831		—		—		—		NA
Accrued interest receivable		12,937		—		12,937		—		12,937
Rate lock loan commitments		789		—		789		—		789
Interest rate swap agreements		5,062		—		5,062		—		5,062
Liabilities:
Noninterest-bearing deposits	$	1,033,379		—	$	1,033,379		—	$	1,033,379
Transaction deposits		2,018,687		—		2,018,687		—		2,018,687
Time deposits		733,942		—		737,733		—		737,733
Securities sold under agreements to repurchase and other short-term borrowings		167,617		—		167,617		—		167,617
Federal Home Loan Bank advances		750,000		—		749,667		—		749,667
Subordinated note		41,240		—		32,587		—		32,587
Accrued interest payable		2,802		—		2,802		—		2,802
Mandatory forward contracts		131		—		131		—		131
Interest rate swap agreements		5,166		—		5,166		—		5,166

NA - Not applicable

			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

NA - Not applicable

Nonrecurring basis

Fair Value Disclosures

Fair value inputs quantitative information

					Range
	Fair		Valuation	Unobservable	(Weighted
December 31, 2019 (dollars in thousands)	Value		Technique	Inputs	Average)
Impaired loans - residential real estate owner occupied	$	3,598	Sales comparison approach	Adjustments determined for differences between comparable sales	0% - 58% (12%)
Impaired loans - residential real estate nonowner occupied	$	14	Sales comparison approach	Adjustments determined for differences between comparable sales	5% (5%)
Impaired loans - commercial real estate	$	3,276	Sales comparison approach	Adjustments determined for differences between comparable sales	1% - 10%  (4%)
Impaired loans - commercial & industrial	$	1,562	Sales comparison approach	Adjustments determined for differences between comparable sales	3% - 50%  (37%)
Impaired loans - home equity	$	470	Sales comparison approach	Adjustments determined for differences between comparable sales	2% (2%)
Premises	$	836	Sales comparison approach	Adjustments determined for differences between comparable sales	39% - 77% (55%)

					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

Years Ended December 31, (in thousands)	2019		2018		2017
Balance, beginning of period	$	3,712	$	4,449	$	4,777
Total gains or losses included in earnings:
Net change in unrealized gain		(79)		(20)		298
Recovery of actual losses previously recorded		151		152		—
Principal paydowns		(289)		(869)		(626)
Balance, end of period	$	3,495	$	3,712	$	4,449

Private label mortgage backed security | Recurring basis

Fair Value Disclosures

Fair value inputs quantitative information

	Fair		Valuation
December 31, 2019 (dollars in thousands)	Value		Technique	Unobservable Inputs	Range
Private label mortgage backed security	$	3,495	Discounted cash flow	(1) Constant prepayment rate	2.3% - 5.0%
				(2) Probability of default	1.8% - 6.3%
				(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

Years Ended December 31, (in thousands)	2019		2018		2017
Balance, beginning of period	$	4,075	$	3,600	$	3,200
Total gains or losses included in earnings:
Discount accretion		42		40		44
Net change in unrealized gain		(117)		435		356
Balance, end of period	$	4,000	$	4,075	$	3,600

Mortgage loans held for sale

Fair Value Disclosures

Schedule of aggregate fair value, contractual balance and unrealized gain

December 31, (in thousands)	2019		2018
Aggregate fair value	$	19,224	$	8,971
Contractual balance		18,690		8,676
Unrealized gain		534		295

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

Years Ended December 31, (in thousands)	2019		2018		2017
Interest income	$	697	$	402	$	346
Change in fair value		239		203		(1)
Total included in earnings	$	936	$	605	$	345