Fair Value (Tables)

9 Months Ended

Sep. 30, 2017

Estimated Fair Values of Financial Instruments

The following table presents the estimated fair values of the financial instruments at September 30, 2017 and December 31, 2016:


	September 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	70,278	$	70,278	$	67,113	$	67,113
Securities available-for-sale		453,660		453,660		470,996		470,996
Loans, net of deferred fees		1,882,842		1,855,447		1,857,767		1,837,673
Accrued interest receivable		6,502		6,502		7,017		7,017
Federal Home Loan Bank stock		7,084		7,084		5,423		5,423
Bank-owned life insurance		35,840		35,840		35,165		35,165
Interest rate swaps		17		17		150		150

Financial liabilities:
Deposits	$	2,098,157		2,097,073	$	2,148,103	$	2,147,056
Federal Home Loan Bank borrowings		101,000		101,005		65,000		65,043
Subordinated debenture		34,167		34,167		34,096		32,140
Junior subordinated debentures		11,428		7,610		11,311		6,972
Accrued interest payable		672		672		176		176
Interest rate swaps		17		17		81		81

Fair Value Hierarchy for Assets and Liabilities Not Measured at Fair Value

The following table presents information about the level in the fair value hierarchy for the Company’s assets and liabilities not measured and carried at fair value as of September 30, 2017 and December 31, 2016:


	Carrying Amount		Fair Value at September 30, 2017
	Carrying Amount		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	70,278	$	70,278	$	—	$	—
Loans, net of deferred fees		1,882,842		—		—		1,855,447
Accrued interest receivable		6,502		6,502		—		—
Federal Home Loan Bank stock		7,084		7,084		—		—

Financial liabilities:
Deposits	$	2,098,157	$	1,961,663	$	135,410	$	—
Federal Home Loan Bank borrowings		101,000		—		101,005		—
Subordinated debentures		34,167		—		34,167		—
Junior subordinated debentures		11,428		—		7,610		—
Accrued interest payable		672		672		—		—

	Carrying Amount		Fair Value at December 31, 2016
	Carrying Amount		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	67,113	$	67,113	$	—	$	—
Loans		1,857,767		—		—		1,837,673
Accrued interest receivable		7,017		7,017		—		—
Federal Home Loan Bank stock		5,423		5,423		—		—
Bank-owned life insurance		35,165		35,165		—		—

Financial liabilities:
Deposits	$	2,148,103	$	1,969,220	$	177,836	$	—
Federal Home Loan Bank borrowings		65,000		—		65,043		—
Subordinated debentures		34,096		—		32,140		—
Junior subordinated debentures		11,311		—		6,972		—
Accrued interest payable		176		176		—		—

Assets and Liabilities Measured at Fair Value on Recurring Basis

The tables below show assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016:


	Carrying		Fair Value at September 30, 2017
	Value		Level 1		Level 2		Level 3

Financial Assets
Available-for-sale securities
Obligations of U.S. government agencies	$	25,670	$	—	$	25,670	$	—
Obligations of states and political subdivisions		110,474		—		110,474		—
Agency mortgage-backed securities		278,865		—		278,865		—
Private-label mortgage-backed securities		1,518		—		315		1,203
SBA variable rate pools		37,133		—		37,133		—
Interest rate swaps		17		17		—		—

Total assets measured on a recurring basis	$	453,677	$	17	$	452,457	$	1,203

Financial Liabilities

Interest rate swap liabilities measured on a recurring basis	$	17	$	17	$	—	$	—


	Carrying		Fair Value at December 31, 2016
	Value		Level 1		Level 2		Level 3

Available-for-sale securities
Obligations of U.S. government agencies	$	25,620	$	—	$	25,620	$	—
Obligations of states and political subdivisions		110,739		—		110,739		—
Agency mortgage-backed securities		290,036		—		290,036		—
Private-label mortgage-backed securities		1,937		—		569		1,368
SBA variable rate pools		42,664		—		42,664		—
Interest rate swaps		150		150		—		—

Total assets measured on a recurring basis	$	471,146	$	150	$	469,628	$	1,368

Financial Liabilities

Interest rate swap liabilities measured on a recurring basis	$	81	$	81	$	—	$	—

Reconciliation of Private-Label Mortgage-Backed Securities Measured at Fair Value on Recurring Basis

The following table provides a reconciliation of private-label mortgage-backed securities measured at fair value on a recurring basis using unobservable inputs (Level 3) for the three and nine months ended September 30, 2017 and 2016:


	Three months ended						Nine months ended
	September 30,						September 30,
	2017			2016			2017			2016
Beginning balance	$	1,267		$	1,399		$	1,368		$	1,586
Transfers into level 3		—			70			—			70
Transfers out of Level 3		—			—			—			—
Total gains or losses
Included in earnings		(7	)		(2	)		(9	)		(19	)
Included in other comprehensive income		13			64			70			45
Paydowns		(70	)		(77	)		(226	)		(228	)
Purchases, issuances, sales and settlements
Purchases		—			—			—			—
Issuances		—			—			—			—
Sales		—			—			—			—
Settlements		—			—			—			—

Ending balance	$	1,203		$	1,454		$	1,203		$	1,454

Assets Measured at Fair Value on Nonrecurring Basis

The tables below show assets measured at fair value on a nonrecurring basis as of September 30, 2017 and December 31, 2016:


	Carrying		Fair Value
September 30, 2017	Value		Level 1		Level 2		Level 3

Loans measured for impairment (net of government guarantees and specific reserve)	$	458	$	—	$	—	$	458

	Carrying		Fair Value
December 31, 2016	Value		Level 1		Level 2		Level 3

Other real estate owned	$	10,936	$	—	$	—	$	10,936

PACIFIC CONTINENTAL CORP 10-Q