Fair Value Measurements

3 Months Ended

Mar. 31, 2025

Fair Value Disclosures [Abstract]

Fair Value Measurements

12. Fair Value Measurements

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2025, and December 31, 2024, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.

Fair values determined by Level 1 inputs utilize quoted prices in active markets for identical assets and liabilities that the Company has the ability to access. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the hierarchy. In such cases, the fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 (in thousands):

	Fair Value Measurement at March 31, 2025
Description	March 31, 2025		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
U.S. Treasury	$	629	$	629	$	—	$	—
U.S. Agencies		6,980		—		6,980		—
State and political subdivisions		13,228		—		13,228		—
Corporates		12,494		12,494		—		—
Trading – other		2,130		2,130		—		—
Trading securities		35,461		15,253		20,208		—
U.S. Treasury		1,585,179		1,585,179		—		—
U.S. Agencies		107,664		—		107,664		—
Mortgage-backed		5,960,927		—		5,960,927		—
State and political subdivisions		2,430,300		—		2,430,300		—
Corporates		298,461		298,461		—		—
Collateralized loan obligations		513,128		—		513,128		—
Available-for-sale securities		10,895,659		1,883,640		9,012,019		—
Equity securities with readily determinable fair values		12,032		12,032		—		—
Derivatives		294,003		—		294,003		—
Total	$	11,237,155	$	1,910,925	$	9,326,230	$	—
Liabilities
Derivatives	$	145,962	$	—	$	145,962	$	—
Securities sold not yet purchased		11,925		—		11,925		—
Total	$	157,887	$	—	$	157,887	$	—

	Fair Value Measurement at December 31, 2024
Description	December 31, 2024		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
U.S. Treasury	$	1,620	$	1,620	$	—	$	—
U.S. Agencies		8,369		—		8,369		—
State and political subdivisions		11,469		—		11,469		—
Corporates		6,935		6,935		—		—
Trading – other		140		140		—		—
Trading securities		28,533		8,695		19,838		—
U.S. Treasury		1,326,073		1,326,073		—		—
U.S. Agencies		129,047		—		129,047		—
Mortgage-backed		4,420,930		—		4,420,930		—
State and political subdivisions		1,218,569		—		1,218,569		—
Corporates		317,170		317,170		—		—
Collateralized loan obligations		362,545		—		362,545		—
Available for sale securities		7,774,334		1,643,243		6,131,091		—
Equity securities with readily determinable fair values		11,596		11,596		—		—
Derivatives		234,443		—		234,443		—
Total	$	8,048,906	$	1,663,534	$	6,385,372	$	—
Liabilities
Derivatives	$	107,442	$	—	$	107,442	$	—
Securities sold not yet purchased		7,100		—		7,100		—
Total	$	114,542	$	—	$	114,542	$	—

Valuation methods for instruments measured at fair value on a recurring basis

The following methods and assumptions were used to estimate the fair value of each class of financial instruments measured on a recurring basis:

Trading Securities Fair values for trading securities (including financial futures), are based on quoted market prices where available. If quoted market prices are not available, fair values are based on quoted market prices for similar securities.

Securities Available for Sale Fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. Prices are provided by third-party pricing services and are based on observable market inputs. On an annual basis, the Company compares a sample of these prices to other independent sources for the same securities. Additionally, throughout the year, if securities are sold, comparisons are made between the pricing services prices and the market prices at which the securities were sold. Variances are analyzed, and, if appropriate, additional research is conducted with the third-party pricing services. Based on this research, the pricing services may affirm or revise their quoted price. No significant adjustments have been made to the prices provided by the pricing services. The pricing services also provide documentation on an ongoing basis that includes reference data, inputs and methodology by asset class, which is reviewed to ensure that security placement within the fair value hierarchy is appropriate.

Equity securities with readily determinable fair values Fair values are based on quoted market prices.

Derivatives Fair values are determined using valuation techniques including discounted cash flow analysis on the expected cash flows from each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign exchange rates, and implied volatilities. The Company incorporates credit valuation adjustments to appropriately

reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Securities sold not yet purchased Fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. Prices are provided by third-party pricing services and are based on observable market inputs.

Assets measured at fair value on a non-recurring basis as of March 31, 2025 and December 31, 2024 (in thousands):

	Fair Value Measurement at March 31, 2025 Using
Description	March 31, 2025		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Losses Recognized During the Three Months Ended March 31
Collateral dependent assets	$	4,068	$	—	$	—	$	4,068	$	(3,073	)
Other real estate owned		2,613		—		—		2,613		—
Other repossessed assets		10		—		—		10		—
Total	$	6,691	$	—	$	—	$	6,691	$	(3,073	)

	Fair Value Measurement at December 31, 2024 Using
Description	December 31, 2024		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Losses Recognized During the Twelve Months Ended December 31
Collateral dependent assets	$	2,405	$	—	$	—	$	2,405	$	(256	)
Other real estate owned		—		—		—		—		—
Other repossessed assets		26,779		—		—		26,779		—
Total	$	29,184	$	—	$	—	$	29,184	$	(256	)

Valuation methods for instruments measured at fair value on a non-recurring basis

The following methods and assumptions were used to estimate the fair value of each class of financial instruments measured on a non-recurring basis:

Collateral Dependent Assets Collateral dependent assets are assets evaluated as part of the ACL on an individual basis. Those assets for which there is an associated allowance are considered financial assets measured at fair value on a non-recurring basis. Adjustments are recorded on certain assets to reflect write-downs that are based on the external appraised value of the underlying collateral. The external appraisals are generally based on recent sales of comparable properties which are then adjusted for the unique characteristics of the property being valued. In the case of non-real estate collateral, reliance is placed on a variety of sources, including external estimates of value and judgments based on the experience and expertise of internal specialists within the Company’s property management group and the Company’s credit department. The valuation of collateral dependent assets and impaired loans are reviewed on a quarterly basis. Because many of these inputs are not observable, the measurements are classified as Level 3.

Other real estate owned and Other repossessed assets Other real estate owned and other repossessed assets consist of loan collateral which has been repossessed through foreclosure. This collateral is comprised of commercial and residential real estate and other non-real estate property, including auto, recreational and marine vehicles. Other real estate owned and other repossessed assets are recorded as held for sale initially at the fair value of the collateral less estimated selling costs. The initial valuation of the foreclosed property is obtained through an appraisal process similar to the process described in the collateral dependent assets paragraph above. Subsequent to foreclosure, valuations are reviewed quarterly and updated periodically, and the assets may be marked down further, reflecting a new cost basis. Fair value measurements may be based upon appraisals, third-party price opinions, or internally developed pricing methods and those measurements are classified as Level 3.

Fair value disclosures require disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis.

The estimated fair value of the Company’s financial instruments at March 31, 2025 and December 31, 2024 are as follows (in thousands):

	Fair Value Measurement at March 31, 2025 Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Estimated Fair Value
FINANCIAL ASSETS
Cash and short-term investments	$	11,365,386	$	10,729,327	$	636,059	$	—	$	11,365,386
Securities available for sale		10,895,659		1,883,640		9,012,019		—		10,895,659
Securities held to maturity (exclusive of allowance for credit losses)		5,717,330		—		4,666,893		440,166		5,107,059
Trading securities		35,461		15,253		20,208		—		35,461
Other securities		647,152		12,032		635,120		—		647,152
Loans (exclusive of allowance for credit losses)		35,941,380		—		35,873,391		—		35,873,391
Derivatives		294,003		—		294,003		—		294,003
FINANCIAL LIABILITIES
Demand and savings deposits		55,330,752		55,330,752		—		—		55,330,752
Time deposits		3,190,426		—		3,191,202		—		3,191,202
Other borrowings		2,559,983		105,115		2,454,868		—		2,559,983
Long-term debt		654,380		—		712,396		—		712,396
Derivatives		145,962		—		145,962		—		145,962
OFF-BALANCE SHEET ARRANGEMENTS
Commitments to extend credit for loans										3,292
Commitments to extend resell agreements										—
Commercial letters of credit										39
Standby letters of credit										1,050

	Fair Value Measurement at December 31, 2024 Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Estimated Fair Value
FINANCIAL ASSETS
Cash and short-term investments	$	9,104,445	$	8,559,445	$	545,000	$	—	$	9,104,445
Securities available for sale		7,774,334		1,643,243		6,131,091		—		7,774,334
Securities held to maturity (exclusive of allowance for credit losses)		5,378,912		—		4,748,938		—		4,748,938
Trading securities		28,533		8,695		19,838		—		28,533
Other securities		471,018		11,596		459,422		—		471,018
Loans (exclusive of allowance for credit losses)		25,645,057		—		25,665,211		—		25,665,211
Derivatives		234,443		—		234,443		—		234,443
FINANCIAL LIABILITIES
Demand and savings deposits		41,014,362		41,014,362		—		—		41,014,362
Time deposits		2,127,667		—		2,127,667		—		2,127,667
Other borrowings		2,609,715		70,405		2,539,310		—		2,609,715
Long-term debt		385,292		—		417,217		—		417,217
Derivatives		107,442		—		107,442		—		107,442
OFF-BALANCE SHEET ARRANGEMENTS
Commitments to extend credit for loans										12,515
Commitments to extend resell agreements										292
Commercial letters of credit										135
Standby letters of credit										4,375

Cash and short-term investments The carrying amounts of cash and due from banks, federal funds sold and resell agreements are reasonable estimates of their fair values.

Securities held to maturity For U.S. Agency and mortgage-backed securities, as well as general obligation bonds in the State and political subdivision portfolio, fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. Prices are provided by third-party pricing services and are based on observable market inputs. On an annual basis, the Company compares a sample of these prices to other independent sources for the same securities. Variances are analyzed, and, if appropriate, additional research is conducted with the third-party pricing services. Based on this research, the pricing services may affirm or revise their quoted price. No significant adjustments have been made to the prices provided by the pricing services. The pricing services also provide documentation on an ongoing basis that includes reference data, inputs and methodology by asset class, which is reviewed to ensure that security placement within the fair value hierarchy is appropriate. For private placement bonds in the State and political subdivision portfolio, fair values are estimated by discounting the future cash flows using current market rates. For bonds acquired as part of the acquisition of HTLF, securities were priced by a third-party using a discounted cash flow method, for which the discount rate is a significant unobservable input.

Other securities Amount consists of FRB and FHLB stock held by the Company, equity securities with readily determinable fair values, and equity securities without readily determinable fair values, including equity-method investments and other miscellaneous investments. The carrying amount of the FRB and FHLB stock equals its fair value because the shares can only be redeemed by the FRB and FHLB at their carrying amount. Equity securities with readily determinable fair values are measured at fair value using quoted market prices. Equity securities without readily determinable fair values are carried at cost, which approximates fair value.

Loans Fair values are estimated for portfolios with similar financial characteristics. Loans are segregated by type, such as commercial, real estate, consumer, and credit card. Each loan category is further segmented into fixed and variable interest rate categories. The fair value of loans is estimated by discounting the future cash flows. The

discount rates used are estimated using comparable market rates for similar types of instruments adjusted to be commensurate with the credit risk, overhead costs, and optionality of such instruments.

Demand and savings deposits The fair value of demand deposits and savings accounts was the amount payable on demand at period-end.

Time deposits The fair value of fixed-maturity certificates of deposit is estimated by discounting the future cash flows using the rates that are currently offered for deposits of similar remaining maturities.

Other borrowings The carrying amounts of federal funds purchased, repurchase agreements and other short-term debt are reasonable estimates of their fair value because of the short-term nature of their maturities. Federal funds purchased are classified as Level 1 based on availability of quoted market prices and repurchase agreements and other short-term debt are classified as Level 2.

Long-term debt Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate fair value of existing debt.

Other off-balance sheet instruments The fair value of loan commitments and letters of credit are determined based on the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreement and the present creditworthiness of the counterparties. Neither the fees earned during the year on these instruments nor their fair value at period-end are significant to the Company’s consolidated financial position.