Fair Value Measurements

3 Months Ended

Mar. 31, 2020

FAIR VALUE MEASUREMENTS

The following table summarizes financial instruments measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:



	March 31, 2020
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Securities available for sale
Obligations of U.S. Government-sponsored enterprises	$	—	$	10,230	$	—	$	10,230
Obligations of states and political subdivisions	—		254,031		—		254,031
Agency mortgage-backed securities	—		886,667		—		886,667
U.S. Treasury bills	—		10,586		—		10,586
Total securities available for sale	—		1,161,514		—		1,161,514
Derivatives	—		33,697		—		33,697
Total assets	$	—	$	1,195,211	$	—	$	1,195,211

Liabilities
Derivatives	$	—	$	43,319	$	—	$	43,319
Total liabilities	$	—	$	43,319	$	—	$	43,319



	December 31, 2019
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Securities available for sale
Obligations of U.S. Government-sponsored enterprises	$	—	$	10,046	$	—	$	10,046
Obligations of states and political subdivisions	—		213,024		—		213,024
Residential mortgage-backed securities	—		902,021		—		902,021
U.S. Treasury bills	—		10,226		—		10,226
Total securities available-for-sale	—		1,135,317		—		1,135,317
Derivative financial instruments	—		11,055		—		11,055
Total assets	$	—	$	1,146,372	$	—	$	1,146,372

Liabilities
Derivatives	$	—	$	14,747	$	—	$	14,747
Total liabilities	$	—	$	14,747	$	—	$	14,747

From time to time, the Company measures certain assets at fair value on a nonrecurring basis. These include assets measured at the lower of cost or fair value that were recognized at fair value below cost at the end of the period.




	(1)		(1)		(1)		(1)
(in thousands)	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	288	$	—	$	—	$	288
Other real estate	3,902		—		—		3,902
Total	$	4,190	$	—	$	—	$	4,190

(1) The amounts represent only balances measured at fair value during the period and still held as of the reporting date.

Following is a summary of the carrying amounts and fair values of the Company’s financial instruments on the consolidated balance sheets at March 31, 2020 and December 31, 2019.



	March 31, 2020			December 31, 2019
(in thousands)	Carrying Amount	Estimated fair value	Level	Carrying Amount	Estimated fair value	Level
Balance sheet assets
Securities held-to-maturity	178,932	178,081	Level 2	181,166	181,939	Level 2
Other investments	41,703	41,703	Level 2	38,044	38,044	Level 2
Loans held for sale	8,430	8,430	Level 2	5,570	5,570	Level 2
Loans, net	5,365,330	5,255,133	Level 3	5,271,049	5,205,651	Level 3
State tax credits, held for sale	39,521	44,539	Level 3	36,802	39,046	Level 3

Balance sheet liabilities
Certificates of deposit	765,904	772,208	Level 3	826,447	825,203	Level 3
Subordinated debentures and notes	141,336	127,064	Level 2	141,258	130,985	Level 2
FHLB advances	222,000	223,074	Level 2	222,406	221,402	Level 2
Other borrowings	205,918	205,894	Level 2	265,172	265,172	Level 2

For information regarding the methods and assumptions used to estimate the fair value of each class of financial instruments refer to Note 19 – Fair Value Measurements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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