Fair Value Measurements

6 Months Ended

Jun. 30, 2020

FAIR VALUE MEASUREMENTS

The following table summarizes financial instruments measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:



	June 30, 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	$	—	$	10,241	$	—	$	10,241
Obligations of states and political subdivisions	—		254,278		—		254,278
Agency mortgage-backed securities	—		720,991		—		720,991
U.S. Treasury bills	—		10,566		—		10,566
Corporate debt securities	—		2,028		—		2,028
Total securities available for sale	—		998,104		—		998,104
Derivatives	—		35,728		—		35,728
Total assets	$	—	$	1,033,832	$	—	$	1,033,832

Liabilities
Derivatives	$	—	$	46,828	$	—	$	46,828
Total liabilities	$	—	$	46,828	$	—	$	46,828



	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)		Total losses for the three months ended June 30, 2020		Total losses for the six months ended June 30, 2020
Impaired loans	$	3,627	$	—	$	—	$	3,627	$	3,219	$	3,230
Other real estate	3,899		—		—		3,899		79		777
Total	$	7,526	$	—	$	—	$	7,526	$	3,298	$	4,007

(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 June 30, 2020 and December 31, 2019.



	June 30, 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, net	345,791	356,139	Level 2	181,166	181,939	Level 2
Other investments	43,106	43,106	Level 2	38,044	38,044	Level 2
Loans held for sale	16,029	16,029	Level 2	5,570	5,570	Level 2
Loans, net	6,029,781	5,876,000	Level 3	5,271,049	5,205,651	Level 3
State tax credits, held for sale	38,820	44,164	Level 3	36,802	39,046	Level 3

Balance sheet liabilities
Certificates of deposit	659,166	665,374	Level 3	826,447	825,203	Level 3
Subordinated debentures and notes	203,384	192,852	Level 2	141,258	130,985	Level 2
FHLB advances	250,000	251,978	Level 2	222,406	221,402	Level 2
Other borrowings and notes payable	227,961	227,961	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 SEC.

- 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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