FAIR VALUE

12 Months Ended

Dec. 31, 2024

Fair Value Disclosures [Abstract]

FAIR VALUE

NOTE 19 – FAIR VALUE

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to disclose the fair value of its financial instruments. Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. For disclosure purposes, the Company groups its financial and non-financial assets and liabilities into three different levels based on the nature of the instrument and the availability and reliability of the information that is used to determine fair value. The three levels of inputs that may be used to measure fair values are defined as follows.

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Level 1 inputs are considered to be the most transparent and reliable. The Company assumes the use of the principal market to conduct a transaction of each particular asset or liability being measured and then considers the assumptions that market participants would use when pricing the asset or liability. Whenever possible, the Company first looks for quoted prices for identical assets or liabilities in active markets (Level 1 inputs) to value each asset or liability. However, when inputs from identical assets or liabilities on active markets are not available, the Company utilizes market observable data for similar assets and liabilities. The Company maximizes the use of observable inputs and limits the use of unobservable inputs to occasions when observable inputs are not available. The need to use unobservable inputs generally results from the lack of market liquidity of the actual financial instrument or of the underlying collateral. Although, in some instances, third party price indications may be available, limited trading activity can challenge the implied value of those quotations.

The following is a description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of each instrument under the hierarchy.

Fair Value of Assets and Liabilities Measured on a Recurring Basis

The fair values of available-for-sale securities are carried at fair value on a recurring basis. To the extent possible, observable quoted prices in an active market are used to determine fair value and, as such, these securities are classified as Level 1. For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities, generally determined by matrix pricing, which is a mathematical technique widely used in the industry to value securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The Company’s available-for-sale securities include residential mortgage-backed securities (all of which are issued or guaranteed by government sponsored agencies) and are classified as Level 2.

The fair values of derivatives are determined based on a valuation pricing model using readily available observable market parameters such as interest rate yield curves (Level 2 inputs) adjusted for credit risk attributable to the seller of the derivative.

Assets and liabilities measured at fair value on a recurring basis are summarized below.

	December 31, 2024
	Level 1			Level 2		Level 3
Assets:
Available-for-sale securities:
U.S. Government-sponsored entities	$	—		$	65,094	$	—
U.S. Treasury securities		86,563			—		—
Mortgage backed securities
Government-sponsored residential mortgage backed securities		—			589,172		—
Private label residential mortgage backed securities		—			124,664		—
Corporate		—			58,652		—
Small Business Administration loan pools		—			6,266		—
State and political subdivisions		—			74,044		—
Derivative assets:
Derivative assets (included in other assets)		—			8,055		—
Cash collateral held by counterparty and netting    adjustments		(7,173	)	—			—
Total derivative assets		(7,173	)		8,055		—
Other assets:
Equity securities with readily determinable fair value		1,031			—		—
Total other assets		1,031			—		—
Total assets	$	80,421		$	925,947	$	—
Liabilities:
Derivative liabilities:
Derivative liabilities (included in other liabilities)	$	—		$	3,546	$	—
Cash collateral held by counterparty and netting    adjustments		97			—		—
Total derivative liabilities		97			3,546		—
Total liabilities	$	97		$	3,546	$	—

	December 31, 2023
	Level 1			Level 2		Level 3
Assets:
Available-for-sale securities:
U.S. Government-sponsored entities	$	—		$	33,087	$	—
U.S. Treasury securities		89,256			—		—
Mortgage backed securities
Government-sponsored residential mortgage backed securities		—			529,143		—
Private label residential mortgage backed securities		—			137,841		—
Corporate		—			49,683		—
Small Business Administration loan pools		—			7,727		—
State and political subdivisions		—			72,911		—
Derivative assets:
Derivative assets (included in other assets)		—			7,002		—
Cash collateral held by counterparty and netting    adjustments		(6,406	)	—			—
Total derivative assets		(6,406	)		7,002		—
Other assets:
Equity securities with readily determinable fair value		674			—		—
Total other assets		674			—		—
Total assets	$	83,524		$	837,394	$	—
Liabilities:
Derivative liabilities:
Derivative liabilities (included in other liabilities)	$	—		$	3,656	$	—
Cash collateral held by counterparty and netting    adjustments		(454	)		—		—
Total derivative liabilities		(454	)		3,656		—
Total liabilities	$	(454	)	$	3,656	$	—

There were no transfers between Levels during 2024 or 2023. The Company’s policy is to recognize transfers into or out of a level as of the end of a reporting period.

Fair Value of Assets and Liabilities Measured on a Non-recurring Basis

Certain assets are measured at fair value on a non-recurring basis when there is evidence of loans individually assessed for credit losses. The fair values of loans individually assessed for credit losses with specific allocations of the allowance for credit losses are generally based on recent real estate appraisals of the collateral. Declines in the fair values of other real estate owned, subsequent to their initial acquisitions, are also based on recent real estate appraisals less selling costs.

Real estate appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Assets measured at fair value on a non-recurring basis are summarized below.

	December 31, 2024
	Level 1		Level 2		Level 3
Loans individually evaluated for credit losses:
Commercial real estate	$	—	$	—	$	3,375
Commercial and industrial		—		—		6,316
Residential real estate		—		—		3,525
Agricultural real estate	—		—			3,040
Other		—		—		1,113
Other real estate owned:
Commercial real estate		—		—		2,173
Residential real estate		—		—		25

	December 31, 2023
	Level 1		Level 2		Level 3
Loans individually evaluated for credit losses:
Commercial real estate	$	—	$	—	$	1,616
Commercial and industrial		—		—		3,706
Residential real estate		—		—		6,165
Agricultural real estate	—		—			2,606
Other		—		—		2,442
Other real estate owned:
Commercial real estate		—		—		1,061
Residential real estate		—		—		170

The Company did not record any liabilities for which the fair value was measured on a non-recurring basis during the years ended December 31, 2024 and 2023.

Valuations of loans and other real estate owned individually assessed for credit losses utilize third party appraisals or broker price opinions and are classified as Level 3 due to the significant judgment involved. Appraisals may include the utilization of unobservable inputs, subjective factors and utilize quantitative data to estimate fair market value.

The following table presents additional information about the unobservable inputs used in the fair value measurement of financial assets measured on a nonrecurring basis that were categorized with Level 3 of the fair value hierarchy.

	Fair Value		Valuation Technique	Unobservable Input	Range (weighted average)
December 31, 2024
Real estate loans individually evaluated     for credit losses	$	17,369	Sales Comparison Approach	Adjustments for differences between comparable sales	5% - 44% (24%)
Other real estate owned individually evaluated     for credit losses	$	2,198	Sales Comparison Approach	Adjustments for differences between comparable sales	3% - 13% (8%)
December 31, 2023
Real estate loans individually evaluated     for credit losses	$	16,535	Sales Comparison Approach	Adjustments for differences between comparable sales	3% - 34% (19%)
Other real estate owned individually evaluated     for credit losses	$	1,231	Sales Comparison Approach	Adjustments for differences between comparable sales	7% - 28% (18%)

Carrying amounts and estimated fair values of financial instruments at year end were as follows as of the date indicated.

	December 31, 2024
	Carrying Amount			Estimated Fair Value			Level 1			Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	383,747		$	383,747		$	383,747		$	—	$	—
Available-for-sale securities		1,004,455			1,004,455			86,563			917,892		—
Held-to-maturity securities		5,217			5,214			—			5,214		—
Loans held for sale		513			513			—			513
Loans, net of allowance for credit losses		3,457,549			3,405,767			—			—		3,405,767
Federal Reserve Bank and Federal Home Loan    Bank stock		27,875			27,875			—			27,875		—
Interest receivable		28,913			28,913			—			28,913		—
Derivative assets		8,055			8,055			—			8,055		—
Cash collateral held by derivative counterparty and    netting adjustments		(7,173	)		(7,173	)		(7,173	)		—		—
Total derivative assets		882			882			(7,173	)		8,055		—
Equity securities with readily determinable fair value		1,031			1,031			1,031			—		—
Total assets	$	4,910,182		$	4,858,397		$	464,168		$	988,462	$	3,405,767
Financial liabilities:
Deposits	$	4,374,789		$	4,370,728		$	—		$	4,370,728	$	—
Federal funds purchased and retail repurchase    agreements		37,246			37,246			—			37,246		—
Federal Home Loan Bank advances		178,073			178,073			—			178,073		—
Subordinated debentures		23,946			23,946			—			23,946		—
Subordinated notes		73,531			73,156			—			73,156		—
Contractual obligations		12,067			12,067			—			12,067		—
Interest payable		5,032			5,032			—			5,032		—
Derivative liabilities		3,546			3,546			—			3,546		—
Cash collateral held by derivative counterparty and    netting adjustments		97			97			97			—		—
Total derivative liabilities		3,643			3,643			97			3,546		—
Total liabilities	$	4,708,327		$	4,703,891		$	97		$	4,703,794	$	—

	December 31, 2023
	Carrying Amount			Estimated Fair Value			Level 1			Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	379,099		$	379,099		$	379,099		$	—	$	—
Available-for-sale securities		919,648			919,648			89,256			830,392		—
Held-to-maturity securities		2,209			2,250			—			2,250		—
Loans held for sale		476			476			—			476		—
Loans, net of allowance for credit losses		3,289,381			3,227,789			—			—		3,227,789
Federal Reserve Bank and Federal Home Loan    Bank stock		20,608			20,608			—			20,608		—
Interest receivable		25,497			25,497			—			25,497		—
Derivative assets		7,002			7,002			—			7,002		—
Cash collateral held by derivative counterparty and    netting adjustments		(6,406	)		(6,406	)		(6,406	)		—		—
Total derivative assets		596			596			(6,406	)		7,002		—
Equity securities with readily determinable fair value		674			674			674			—		—
Total assets	$	4,638,188		$	4,576,637		$	462,623		$	886,225	$	3,227,789
Financial liabilities:
Deposits	$	4,145,455		$	4,140,501		$	—		$	4,140,501	$	—
Federal funds purchased and retail repurchase    agreements		43,582			43,582			—			43,582		—
Federal Home Loan Bank advances		100,000			100,000			—			100,000		—
Federal Reserve Bank borrowings		140,000			140,000			—			140,000		—
Subordinated debentures		23,594			23,594			—			23,594		—
Subordinated notes		73,327			71,827			—			71,827		—
Contractual obligations		19,315			19,315			—			19,315		—
Interest payable		9,180			9,180			—			9,180		—
Derivative liabilities		3,656			3,656			—			3,656		—
Cash collateral held by derivative counterparty and    netting adjustments		(454	)		(454	)		(454	)		—		—
Total derivative liabilities		3,202			3,202			(454	)		3,656		—
Total liabilities	$	4,557,655		$	4,551,201		$	(454	)	$	4,551,655	$	—

The fair value of off-balance-sheet items is not considered material.