Fair Value Measurements

9 Months Ended

Sep. 30, 2024

The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, we utilize valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. ASC Topic 820 establishes a three-level fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. See our 2023 Form 10-K for additional information regarding the fair value hierarchy and a description of our valuation techniques.

Financial Assets and Financial Liabilities. The tables below summarize financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023, segregated by the level of the valuation inputs within the fair value hierarchy of ASC Topic 820 utilized to measure fair value.


	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
September 30, 2024
Securities available for sale:
U.S. Treasury	$	3,987,746	$	—	$	—	$	3,987,746
Residential mortgage-backed securities	—		6,692,663		—		6,692,663
States and political subdivisions	—		4,596,560		—		4,596,560
Other	—		43,074		—		43,074
Trading account securities:
U.S. Treasury	32,261		—		—		32,261
States and political subdivisions	—		92		—		92
Derivative assets:
Interest rate swaps, caps, and floors	—		76,790		—		76,790
Commodity swaps and options	—		64,082		—		64,082

Derivative liabilities:
Interest rate swaps, caps, and floors	—		76,706		—		76,706
Commodity swaps and options	—		62,798		—		62,798

December 31, 2023
Securities available for sale:
U.S. Treasury	$	4,927,589	$	—	$	—	$	4,927,589
Residential mortgage-backed securities	—		6,596,682		—		6,596,682
States and political subdivisions	—		5,011,331		—		5,011,331
Other	—		42,769		—		42,769
Trading account securities:
U.S. Treasury	30,265		—		—		30,265
States and political subdivisions	—		1,452		—		1,452
Derivative assets:
Interest rate swaps, caps, and floors	—		90,715		—		90,715
Commodity swaps and options	—		70,710		—		70,710
Foreign currency forward contracts	22		—		—		22
Derivative liabilities:
Interest rate swaps, caps, and floors	—		90,525		—		90,525
Commodity swaps and options	—		69,447		—		69,447
Foreign currency forward contracts	19		—		—		19

Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. Financial assets measured at fair value on a non-recurring basis during the reported periods include certain collateral dependent loans reported at the fair value of the underlying collateral if repayment is expected solely from the collateral.

The following table presents collateral dependent loans that were remeasured and reported at fair value through a specific allocation of the allowance for credit losses on loans based upon the fair value of the underlying collateral during the reported periods.


	Nine Months Ended September 30, 2024				Nine Months Ended September 30, 2023
	Level 2		Level 3		Level 2		Level 3
Carrying value before allocations	$	18,831	$	43,046	$	20,051	$	24,921
Specific (allocations) reversals of prior allocations	(2,220)		(13,145)		(1,452)		(4,849)
Fair value	$	16,611	$	29,901	$	18,599	$	20,072

Non-Financial Assets and Non-Financial Liabilities. We do not have any non-financial assets or non-financial liabilities measured at fair value on a recurring basis. From time to time, non-financial assets measured at fair value on a non-recurring basis may include certain foreclosed assets which, upon initial recognition, were remeasured and reported at fair value through a charge-off to the allowance for loan losses and certain foreclosed assets which, subsequent to their initial recognition, were remeasured at fair value through a write-down included in other non-interest expense.

The following table presents foreclosed assets that were remeasured and reported at fair value during the reported periods:


	Nine Months Ended September 30,
	2024		2023
Foreclosed assets remeasured at initial recognition:
Carrying value of foreclosed assets prior to remeasurement	$	2,633	$	—
Charge-offs recognized in the allowance for loan losses	—		—
Fair value	$	2,633	$	—

Financial Instruments Reported at Amortized Cost. The estimated fair values of financial instruments that are reported at amortized cost in our consolidated balance sheets, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value, were as follows:


	September 30, 2024				December 31, 2023
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Level 2 inputs:
Cash and cash equivalents	$	9,198,374	$	9,198,374	$	8,687,276	$	8,687,276
Securities held to maturity	3,569,718		3,498,271		3,619,428		3,532,044
Accrued interest receivable	194,562		194,562		251,385		251,385
Level 3 inputs:
Loans, net	19,791,734		19,490,209		18,578,255		18,117,369
Financial liabilities:
Level 2 inputs:
Deposits	41,720,621		41,712,765		41,920,568		41,903,580
Federal funds purchased	22,375		22,375		14,200		14,200
Repurchase agreements	4,014,037		4,014,037		4,127,188		4,127,188
Junior subordinated deferrable interest debentures	123,170		123,712		123,127		123,712
Subordinated notes	99,609		99,319		99,491		96,071
Accrued interest payable	66,462		66,462		61,222		61,222

Under ASC Topic 825, entities may choose to measure eligible financial instruments at fair value at specified election dates. The fair value measurement option (i) may be applied instrument by instrument, with certain exceptions, (ii) is generally irrevocable and (iii) is applied only to entire instruments and not to portions of instruments. Unrealized gains and losses on items for which the fair value measurement option has been elected must be reported in earnings at each subsequent reporting date. During the reported periods, we had no financial instruments measured at fair value under the fair value measurement option.

- 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.

+ References + Details