Fair Value of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2022

Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall as of September 30, 2022 and December 31, 2021 (in thousands):

	Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
September 30, 2022
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	222,731	$	—	$	222,731	$	—
Obligations of states and political subdivisions		286,108		—		286,108		—
Mortgage-backed securities		640,394		—		640,394		—
Other securities		81,555		—		81,555		—
Total available-for-sale securities		1,230,788		—		1,230,788		—
Equity securities		317		317		—		—
Derivative assets: interest rate swaps		4,501		—		4,501		—
Total assets	$	1,235,606	$	317	$	1,235,289	$	—

Derivative liabilities: interest rate swaps	$	3,296	$	—	$	3,296	$	—
December 31, 2021
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	203,815	$	—	$	203,815	$	—
Obligations of states and political subdivisions		395,457		—		395,358		99
Mortgage-backed securities		791,038		—		791,038		—
Other securities		31,112		—		31,112		—
Total available-for-sale securities		1,421,422		—		1,421,323		99
Equity securities		397		397		—		—
Derivative assets: interest rate swaps		809		—		809		—
Total assets	$	1,422,628	$	397	$	1,422,132	$	99

Derivative liabilities: interest rate swaps	$	1,476	$	—	$	1,476	$	—

Fair Value of Assets Measured on a Recurring Basis Using Significant Unobservable Inputs

The change in fair value of assets measured on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2022 and 2021 is summarized as follows (in thousands):

	Obligation of State and Political Subdivisions
	Three months ended				Nine months ended
	September 30, 2022		September 30, 2021		September 30, 2022			September 30, 2021
Beginning balance	$	—	$	615	$	99		$	794
Transfers into Level 3		—		—		—			—
Transfers out of Level 3		—		—		—			—
Total gains or losses:
Included in net income		—		1		—			3
Included in other comprehensive income (loss)		—		—		—			—
Purchases, issuances, sales and settlements:
Purchases		—		—		—			—
Issuances		—		—		—			—
Sales		—		—		—			—
Settlements		—		—		(99	)		(181	)
Ending balance	$	—	$	616	$	—		$	616
Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date	$	—	$	—	$	—		$	—

Assets Measured at Fair Value on a Nonrecurring Basis

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at September 30, 2022 and December 31, 2021 (in thousands):

	Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
September 30, 2022
Collateral dependent loans	$	2,678	$	—	$	—	$	2,678
Foreclosed assets held for sale		213		—		—		213
Mortgage servicing rights		599		—		—		599
December 31, 2021
Collateral dependent loans	$	6,750	$	—	$	—	$	6,750
Foreclosed assets held for sale		2,068		—		—		2,068
Mortgage servicing rights		420		—		—		420

Significant Unobservable Inputs Used in Valuation of Level 3 Fair Value Measurements

The following table presents quantitative information about unobservable inputs used in Level 3 fair value measurements other than goodwill at September 30, 2022 and December 31, 2021.

September 30, 2022	Fair Value		Valuation Technique	Unobservable Inputs	Range	Weighted Average
Collateral dependent loans	$	2,678	Third party valuations	Discount to reflect realizable value	0% - 40%	20%
Foreclosed assets held for sale		213	Third party valuations	Discount to reflect realizable value less estimated selling costs	0% - 40%	35%
Mortgage servicing rights		599	Third party valuations	PSA standard prepayment model rate	131 - 438		142

December 31, 2021	Fair Value		Valuation Technique	Unobservable Inputs	Range	Weighted Average
Collateral dependent loans	$	6,750	Third party valuations	Discount to reflect realizable value	0% - 40%	20%
Foreclosed assets held for sale		2,068	Third party valuations	Discount to reflect realizable value less estimated selling costs	0% - 40%	35%
Mortgage servicing rights		420	Third party valuations	PSA standard prepayment model rate	205 - 513		273

Summary of Estimated Fair Values of Company Financial Instruments

The following tables present estimated fair values of the Company’s financial instruments at September 30, 2022 and December 31, 2021 in accordance with ASC 825 (in thousands):

	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
September 30, 2022
Financial assets
Cash and due from banks	$	153,559	$	153,559	$	153,559	$	—	$	—
Federal funds sold		7,395		7,395		7,395		—		—
Certificates of deposit investments		1,470		1,470		—		1,470		—
Available-for-sale securities		1,230,788		1,230,788		—		1,230,788		—
Held-to-maturity securities		2,930		2,930		2,930		—		—
Equity securities		317		317		317		—		—
Loans held for sale		467		467		—		467		—
Loans net of allowance for credit losses		4,661,046		4,459,663		—		—		4,459,663
Interest receivable		25,975		25,975		—		25,975		—
Federal Reserve Bank stock		17,050		17,050		—		17,050		—
Federal Home Loan Bank stock		5,843		5,843		—		5,843		—
Financial liabilities
Deposits	$	5,483,198	$	5,483,500	$	—	$	4,799,644	$	683,856
Other borrowings		5,000		5,000		5,000		—		—
Securities sold under agreements to repurchase		220,707		220,538		—		220,538		—
Interest payable		3,007		3,007		—		3,007		—
Federal Home Loan Bank borrowings		176,232		171,008		—		171,008		—
Subordinated debt, net		94,515		87,977		—		87,977
Junior subordinated debentures, net		19,322		17,134		—		17,134		—

December 31, 2021
Financial assets
Cash and due from banks	$	167,242	$	167,242	$	167,242	$	—	$	—
Federal funds sold		1,360		1,360		1,360		—		—
Certificates of deposit investments		2,450		2,450		—		2,450		—
Available-for-sale securities		1,421,422		1,421,422		—		1,421,323		99
Held-to-maturity securities		7,030		7,034		2,029		5,005		—
Equity securities		397		397		397		—		—
Loans held for sale		2,748		2,748		—		2,748		—
Loans net of allowance for credit losses		3,938,120		3,889,870		—		—		3,889,870
Interest receivable		19,868		19,868		—		19,868		—
Federal Reserve Bank stock		13,845		13,845		—		13,845		—
Federal Home Loan Bank stock		6,484		6,484		—		6,484		—
Financial liabilities
Deposits	$	4,956,486	$	4,956,738	$	—	$	4,394,434	$	562,304
Securities sold under agreements to repurchase		146,268		146,274		—		146,274		—
Interest payable		1,346		1,346		—		1,346		—
Federal Home Loan Bank borrowings		86,446		86,248		—		86,248		—
Subordinated debt, net		94,400		94,400		—		94,400		—
Junior subordinated debentures, net		19,195		15,012		—		15,012		—