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Fair Value Measurements
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
We use fair value measurements when recording and disclosing certain financial assets and liabilities. Debt securities, equity securities, securities held in a deferred compensation plan and derivative financial instruments are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record other financial instruments at fair value on a nonrecurring basis, such as loans held for sale, individually assessed loans, other real estate owned, or OREO, and other repossessed assets, mortgage servicing rights, or MSRs, and certain other assets.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities; it is not a forced transaction. In determining fair value, we use various valuation approaches, including market, income and cost approaches. The fair value standard establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing an asset or liability, which are developed based on market data that we have obtained from independent sources. Unobservable inputs reflect our estimates of assumptions that market participants would use in pricing an asset or liability, which are developed based on the best information available in the circumstances.
The fair value hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows.
Level 1: valuation is based upon unadjusted quoted market prices for identical instruments traded in active markets.
Level 2: valuation is based upon quoted market prices for similar instruments traded in active markets, quoted market prices for identical or similar instruments traded in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by market data.
Level 3: valuation is derived from other valuation methodologies, including discounted cash flow models and similar techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in determining fair value.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
There have been no changes in our valuation methodologies during the three and nine months ended September 30, 2024. Refer to Note 1 Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements in our 2023 Form 10-K for more information on the valuation methodologies that we use for financial instruments recorded at fair value on a recurring or nonrecurring basis.
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
The following tables present our assets and liabilities that are measured at fair value on a recurring basis by fair value hierarchy level at the dates presented:
September 30, 2024
(dollars in thousands)Level 1Level 2Level 3Total
ASSETS
Available-for-sale debt securities:
U.S. Treasury securities$118,109 $— $— $118,109 
Obligations of U.S. government corporations and agencies— 15,026 — 15,026 
Collateralized mortgage obligations of U.S. government corporations and agencies— 565,312 — 565,312 
Residential mortgage-backed securities of U.S. government corporations and agencies— 35,653 — 35,653 
Commercial mortgage-backed securities of U.S. government corporations and agencies— 248,044 — 248,044 
Obligations of states and political subdivisions— 24,713 — 24,713 
Total Available-for-Sale Debt Securities118,109 888,748 — 1,006,857 
Equity securities4,455 — — 4,455 
Total Securities Available for Sale122,564 888,748 — 1,011,312 
Securities held in a deferred compensation plan10,800 — — 10,800 
Derivative financial assets:
Interest rate swap contracts - commercial loans— 45,690 — 45,690 
Interest rate lock commitments - mortgage loans— — 64 64 
Total Assets$133,364 $934,438 $64 $1,067,866 
LIABILITIES
Derivative financial liabilities:
Interest rate swap contracts - commercial loans$— $46,156 $— $46,156 
Interest rate swap contracts - cash flow hedge— 7,115 — 7,115 
Total Liabilities$— $53,271 $— $53,271 

December 31, 2023
(dollars in thousands)Level 1Level 2Level 3Total
ASSETS
Available-for-sale debt securities:
U.S. Treasury securities$133,786 $— $— $133,786 
Obligations of U.S. government corporations and agencies— 32,513 — 32,513 
Collateralized mortgage obligations of U.S. government corporations and agencies— 460,939 — 460,939 
Residential mortgage-backed securities of U.S. government corporations and agencies— 38,177 — 38,177 
Commercial mortgage-backed securities of U.S. government corporations and agencies— 273,425 — 273,425 
Obligations of states and political subdivisions— 30,468 — 30,468 
Total Available-for-Sale Debt Securities133,786 835,522 — 969,308 
Equity securities1,010 73 — 1,083 
Total Securities Available for Sale134,796 835,595 — 970,391 
Securities held in a deferred compensation plan9,399 — — 9,399 
Derivative financial assets:
Interest rate swap contracts - commercial loans— 63,018 — 63,018 
Total Assets$144,195 $898,613 $— $1,042,808 
LIABILITIES
Derivative financial liabilities:
Interest rate swap contracts - commercial loans$— $63,554 $— $63,554 
Interest rate swap contracts - cash flow hedge— 14,739 — 14,739 
Total Liabilities$— $78,293 $— $78,293 
Assets Recorded at Fair Value on a Nonrecurring Basis
We may be required to measure certain assets and liabilities at fair value on a nonrecurring basis. Nonrecurring assets are recorded at the lower of cost or fair value in our consolidated financial statements. There were no liabilities measured at fair value on a nonrecurring basis at September 30, 2024 or December 31, 2023. There were five Level 3 individually assessed loans measured at fair value on a nonrecurring basis as of September 30, 2024 for $15.9 million and one Level 2 individually assessed loan measured at fair value on a nonrecurring basis as of December 31, 2023 for $5.9 million.
For Level 3 assets measured at fair value on a nonrecurring basis at September 30, 2024 the significant unobservable inputs used in the fair value measurements were as follows:
September 30, 2024Valuation TechniqueSignificant Unobservable InputsRangeWeighted Average
(dollars in thousands)
Loans individually evaluated$15,904Appraisals which utilize sales comparison and income approachDiscount for changes in market conditions10.00%-30.00%26.54%
Fair Value of Financial Instruments
The following tables present the carrying values and fair values of our financial instruments at the dates presented:
Carrying
Value(1)
Fair Value Measurements at September 30, 2024
(dollars in thousands)TotalLevel 1Level 2Level 3
ASSETS
Cash and due from banks, including interest-bearing deposits$228,090 $228,090 $228,090 $— $— 
Securities available for sale1,011,312 1,011,312 122,564 888,748 — 
Loans held for sale307 307 — 307 — 
Portfolio loans, net7,584,733 7,393,357 — — 7,393,357 
Collateral receivable1,466 1,466 1,466 — — 
Securities held in a deferred compensation plan10,800 10,800 10,800 — — 
Mortgage servicing rights5,804 7,959 — — 7,959 
Interest rate swap contracts - commercial loans45,690 45,690 — 45,690 — 
Interest rate lock commitments - mortgage loans64 64 — — 64 
LIABILITIES
Deposits$7,654,841 $7,652,235 $5,884,509 $1,767,726 $— 
Collateral payable35,211 35,211 35,211 — — 
Short-term borrowings225,000 225,129 — 225,129 — 
Long-term borrowings64,015 64,091 — 64,091 — 
Junior subordinated debt securities49,403 49,403 — 49,403 — 
Interest rate swap contracts - commercial loans46,156 46,156 — 46,156 — 
Interest rate swap contracts - cash flow hedge7,115 7,115 — 7,115 — 
(1) As reported in the Consolidated Balance Sheets
Carrying
Value(1)
Fair Value Measurements at December 31, 2023
(dollars in thousands)TotalLevel 1Level 2Level 3
ASSETS
Cash and due from banks, including interest-bearing deposits$233,612 $233,612 $233,612 $— $— 
Securities available for sale970,391 970,391 134,796 835,595 — 
Loans held for sale153 153 — 153 — 
Portfolio loans, net7,545,375 7,263,270 — — 7,263,270 
Collateral receivable5,356 5,356 5,356 — — 
Securities held in a deferred compensation plan9,399 9,399 9,399 — — 
Mortgage servicing rights6,345 8,704 — — 8,704 
Interest rate swaps - commercial loans63,018 63,018 — 63,018 — 
LIABILITIES
Deposits$7,521,769 $7,511,598 $5,940,117 $1,571,481 $— 
Collateral payable50,920 50,920 50,920 — — 
Short-term borrowings415,000 415,000 — 415,000 — 
Long-term borrowings39,277 38,995 — 38,995 — 
Junior subordinated debt securities49,358 49,358 — 49,358 — 
Interest rate swaps - commercial loans63,554 63,554 — 63,554 — 
Interest rate swaps - cash flow hedge14,739 14,739 — 14,739 — 
(1) As reported in the Consolidated Balance Sheets