Fair Value Measurements

3 Months Ended

Mar. 31, 2022

FAIR VALUE MEASUREMENTS

The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis.


	Balance at		Fair Value Measurements Using:
Dollars in thousands	March 31, 2022		Level 1		Level 2		Level 3
Debt securities available for sale
U.S. Government sponsored agencies	$	33,899	$	—	$	33,899	$	—
Mortgage backed securities:
Government sponsored agencies	57,193		—		57,193		—
Nongovernment sponsored entities	32,280		—		32,280		—
State and political subdivisions	111,949		—		111,949		—
Corporate debt securities	32,366		—		32,366		—
Asset-backed securities	24,077		—		24,077		—

Tax-exempt state and political subdivisions	83,091		—		83,091		—
Total debt securities available for sale	$	374,855	$	—	$	374,855	$	—

Derivative financial assets
Interest rate caps	$	20,953	$	—	$	20,953	$	—
Interest rate swaps	3,502		—		3,502		—


	Balance at		Fair Value Measurements Using:
Dollars in thousands	December 31, 2021		Level 1		Level 2		Level 3
Debt securities available for sale
U.S. Government sponsored agencies	$	36,629	$	—	$	36,629	$	—
Mortgage backed securities:
Government sponsored agencies	62,211		—		62,211		—
Nongovernment sponsored entities	26,586		—		26,586		—
State and political subdivisions	137,786		—		137,786		—
Corporate debt securities	30,278		—		30,278		—
Asset-backed securities	24,883		—		24,883		—

Tax-exempt state and political subdivisions	82,730		—		82,730		—
Total debt securities available for sale	$	401,103	$	—	$	401,103	$	—

Derivative financial assets
Interest rate caps	$	11,187	$	—	$	11,187	$	—

Derivative financial liabilities
Interest rate swaps	$	1,124	$	—	$	1,124	$	—

We may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with U.S. generally accepted accounting principles. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. Assets measured at fair value on a nonrecurring basis are included in the table below.


	Balance at		Fair Value Measurements Using:
Dollars in thousands	March 31, 2022		Level 1		Level 2		Level 3
Residential mortgage loans held for sale	$	265	$	—	$	265	$	—

Collateral-dependent loans with an ACLL

Commercial real estate	$	3,051	$	—	$	3,051	$	—
Construction and development	350		—		350		—
Residential real estate	337		—		182		155

Total collateral-dependent loans with an ACLL	$	3,738	$	—	$	3,583	$	155

Property held for sale

Commercial real estate	$	1,163	$	—	$	1,163	$	—
Construction and development	5,350		—		5,350		—
Residential real estate	—		—		—		—
Total property held for sale	$	6,513	$	—	$	6,513	$	—


	Balance at		Fair Value Measurements Using:
Dollars in thousands	December 31, 2021		Level 1		Level 2		Level 3
Residential mortgage loans held for sale	$	227	$	—	$	227	$	—

Collateral-dependent loans with an ACLL

Commercial real estate	$	2,417	$	—	$	2,417	$	—
Construction and development	693		—		693		—
Residential real estate	528		—		528		—

Total collateral-dependent loans with an ACLL	$	3,638	$	—	$	3,638	$	—

Property held for sale

Commercial real estate	$	1,170	$	—	$	1,170	$	—
Construction and development	7,893		—		7,893		—
Residential real estate	27		—		27		—
Total property held for sale	$	9,090	$	—	$	9,090	$	—

The carrying values and estimated fair values of our financial instruments are summarized below:


	March 31, 2022				Fair Value Measurements Using:
Dollars in thousands	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	61,257	$	61,257	$	18,404	$	42,853	$	—
Debt securities available for sale	374,855		374,855		—		374,855		—
Debt securities held to maturity	97,589		93,284		—		93,284		—
Equity investments	20,574		20,574		—		20,574		—
Other investments	10,974		10,974		—		10,974		—
Loans held for sale, net	265		265		—		265		—
Loans, net	2,817,998		2,864,756		—		3,583		2,861,173
Accrued interest receivable	11,022		11,022		—		11,022		—
Cash surrender value of life insurance policies and annuities	70,825		70,825		—		70,825		—
Derivative financial assets	24,455		24,455		—		24,455		—
	$	3,489,814	$	3,532,267	$	18,404	$	652,690	$	2,861,173
Financial liabilities
Deposits	$	3,008,063	$	2,893,414	$	—	$	2,893,414	$	—
Short-term borrowings	140,146		140,146		—		140,146		—
Long-term borrowings	674		743		—		743		—
Subordinated debentures	102,997		104,624		—		—		104,624
Subordinated debentures owed to unconsolidated subsidiary trusts	19,589		19,589		—		19,589		—
Accrued interest payable	1,548		1,548		—		1,548		—

	$	3,273,017	$	3,160,064	$	—	$	3,055,440	$	104,624


	December 31, 2021				Fair Value Measurements Using:
Dollars in thousands	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	78,458	$	78,458	$	21,006	$	57,452	$	—
Debt securities available for sale	401,103		401,103		—		401,103		—
Debt securities held to maturity	98,060		101,242		—		101,242		—
Equity investments	20,202		20,202		—		20,202		—
Other investments	11,304		11,304		—		11,304		—
Loans held for sale, net	227		227		—		227		—
Loans, net	2,729,093		2,726,959		—		3,638		2,723,321
Accrued interest receivable	10,578		10,578		—		10,578		—
Cash surrender value of life insurance policies and annuities	60,613		60,613		—		60,613		—
Derivative financial assets	11,187		11,187		—		11,187		—
	$	3,420,825	$	3,421,873	$	21,006	$	677,546	$	2,723,321
Financial liabilities
Deposits	$	2,943,089	$	2,944,722	$	—	$	2,944,722	$	—
Short-term borrowings	140,146		140,146		—		140,146		—
Long-term borrowings	679		795		—		795		—
Subordinated debentures	102,891		103,623		—		—		103,623
Subordinated debentures owed to unconsolidated subsidiary trusts	19,589		19,589		—		19,589		—
Accrued interest payable	788		788		—		788		—
Derivative financial liabilities	1,124		1,124		—		1,124		—
	$	3,208,306	$	3,210,787	$	—	$	3,107,164	$	103,623

- 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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