XML 31 R20.htm IDEA: XBRL DOCUMENT v3.25.1
Fair Value Measurements
 3 Months Ended
Mar. 31, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Fair value represents the amount expected to be received to sell an asset or paid to transfer a liability in its principal or most advantageous market in an orderly transaction between market participants at the measurement date.
Depending on the nature of the asset or liability, the Company uses various valuation methodologies and assumptions to estimate fair value. The measurement of fair value under U.S. GAAP uses a hierarchy intended to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows.
The fair value hierarchy is as follows:
Level 1 – Inputs are unadjusted quoted prices for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and is used to measure fair value whenever available. A contractually binding sales price also provides reliable evidence of fair value.
Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets and liabilities in active markets, such as interest rates and yield curves that are observable at commonly quoted intervals.
Level 3 – Inputs are unobservable inputs for the asset or liability and significant to the fair value. These may be internally developed using the Company’s best information and assumptions that a market participant would consider.
In accordance with fair value accounting guidance, the Company measures, records, and reports various types of assets and liabilities at fair value on either a recurring or non-recurring basis in the consolidated financial statements. Nonfinancial assets measured at fair value on a non-recurring basis would include foreclosed real estate, long-lived assets, and core deposit intangible assets, which are reviewed when circumstances or other events indicate that impairment may have occurred.
Valuation Methods for Assets and Liabilities Measured at Fair Value on a Recurring Basis
Following is a description of the Company’s valuation methodologies used for assets and liabilities recorded at fair value on a recurring basis:
Available-for-Sale Securities
The fair value measurements of the Company’s investment securities are determined by a third party pricing service that considers observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. The fair value measurements are subject to management's independent verification to another pricing source for reasonableness each quarter.
Other Investment Securities
Other investment securities include equity securities with readily determinable fair values and other investment securities that do not have readily determinable fair values. Investments in FHLB stock and MIB stock, that do not have readily determinable fair values, are required for membership in those organizations. Equity securities that are not actively traded are classified in Level 2.
Equity securities with readily determinable fair values are recorded at fair value, with changes in fair value reflected in earnings. Equity securities that do not have readily determinable fair values are carried at cost and are periodically assessed for impairment. The Company uses Level 1 inputs to value equity securities that are traded in active markets.
Loans Held for Sale
The fair value of the commitment in forward sale agreements loans is the price at which they could be sold in the principal market at the measurement date, therefore the Company classifies these loans as Level 2.
Derivative Assets and Liabilities
Derivative assets and liabilities include interest rate swaps. The fair value is determined using a discounted cash flow analysis on the expected cash flows of each derivative, which also includes a credit value adjustment for client swaps. An independent third-party valuation is used to verify and confirm these values, which are classified as Level 2 within the fair value hierarchy.
Fair Value Measurements
(dollars in thousands)Fair ValueQuoted Prices in Active Markets for Identical Assets (Level 1)Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
March 31, 2025
Assets:
U.S. Treasury$5,005 $5,005 $— $— 
U.S. government and federal agency obligations378 — 378 — 
U.S. government-sponsored enterprises12,861—12,861—
Obligations of states and political subdivisions97,482—97,482—
Mortgage-backed securities
Residential66,229—66,229—
Commercial13,820—13,820—
Other debt securities22,608—22,608—
Bank-issued trust preferred securities1,264—1,264—
Equity securities7272——
Derivative instruments, interest rate swaps222 222 
Loans held for sale224—224—
Total$220,165 $5,077 $215,088 $— 
Liabilities:
Derivative instruments, interest rate swaps$268 $— $268 $— 
Total$268 $— $268 $— 
December 31, 2024
Assets:
U.S. Treasury$4,915 $4,915 $— $— 
U.S. government and federal agency obligations401—401—
U.S. government-sponsored enterprises12,804—12,804—
Obligations of states and political subdivisions102,486—102,486—
Mortgage-backed securities
Residential64,371—64,371—
Commercial13,739 — 13,739 
Other debt securities18,687—18,687—
Bank-issued trust preferred securities1,249—1,249—
Equity securities7474——
Derivative instruments, interest rate swaps66 — 66 — 
Total$218,792 $4,989 $213,803 $— 
Liabilities:
Derivative instruments, interest rate swaps$89 $— $89 $— 
Total$89 $— $89 $— 
The changes in Level 3 assets and liabilities measured at fair value on a recurring basis are summarized as follows:
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Mortgage Servicing RightsInterest Rate Lock Commitments
Three Months Ended March 31,
(dollars in thousands)2025202420252024
Balance at beginning of period$—$1,738$—$41
Total gains or (losses) (realized/unrealized):
Included in earnings—(59)— (9)
Included in other comprehensive income————
Purchases————
Sales (1)
—(1,552)—(41)
Issues— 0—45
Balance at end of period$—$127$—$36
(1) The Company sold its servicing portfolio on January 31, 2024.
Valuation Methods for Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
Following is a description of the Company’s valuation methodologies used for assets and liabilities recorded at fair value on a non-recurring basis:
Collateral Dependent Impaired Loans
While the overall loan portfolio is not carried at fair value, the Company periodically records non-recurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Non-recurring adjustments also include certain impairment amounts for collateral dependent loans when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan. In determining the value of real estate collateral, the Company relies on external and internal appraisals of property values depending on the size and complexity of the real estate collateral. The Company maintains staff trained to perform in-house evaluations and also to review third-party appraisal reports for reasonableness. In the case of non-real estate collateral, reliance is placed on a variety of sources, including external estimates of value and judgments based on the experience and expertise of internal specialists. Values of all loan collateral are regularly reviewed by the executive loan committee. Because many of these inputs are not observable, the measurements are classified as Level 3.
Other Real Estate and Foreclosed Assets
Other real estate owned (OREO) and foreclosed assets consisted of loan collateral repossessed through foreclosure. This collateral is comprised of commercial and residential real estate and other non-real estate property, including autos, manufactured homes, and construction equipment. Subsequent to foreclosure, these assets are initially carried at fair value of the collateral less estimated selling costs. Fair value, when recorded, is generally based upon appraisals by approved, independent state-certified appraisers. Like impaired loans, appraisals on OREO may be discounted based on the Company’s historical knowledge, changes in market conditions from the time of appraisal or other information available. During the holding period, valuations are updated periodically, and the assets may be written down to reflect a new cost basis. Because many of these inputs are not observable, the measurements are classified as Level 3.
Fair Value Measurements Using
(dollars in thousands)Total Fair ValueQuoted Prices in Active Markets for Identical Assets (Level 1)Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Three Months Ended March 31, Total Gains (Losses)*
March 31, 2025
Assets:
Collateral dependent impaired loans:
Commercial, financial, & agricultural$641 ——$641 $— 
Real estate construction − residential260——260— 
Real estate mortgage - commercial65 — — 65 — 
Total$966 $— $— $966 $— 
Other real estate and repossessed assets$— $— $— $— $— 
March 31, 2024
Assets:
Collateral dependent impaired loans:
Commercial, financial, & agricultural$343 $— $— $343 $— 
Real estate construction − residential260 — — 260 — 
Real estate mortgage - residential21 — — 21 — 
Real estate mortgage - commercial3,163 — — 3,163 (23)
Total$3,787 $— $— $3,787 $(23)
Other real estate and repossessed assets$1,937 $— $— $1,937 $34 
*Total gains (losses) reported for other real estate and foreclosed assets include charge-offs, valuation write downs, and net losses taken during the periods reported.