FAIR VALUE (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures

Assets and Liabilities Measured at Fair Value on Recurring Basis

	Fair Value Measurements at
	June 30, 2022 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Financial assets:
Available-for-sale debt securities:
U.S. Treasury securities and U.S. Government agencies	$	230,771	$	152,321	$	—	$	383,092
Private label mortgage-backed security		—		—		2,478		2,478
Mortgage-backed securities - residential		—		198,270		—		198,270
Collateralized mortgage obligations		—		24,545		—		24,545
Corporate bonds		—		9,936		—		9,936
Trust preferred security		—		—		3,824		3,824
Total available-for-sale debt securities	$	230,771	$	385,072	$	6,302	$	622,145
Equity securities with readily determinable fair value:
Freddie Mac preferred stock	$	—	$	189	$	—	$	189
Total equity securities with readily determinable fair value	$	—	$	189	$	—	$	189
Mortgage loans held for sale	$	—	$	8,491	$	—	$	8,491
Consumer loans held for sale		—		—		17,459		17,459
Consumer loans held for investment		—		—		45		45
Rate lock loan commitments		—		220		—		220
Mandatory forward contracts		—		359		—		359
Interest rate swap agreements		—		4,501		—		4,501
Financial liabilities:
Interest rate swap agreements	$	—	$	4,501	$	—	$	4,501

	Fair Value Measurements at
	December 31, 2021 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Financial assets:
Available-for-sale debt securities:
U.S. Treasury securities and U.S. Government agencies	$	70,112	$	167,347	$	—	$	237,459
Private label mortgage-backed security		—		—		2,731		2,731
Mortgage-backed securities - residential		—		210,749		—		210,749
Collateralized mortgage obligations		—		30,294		—		30,294
Corporate bonds		—		10,046		—		10,046
Trust preferred security		—		—		3,847		3,847
Total available-for-sale debt securities	$	70,112	$	418,436	$	6,578	$	495,126
Equity securities with readily determinable fair value:
Freddie Mac preferred stock	$	—	$	170	$	—	$	170
Community Reinvestment Act mutual fund		2,450		—		—		2,450
Total equity securities with readily determinable fair value	$	2,450	$	170	$	—	$	2,620
Mortgage loans held for sale	$	—	$	29,393	$	—	$	29,393
Consumer loans held for sale		—		—		19,747		19,747
Consumer loans held for investment		—		—		170		170
Rate lock loan commitments		—		1,404		—		1,404
Mandatory forward contracts		—		66		—		66
Interest rate swap agreements		—		5,786		—		5,786
Financial liabilities:
Interest rate swap agreements		—		5,786		—		5,786

Assets Measured at Fair Value on a Non-Recurring Basis

	Fair Value Measurements at
	June 30, 2022 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Collateral-dependent loans:
Residential real estate:
Owner occupied	$	—	$	—	$	1,345	$	1,345
Commercial real estate		—		—		2,475		2,475
Total collateral-dependent loans*	$	—	$	—	$	3,820	$	3,820
Other real estate owned:
Commercial real estate	$	—	$	—	$	1,687	$	1,687
Total other real estate owned	$	—	$	—	$	1,687	$	1,687

* The difference between the carrying value and the fair value of collateral-dependent loans measured at fair value is reconciled in a subsequent table of this Footnote.

	Fair Value Measurements at
	December 31, 2021 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Collateral-dependent loans:
Residential real estate:
Owner occupied	$	—	$	—	$	1,626	$	1,626
Commercial real estate		—		—		2,841		2,841
Home equity		—		—		378		378
Total collateral-dependent loans*	$	—	$	—	$	4,845	$	4,845
Other real estate owned:
Residential real estate	$	—	$	—	$	1,792	$	1,792
Total other real estate owned	$	—	$	—	$	1,792	$	1,792

* The difference between the carrying value and the fair value of collateral-dependent loans measured at fair value is reconciled in a subsequent table of this Footnote.

Impaired collateral dependent loans classified with Level 3 fair value hierarchy

(in thousands)	June 30, 2022		December 31, 2021
Carrying amount of loans measured at fair value	$	4,024	$	4,928
Estimated selling costs considered in carrying amount		714		842
Valuation allowance		(918)		(925)
Total fair value	$	3,820	$	4,845

Provisions for loss on collateral dependent impaired loans

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Provision on collateral-dependent loans	$	(7)	$	45	$	(4)	$	45

Other Real Estate Owned

(in thousands)	June 30, 2022		December 31, 2021
Other real estate owned carried at fair value	$	1,687	$	1,792
Other real estate owned carried at cost		—		—
Total carrying value of other real estate owned	$	1,687	$	1,792

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Other real estate owned write-downs during the period	$	54	$	52	$	105	$	105

Carrying amount and estimated fair values of financial instruments

			Fair Value Measurements at
			June 30, 2022:
									Total
	Carrying								Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Assets:
Cash and cash equivalents	$	795,143	$	795,143	$	—	$	—	$	795,143
Available-for-sale debt securities		622,145		230,771		385,072		6,302		622,145
Held-to-maturity debt securities		32,962		—		32,978		—		32,978
Equity securities with readily determinable fair values		189		—		189		—		189
Mortgage loans held for sale, at fair value		8,491		—		8,491		—		8,491
Consumer loans held for sale, at fair value		17,459		—		—		17,459		17,459
Consumer loans held for sale, at the lower of cost or fair value		13,777		—		—		13,777		13,777
Loans, net		4,297,784		—		—		4,165,381		4,165,381
Federal Home Loan Bank stock		10,311		—		—		—		NA
Accrued interest receivable		9,872		—		9,872		—		9,872
Mortgage servicing rights		9,407		—		16,568		—		16,568
Rate lock loan commitments		220		—		220		—		220
Mandatory forward contracts		359		—		359		—		359
Interest rate swap agreements		4,501		—		4,501		—		4,501
Liabilities:
Noninterest-bearing deposits	$	2,094,436	$	—	$	2,094,436	$	—	$	2,094,436
Transaction deposits		2,499,250		—		2,499,250		—		2,499,250
Time deposits		233,843		—		230,849		—		230,849
Securities sold under agreements to repurchase and other short-term borrowings		303,315		—		303,315		—		303,315
Federal Home Loan Bank advances		20,000		—		21,766		—		21,766
Accrued interest payable		162		—		162		—		162
Interest rate swap agreements		4,501		—		4,501		—		4,501

			Fair Value Measurements at
			December 31, 2021:
									Total
	Carrying								Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Assets:
Cash and cash equivalents	$	756,971	$	756,971	$	—	$	—	$	756,971
Available-for-sale debt securities		495,126		70,112		418,436		6,578		495,126
Held-to-maturity debt securities		44,299		—		44,764		—		44,764
Equity securities with readily determinable fair values		2,620		2,450		170		—		2,620
Mortgage loans held for sale, at fair value		29,393		—		29,393		—		29,393
Consumer loans held for sale, at fair value		19,747		—		—		19,747		19,747
Consumer loans held for sale, at the lower of cost or fair value		2,937		—		—		2,937		2,937
Loans, net		4,431,985		—		—		4,445,244		4,445,244
Federal Home Loan Bank stock		10,311		—		—		—		NA
Accrued interest receivable		9,877		—		9,877		—		9,877
Mortgage servicing rights		9,196		—		11,540		—		11,540
Rate lock loan commitments		1,404		—		1,404		—		1,404
Mandatory forward contracts		66		—		66		—		66
Interest rate swap agreements		5,786		—		5,786		—		5,786
Liabilities:
Noninterest-bearing deposits	$	1,990,781	$	—	$	1,990,781	$	—	$	1,990,781
Transaction deposits		2,553,423		—		2,553,423		—		2,553,423
Time deposits		296,214		—		298,236		—		298,236
Securities sold under agreements to repurchase and other short-term borrowings		290,967		—		290,967		—		290,967
Federal Home Loan Bank advances		25,000		—		25,000		—		25,000
Accrued interest payable		159		—		159		—		159
Interest rate swap agreements		5,786		—		5,786		—		5,786

Nonrecurring basis

Fair Value Disclosures

Fair value inputs quantitative information

					Range
	Fair		Valuation	Unobservable	(Weighted
June 30, 2022 (dollars in thousands)	Value		Technique	Inputs	Average)
Collateral-dependent loans - residential real estate owner occupied	$	1,345	Sales comparison approach	Adjustments determined for differences between comparable sales	0% - 41% (11%)
Collateral-dependent loans - commercial real estate	$	2,475	Sales comparison approach	Adjustments determined for differences between comparable sales	12% - 13% (12%)
Other real estate owned - commercial real estate	$	1,687	Sales comparison approach	Adjustments determined for differences between comparable sales	37% (37%)

					Range
	Fair		Valuation	Unobservable	(Weighted
December 31, 2021 (dollars in thousands)	Value		Technique	Inputs	Average)
Collateral-dependent loans - residential real estate owner occupied	$	1,626	Sales comparison approach	Adjustments determined for differences between comparable sales	0% - 51% (10%)
Collateral-dependent loans - commercial real estate	$	2,841	Sales comparison approach	Adjustments determined for differences between comparable sales	12% - 13% (12%)
Collateral-dependent loans - home equity	$	378	Sales comparison approach	Adjustments determined for differences between comparable sales	2%-4% (3%)
Other real estate owned - commercial real estate	$	1,792	Sales comparison approach	Adjustments determined for differences between comparable sales	33% (33%)

Private label mortgage backed security

Fair Value Disclosures

Reconciliation of the Bank's investments measured at fair value on a recurring basis using significant unobservable inputs

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Balance, beginning of period	$	2,602	$	2,863	$	2,731	$	2,957
Total gains or losses included in earnings:
Net change in unrealized gain		(15)		34		9		49
Principal paydowns		(109)		(73)		(262)		(182)
Balance, end of period	$	2,478	$	2,824	$	2,478	$	2,824

Private label mortgage backed security | Recurring basis

Fair Value Disclosures

Fair value inputs quantitative information

	Fair		Valuation
June 30, 2022 (dollars in thousands)	Value		Technique	Unobservable Inputs	Range
Private label mortgage-backed security	$	2,478	Discounted cash flow	(1) Constant prepayment rate	4.5% - 5.4%
				(2) Probability of default	1.8% - 9.3%
				(3) Loss severity	50% - 75%

	Fair		Valuation
December 31, 2021 (dollars in thousands)	Value		Technique	Unobservable Inputs	Range
Private label mortgage-backed security	$	2,731	Discounted cash flow	(1) Constant prepayment rate	4.5% - 5.7%
				(2) Probability of default	1.8% - 9.3%
				(3) Loss severity	50% - 75%

Trust Preferred Securities

Fair Value Disclosures

Reconciliation of the Bank's investments measured at fair value on a recurring basis using significant unobservable inputs

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Balance, beginning of period	$	3,725	$	3,650	$	3,847	$	3,800
Total gains or losses included in earnings:
Discount accretion		14		13		28		26
Net change in unrealized gain		85		37		(51)		(126)
Balance, end of period	$	3,824	$	3,700	$	3,824	$	3,700

Mortgage Loans Held for Sale

Fair Value Disclosures

Schedule of aggregate fair value, contractual balance and unrealized gain

(in thousands)	June 30, 2022		December 31, 2021
Aggregate fair value	$	8,491	$	29,393
Contractual balance		8,363		28,668
Unrealized gain		128		725

Schedule of gains and losses from changes in fair value included in earnings

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Interest income	$	153	$	140	$	357	$	549
Change in fair value		109		(143)		(597)		(1,154)
Total included in earnings	$	262	$	(3)	$	(240)	$	(605)

Consumer loans

Fair Value Disclosures

Schedule of aggregate fair value, contractual balance and unrealized gain

(in thousands)	June 30, 2022		December 31, 2021
Aggregate fair value	$	17,459	$	19,747
Contractual balance		17,563		19,633
Unrealized gain		(104)		114

Schedule of gains and losses from changes in fair value included in earnings

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2022		2021		2022		2021
Interest income	$	2,990	$	1,397	$	5,880	$	1,968
Change in fair value		(181)		63		(218)		78
Total included in earnings	$	2,809	$	1,460	$	5,662	$	2,046

Consumer loans | Recurring basis

Fair Value Disclosures

Reconciliation of the Bank's investments measured at fair value on a recurring basis using significant unobservable inputs

	Fair		Valuation
June 30, 2022 (dollars in thousands)	Value		Technique	Unobservable Inputs	Rate
Consumer loans held for sale	$	17,459	Contract Terms	(1) Net Premium	0.15%
				(2) Discounted Sales	10.00%

	Fair		Valuation
December 31, 2021 (dollars in thousands)	Value		Technique	Unobservable Inputs	Rate
Consumer loans held for sale	$	19,747	Contract Terms	(1) Net Premium	1.4%
				(2) Discounted Sales	5.00%