FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures

Assets and Liabilities Measured at Fair Value on Recurring Basis

	Fair Value Measurements at
	September 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	$	203,013	$	207,422	$	—	$	410,435
Private label mortgage-backed security		—		—		2,284		2,284
Mortgage-backed securities - residential		—		180,404		—		180,404
Collateralized mortgage obligations		—		22,916		—		22,916
Corporate bonds		—		9,998		—		9,998
Trust preferred security		—		—		3,910		3,910
Total available-for-sale debt securities	$	203,013	$	420,740	$	6,194	$	629,947
Equity securities with readily determinable fair value:
Freddie Mac preferred stock	$	—	$	175	$	—	$	175
Total equity securities with readily determinable fair value	$	—	$	175	$	—	$	175
Mortgage loans held for sale	$	—	$	2,912	$	—	$	2,912
Consumer loans held for sale		—		—		8,796		8,796
Consumer loans held for investment		—		—		11		11
Mandatory forward contracts		—		639		—		639
Interest rate swap agreements		—		7,121		—		7,121
Financial liabilities:
Rate lock loan commitments	$	—	$	175	$	—	$	175
Interest rate swap agreements		—		7,121		—		7,121

	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
	September 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	$	—	$	—	$	1,314	$	1,314
Commercial real estate		—		—		944		944
Total collateral-dependent loans*	$	—	$	—	$	2,258	$	2,258
Other real estate owned:
Commercial real estate	$	—	$	—	$	1,634	$	1,634
Total other real estate owned	$	—	$	—	$	1,634	$	1,634

* 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)	September 30, 2022		December 31, 2021
Carrying amount of loans measured at fair value	$	1,815	$	4,928
Estimated selling costs considered in carrying amount		479		842
Valuation allowance		(36)		(925)
Total fair value	$	2,258	$	4,845

Provisions for loss on collateral dependent impaired loans

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2022		2021		2022		2021
Provision on collateral-dependent loans	$	(7)	$	345	$	(11)	$	393

Other Real Estate Owned

(in thousands)	September 30, 2022		December 31, 2021
Other real estate owned carried at fair value	$	1,634	$	1,792
Other real estate owned carried at cost		—		—
Total carrying value of other real estate owned	$	1,634	$	1,792

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2022		2021		2022		2021
Other real estate owned write-downs during the period	$	53	$	53	$	158	$	158

Carrying amount and estimated fair values of financial instruments

			Fair Value Measurements at
			September 30, 2022:
									Total
	Carrying								Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Assets:
Cash and cash equivalents	$	754,393	$	754,393	$	—	$	—	$	754,393
Available-for-sale debt securities		629,947		203,013		420,740		6,194		629,947
Held-to-maturity debt securities		32,628		—		32,621		—		32,621
Equity securities with readily determinable fair values		175		—		175		—		175
Mortgage loans held for sale, at fair value		2,912		—		2,912		—		2,912
Consumer loans held for sale, at fair value		8,796		—		—		8,796		8,796
Consumer loans held for sale, at the lower of cost or fair value		12,679		—		—		12,679		12,679
Loans, net		4,224,531		—		—		4,048,246		4,048,246
Federal Home Loan Bank stock		8,568		—		—		—		NA
Accrued interest receivable		11,102		—		11,102		—		11,102
Mortgage servicing rights		9,177		—		17,592		—		17,592
Mandatory forward contracts		639		—		639		—		639
Interest rate swap agreements		7,121		—		7,121		—		7,121
Liabilities:
Noninterest-bearing deposits	$	2,014,123	$	—	$	2,014,123	$	—	$	2,014,123
Transaction deposits		2,540,961		—		2,540,961		—		2,540,961
Time deposits		245,424		—		239,058		—		239,058
Securities sold under agreements to repurchase and other short-term borrowings		209,376		—		209,376		—		209,376
Federal Home Loan Bank advances		20,000		—		21,671		—		21,671
Accrued interest payable		193		—		193		—		193
Rate lock loan commitments		175		—		175		—		175
Interest rate swap agreements		7,121		—		7,121		—		7,121

			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
September 30, 2022 (dollars in thousands)	Value		Technique	Inputs	Average)
Collateral-dependent loans - residential real estate owner occupied	$	1,314	Sales comparison approach	Adjustments determined for differences between comparable sales	0% - 41% (11%)
Collateral-dependent loans - commercial real estate	$	944	Sales comparison approach	Adjustments determined for differences between comparable sales	16% (16%)
Other real estate owned - commercial real estate	$	1,634	Sales comparison approach	Adjustments determined for differences between comparable sales	39% (39%)

					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				Nine Months Ended
	September 30,				September 30,
(in thousands)	2022		2021		2022		2021
Balance, beginning of period	$	2,478	$	2,824	$	2,731	$	2,957
Total gains or losses included in earnings:
Net change in unrealized gain		1		13		10		62
Principal paydowns		(195)		(57)		(457)		(239)
Balance, end of period	$	2,284	$	2,780	$	2,284	$	2,780

Private label mortgage backed security | Recurring basis

Fair Value Disclosures

Fair value inputs quantitative information

	Fair		Valuation
September 30, 2022 (dollars in thousands)	Value		Technique	Unobservable Inputs	Range
Private label mortgage-backed security	$	2,284	Discounted cash flow	(1) Constant prepayment rate	4.5% - 4.7%
				(2) Probability of default	1.8% - 9.3%
				(3) Loss severity	25% - 35%

	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				Nine Months Ended
	September 30,				September 30,
(in thousands)	2022		2021		2022		2021
Balance, beginning of period	$	3,824	$	3,700	$	3,847	$	3,800
Total gains or losses included in earnings:
Discount accretion		14		14		42		40
Net change in unrealized gain		72		136		21		10
Balance, end of period	$	3,910	$	3,850	$	3,910	$	3,850

Mortgage Loans Held for Sale

Fair Value Disclosures

Schedule of aggregate fair value, contractual balance and unrealized gain

(in thousands)	September 30, 2022		December 31, 2021
Aggregate fair value	$	2,912	$	29,393
Contractual balance		2,925		28,668
Unrealized (loss) gain		(13)		725

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2022		2021		2022		2021
Interest income	$	112	$	253	$	469	$	802
Change in fair value		(141)		(373)		(738)		(1,527)
Total included in earnings	$	(29)	$	(120)	$	(269)	$	(725)

Consumer loans

Fair Value Disclosures

Schedule of aggregate fair value, contractual balance and unrealized gain

(in thousands)	September 30, 2022		December 31, 2021
Aggregate fair value	$	8,796	$	19,747
Contractual balance		8,868		19,633
Unrealized (loss) gain		(72)		114

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2022		2021		2022		2021
Interest income	$	3,009	$	2,102	$	8,889	$	4,070
Change in fair value		32		(16)		(186)		62
Total included in earnings	$	3,041	$	2,086	$	8,703	$	4,132

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
September 30, 2022 (dollars in thousands)	Value		Technique	Unobservable Inputs	Rate
Consumer loans held for sale	$	8,796	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%