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FAIR VALUE DISCLOSURES AND REPORTING, THE FAIR VALUE OPTION AND FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2024

Estimated fair values for the Company’s financial instruments are as follows, as of the dates noted:


September 30, 2024	Carrying Amount		Estimated Fair Value		Fair Value Measurements
($ in thousands)
					Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)


Financial Instruments:
Assets:
Cash and cash equivalents	$	214,135	$	214,135	$	214,135	$	—	$	—
Securities available-for-sale	1,060,014		1,060,014		5,181		1,028,714		26,119
Securities held-to-maturity	602,328		574,750		—		574,750		—
Loans held for sale	2,987		2,987		—		2,987		—
Loans, net	5,262,890		5,023,940		—		—		5,023,940
Accrued interest receivable	33,384		33,384		—		7,342		26,042
Interest rate swaps	11,389		11,389		—		11,352		37
Liabilities:
Noninterest-bearing deposits	$	1,796,746	$	1,796,746	$	—	$	1,796,746	$	—
Interest-bearing deposits	4,763,966		4,702,034		—		4,702,034		—
Subordinated debentures	123,645		112,327		—		—		112,327
FHLB and other borrowings	207,500		207,500		—		207,500		—
Accrued interest payable	13,720		13,720		—		13,720		—
Interest rate swaps	11,388		11,388		—		11,352		36


December 31, 2023	Carrying Amount		Estimated Fair Value		Fair Value Measurements
($ in thousands)
					Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)


Financial Instruments:
Assets:
Cash and cash equivalents	$	355,147	$	355,147	$	355,147	$	—	$	—
Securities available-for-sale	1,039,322		1,039,322		16,675		1,004,434		18,213
Securities held-to-maturity	654,539		615,944		—		615,944		—
Loans held for sale	2,914		2,914		—		2,914		—
Loans, net	5,116,010		4,877,935		—		—		4,877,935
Accrued interest receivable	33,300		33,300		—		8,632		24,668
Interest rate swaps	12,170		12,170		—		12,129		41
Liabilities:
Non-interest-bearing deposits	$	1,849,013	$	1,849,013	$	—	$	1,849,013	$	—
Interest-bearing deposits	4,613,859		4,430,227		—		4,430,227		—
Subordinated debentures	123,386		109,426		—		—		109,426
FHLB and other borrowings	390,000		390,000		—		390,000		—
Accrued interest payable	22,702		22,702		—		22,702		—
Interest rate swaps	12,175		12,175		—		12,129		46

Schedule of Assets Measured at Fair Value on a Recurring Basis

Assets measured at fair value on a recurring basis are summarized below:


September 30, 2024
($ in thousands)	Fair Value		Fair Value Measurements Using
			Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Available-for-sale
U.S. Treasury	$	5,181	$	5,181	$	—	$	—
Obligations of U.S. Government agencies and sponsored entities	98,580		—		98,580		—
Municipal securities	420,701		—		394,611		26,090
Mortgage-backed securities	502,435		—		502,435		—
Corporate obligations	33,117		—		33,088		29
Total available-for-sale	$	1,060,014	$	5,181	$	1,028,714	$	26,119
Loans held for sale	$	2,987	$	—	$	2,987	$	—
Interest rate swaps	$	11,389	$	—	$	11,352	$	37
Liabilities:
Interest rate swaps	$	11,388	$	—	$	11,352	$	36


December 31, 2023
($ in thousands)	Fair Value		Fair Value Measurements Using
			Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available-for-sale
U.S. Treasury	$	16,675	$	16,675	$	—	$	—
Obligations of U.S. Government agencies and sponsored entities	104,923		—		104,923		—
Municipal securities	438,466		—		420,283		18,183
Mortgage-backed securities	441,661		—		441,661		—
Corporate obligations	37,597		—		37,567		30
Total available-for-sale	$	1,039,322	$	16,675	$	1,004,434	$	18,213
Loans held for sale	$	2,914	$	—	$	2,914	$	—
Interest rate swaps	$	12,170	$	—	$	12,129	$	41
Liabilities:
Interest rate swaps	$	12,175	$	—	$	12,129	$	46

Schedule of Reconciliation of Activity for Assets Measured at Fair Value Based on Significant Unobservable Inputs (Level 3)

The following is a reconciliation of activity for assets measured at fair value based on significant unobservable inputs (Level 3) information.


	Bank-Issued Trust Preferred Securities
($ in thousands)	2024		2023
Balance, January 1	$	30	$	31
Paydowns	(1)		—
Balance at September 30	$	29	$	31


	Municipal Securities
($ in thousands)	2024		2023
Balance, January 1	$	18,183	$	15,117
Maturities, calls and paydowns	(580)		(532)
Transfer from level 2 to level 3	8,384		6,085
Transfer from level 3 to level 2	(270)		—
Unrealized gain (loss) included in comprehensive income	373		(1,177)
Balance at September 30	$	26,090	$	19,493

Schedule of Quantitative Information About Recurring Level 3 Fair Value Measurements


	Interest Rate Swaps - Risk Participations
($ in thousands)	2024		2023
Balance, January 1	$	(5)	$	—
RPA-in	10		11
RPA-out	(4)		—
Balance at September 30	$	1	$	11

The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a recurring basis at September 30, 2024 and December 31, 2023. The following tables present quantitative information about recurring Level 3 fair value measurements.

($ in thousands)

Trust Preferred Securities

Fair Value

Valuation Technique

Significant Unobservable
Inputs

Range of Inputs

September 30, 2024

Discounted cash flow

Probability of default

7.09% - 7.45%

December 31, 2023

Discounted cash flow

Probability of default

7.81% - 7.89%

Municipal Securities

Fair Value

Valuation Technique

Significant
Unobservable Inputs

Range of Inputs

September 30, 2024

26,090

Discounted cash flow

Discount Rate

2.60% - 5.56%

December 31, 2023

18,183

Discounted cash flow

Discount Rate

2.34% - 5.50%

Interest Rate Swaps - Risk Participations

Fair Value

Valuation Technique

Significant
Unobservable Inputs

Range of Inputs

September 30, 2024

Credit Value Adjustment

Credit Spread

225 bps - 300 bps

Recovery Rate

70%

December 31, 2023

(5)

Credit Value Adjustment

Credit Spread

225 bps - 300 bps

Recovery Rate

70%

Schedule of Fair Value Measurement of Assets Measured at Fair Value on a Non-Recurring Basis and the Level Within the Fair Value Hierarchy

The following table presents the fair value measurement of assets measured at fair value on a non-recurring basis and the level within the fair value hierarchy in which the fair value measurements were classified at September 30, 2024 and December 31, 2023.


September 30, 2024
($ in thousands)			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral dependent loans	$	2,894	$	—	$	—	$	2,894
Other real estate owned	7,314		—		—		7,314


December 31, 2023
($ in thousands)			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Collateral dependent loans	$	2,494	$	—	$	—	$	2,494
Other real estate owned	8,320		—		—		8,320

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References + Details