XML 31 R19.htm IDEA: XBRL DOCUMENT
v3.24.1.1.u2

FAIR VALUE | 3 Months Ended
--- | ---
Mar. 31, 2024
FAIR VALUE |
FAIR VALUE | NOTE K: FAIR VALUE Accounting standards establish a framework for measuring fair value and require certain disclosures about such fair value instruments. It defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. exit price). Inputs used to measure fair value are classified into the following hierarchy: ​
​ | ​
● Level 1 - | Quoted prices in active markets for identical assets or liabilities.
● Level 2 - | Quoted prices in active markets for similar assets or liabilities, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.
● Level 3 - | Significant valuation assumptions not readily observable in a market.
​ A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following tables set forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis. There were no transfers between any of the levels for the periods presented. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | March 31, 2024
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Total Fair
(000’s omitted) |  | Level 1 |  | Level 2 |  | Level 3 |  | Value
Available-for-sale investment securities: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
U.S. Treasury and agency securities | ​ | $ | 1,995,421 | ​ | $ | 60,096 | ​ | $ | 0 | ​ | $ | 2,055,517
Obligations of state and political subdivisions | ​ |  | 0 | ​ |  | 460,149 | ​ |  | 0 | ​ |  | 460,149
Government agency mortgage-backed securities | ​ |  | 0 | ​ |  | 332,479 | ​ |  | 0 | ​ |  | 332,479
Corporate debt securities | ​ |  | 0 | ​ |  | 7,440 | ​ |  | 0 | ​ |  | 7,440
Government agency collateralized mortgage obligations | ​ |  | 0 | ​ |  | 8,279 | ​ |  | 0 | ​ |  | 8,279
Total available-for-sale investment securities | ​ |  | 1,995,421 | ​ |  | 868,443 | ​ |  | 0 | ​ |  | 2,863,864
Equity securities | ​ |  | 388 | ​ |  | 0 | ​ |  | 0 | ​ |  | 388
Mortgage loans held for sale | ​ | ​ | 0 | ​ | ​ | 88 | ​ | ​ | 0 | ​ | ​ | 88
Commitments to originate real estate loans for sale | ​ | ​ | 0 | ​ | ​ | 0 | ​ | ​ | 32 | ​ | ​ | 32
Forward sales commitments | ​ | ​ | 0 | ​ | ​ | 37 | ​ | ​ | 0 | ​ | ​ | 37
Total | ​ | $ | 1,995,809 | ​ | $ | 868,568 | ​ | $ | 32 | ​ | $ | 2,864,409
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, 2023
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Total Fair
(000’s omitted) |  | Level 1 |  | Level 2 |  | Level 3 |  | Value
Available-for-sale investment securities: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
U.S. Treasury and agency securities | ​ | $ | 2,019,089 | ​ | $ | 61,694 | ​ | $ | 0 | ​ | $ | 2,080,783
Obligations of state and political subdivisions | ​ |  | 0 | ​ |  | 474,363 | ​ |  | 0 | ​ |  | 474,363
Government agency mortgage-backed securities | ​ |  | 0 | ​ |  | 348,526 | ​ |  | 0 | ​ |  | 348,526
Corporate debt securities | ​ |  | 0 | ​ |  | 7,394 | ​ |  | 0 | ​ |  | 7,394
Government agency collateralized mortgage obligations | ​ |  | 0 | ​ |  | 8,926 | ​ |  | 0 | ​ |  | 8,926
Total available-for-sale investment securities | ​ |  | 2,019,089 | ​ |  | 900,903 | ​ |  | 0 | ​ |  | 2,919,992
Equity securities | ​ |  | 372 | ​ |  | 0 | ​ |  | 0 | ​ |  | 372
Mortgage loans held for sale | ​ |  | 0 | ​ |  | 414 | ​ |  | 0 | ​ |  | 414
Commitments to originate real estate loans for sale | ​ | ​ | 0 | ​ | ​ | 0 | ​ | ​ | 2 | ​ | ​ | 2
Forward sales commitments | ​ | ​ | 0 | ​ | ​ | 6 | ​ | ​ | 0 | ​ | ​ | 6
Total | ​ | $ | 2,019,461 | ​ | $ | 901,323 | ​ | $ | 2 | ​ | $ | 2,920,786
​ ​ The valuation techniques used to measure fair value for the items in the table above are as follows:
● | Available-for-sale investment securities and equity securities – The fair values of available-for-sale investment securities are based upon quoted prices, if available. If quoted prices are not available, fair values are measured using quoted market prices for similar securities or model-based valuation techniques. Level 1 securities include U.S. Treasury obligations and marketable equity securities that are traded by dealers or brokers in active over-the-counter markets. Level 2 securities include U.S. agency securities, mortgage-backed securities issued by government-sponsored entities, municipal securities and corporate debt securities that are valued by reference to prices for similar securities or through model-based techniques in which all significant inputs, such as reported trades, trade execution data, interest rate swap yield curves, market prepayment speeds, credit information, market spreads, and security’s terms and conditions, are observable. See Note D for further disclosure of the fair value of investment securities.
● | Mortgage loans held for sale – The Company has elected to value loans held for sale at fair value in order to more closely match the gains and losses associated with loans held for sale with the gains and losses on forward sales contracts. Accordingly, the impact on the valuation will be recognized in the Company’s consolidated statements of income. All mortgage loans held for sale are current and in performing status. The fair value of mortgage loans held for sale is determined using quoted secondary-market prices of loans with similar characteristics and, as such, has been classified as a Level 2 valuation. The unpaid principal value of mortgage loans held for sale was approximately $0.1 million at March 31, 2024 and $0.4 million at December 31, 2023. Mortgage loans held for sale are included in other assets in the consolidated statements of condition. The unrealized gain on mortgage loans held for sale was recognized in mortgage banking revenues in the consolidated statements of income and is immaterial.
● | Forward sales commitments – The Company enters into forward sales commitments to sell certain residential real estate loans. Such commitments are considered to be derivative financial instruments and, therefore, are carried at estimated fair value in the other asset or other liability section of the consolidated statements of condition. The fair value of these forward sales commitments is primarily measured by obtaining pricing from certain government-sponsored entities and reflects the underlying price the entity would pay the Company for an immediate sale on these mortgages. As such, these instruments are classified as Level 2 in the fair value hierarchy.
● | Commitments to originate real estate loans for sale – The Company enters into various commitments to originate residential real estate loans for sale. Such commitments are considered to be derivative financial instruments and, therefore, are carried at estimated fair value in the other asset or other liability section of the consolidated statements of condition. The estimated fair value of these commitments is determined using quoted secondary market prices obtained from certain government-sponsored entities. Additionally, accounting guidance requires the expected net future cash flows related to the associated servicing of the loan to be included in the fair value measurement of the derivative. The expected net future cash flows are based on a valuation model that calculates the present value of estimated net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income. Such assumptions include estimates of the cost of servicing loans, appropriate discount rate and prepayment speeds. The determination of expected net cash flows is considered a significant unobservable input contributing to the Level 3 classification of commitments to originate real estate loans for sale.
The changes in Level 3 assets measured at fair value on a recurring basis are immaterial. The fair value information of assets and liabilities measured on a non-recurring basis presented below is not as of the period-end, but rather as of the date the fair value adjustment was recorded closest to the date presented. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | March 31, 2024 | ​ | December 31, 2023
​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ | ​ | Total Fair |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ | Total Fair
(000’s omitted) | ​ | Level 1 | ​ | Level 2 | ​ | Level 3 | ​ | Value | ​ | Level 1 | ​ | Level 2 | ​ | Level 3 | ​ | Value
Individually assessed loans | ​ | $ | 0 | ​ | $ | 0 | ​ | $ | 9,224 |  | $ | 9,224 | ​ | $ | 0 | ​ | $ | 0 | ​ | $ | 3,014 |  | $ | 3,014
Other real estate owned | ​ | ​ | 0 | ​ | ​ | 0 | ​ | ​ | 1,742 |  | ​ | 1,742 | ​ | ​ | 0 | ​ | ​ | 0 | ​ | ​ | 1,159 |  | ​ | 1,159
Mortgage servicing rights | ​ |  | 0 | ​ |  | 0 | ​ |  | 76 |  |  | 76 | ​ |  | 0 | ​ |  | 0 | ​ |  | 162 |  |  | 162
Contingent consideration | ​ | ​ | 0 | ​ | ​ | 0 | ​ | ​ | (8,216) | ​ | ​ | (8,216) | ​ | ​ | 0 | ​ | ​ | 0 | ​ | ​ | (5,150) | ​ | ​ | (5,150)
Total | ​ | $ | 0 | ​ | $ | 0 | ​ | $ | 2,826 |  | $ | 2,826 | ​ | $ | 0 | ​ | $ | 0 | ​ | $ | (815) |  | $ | (815)
​ Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records nonrecurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Nonrecurring adjustments also include certain impairment amounts for collateral-dependent loans calculated when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using independent appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace, adjusted for non-observable inputs. Thus, the resulting nonrecurring fair value measurements are generally classified as Level 3. Estimates of fair value used for other collateral supporting commercial loans generally are based on assumptions not observable in the marketplace and, therefore, such valuations classify as Level 3. Other real estate owned (“OREO”) is valued at the time the loan is foreclosed upon and the asset is transferred to OREO. The value is based primarily on third party appraisals, less estimated costs to sell. The appraisals are sometimes further discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the customer and customer’s business. Such discounts are significant, ranging from 9.0% to 73.8% at March 31, 2024 and result in a Level 3 classification of the inputs for determining fair value. OREO is reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors identified above. The Company recovers the carrying value of OREO through the sale of the property. The ability to affect future sales prices is subject to market conditions and factors beyond the Company’s control and may impact the estimated fair value of a property. Originated mortgage servicing rights are recorded at their fair value at the time of sale of the underlying loan, and are amortized in proportion to and over the estimated period of net servicing income. The fair value of mortgage servicing rights is based on a valuation model incorporating inputs that market participants would use in estimating future net servicing income. Such inputs include estimates of the cost of servicing loans, appropriate discount rate and prepayment speeds and are considered to be unobservable and contribute to the Level 3 classification of mortgage servicing rights. In accordance with GAAP, the Company must record impairment charges, on a nonrecurring basis, when the carrying value of a stratum exceeds its estimated fair value. Impairment is recognized through a valuation allowance. There is a valuation allowance of approximately $1.2 million at March 31, 2024 and December 31, 2023. The Company has recorded contingent consideration liabilities that arise from acquisition activity. The contingent consideration is recorded at fair value at the date of acquisition. The valuation of contingent consideration is calculated using an income approach method, which provides an estimation of the fair value of an asset or liability based on future cash flows over a discrete projection period, discounted to present value using an appropriate rate of return. The assumptions used in the valuation calculation are based on significant unobservable inputs, therefore such valuations classify as Level 3. The contingent consideration related to the FBD acquisition completed in 2021 was revalued at December 31, 2023. The remaining contingent consideration accrual was adjusted to the maximum potential amount of $2.7 million, using a potential probability of achievement of 100%. The first of the two required payments were made on the TGA contingent consideration in the third quarter of 2023 in the amount of $2.4 million, based on actual retained revenue results. The remaining contingent consideration liability related to the TGA acquisition was revalued at December 31, 2023 for an adjusted fair value of $1.0 million. The Company determines fair values based on quoted market values, where available, estimates of present values, or other valuation techniques. Those techniques are significantly affected by the assumptions used, including, but not limited to, the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in immediate settlement of the instrument. The significant unobservable inputs used in the determination of fair value of assets classified as Level 3 on a recurring or non-recurring basis are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ | ​ |  | ​ |  | ​ |  | Significant Unobservable |
​ | ​ | Fair Value at | ​ | ​ | ​ | ​ | ​ | Input Range | ​
(000’s omitted, except per loan data) | ​ | March 31, 2024 | ​ | Valuation Technique | ​ | Significant Unobservable Inputs |  | (Weighted Average) | ​
Individually assessed loans | ​ | $ | 9,224 |  | Fair value of collateral |  | Estimated cost of disposal/market adjustment |  | ​ | 27.2 | %
Other real estate owned | ​ | ​ | 1,742 |  | Fair value of collateral |  | Estimated cost of disposal/market adjustment |  | ​ | 9.0% - 73.8% (58.8%) | ​
Commitments to originate real estate loans for sale | ​ |  | 32 |  | Discounted cash flow |  | Embedded servicing value |  | ​ | 1.0 | %
Mortgage servicing rights | ​ |  | 76 |  | Discounted cash flow |  | Weighted average constant prepayment rate |  | ​ | 5.0% - 14.4% (5.2%) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Weighted average discount rate | ​ | ​ | 5.0% - 5.2% (5.2%) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Adequate compensation | ​ | $ | 7/loan | ​
Contingent consideration | ​ | ​ | (8,216) | ​ | Discounted cash flow | ​ | Discount rate | ​ | ​ | 6.7% - 19.1% (12.1%) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Probability of achievement | ​ | ​ | 82.0% - 100.0% (94.1%) | ​
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Significant Unobservable | ​
​ | ​ | Fair Value at | ​ | ​ | ​ | ​ | ​ | Input Range | ​
(000's omitted, except per loan data) | ​ | December 31, 2023 | ​ | Valuation Technique | ​ | Significant Unobservable Inputs | ​ | (Weighted Average) |
Individually assessed loans | ​ | $ | 3,014 |  | Fair value of collateral |  | Estimated cost of disposal/market adjustment |  | ​ | 27.2 | %
Other real estate owned | ​ | ​ | 1,159 |  | Fair value of collateral |  | Estimated cost of disposal/market adjustment |  | ​ | 9.0% - 73.8% (45.8%) | ​
Commitments to originate real estate loans for sale | ​ | ​ | 2 | ​ | Discounted cash flow | ​ | Embedded servicing value | ​ | ​ | 1.0 | %
Mortgage servicing rights | ​ |  | 162 |  | Discounted cash flow |  | Weighted average constant prepayment rate |  | ​ | 4.2% - 5.1% (4.2%) | ​
​ | ​ |  | ​ |  |  |  | Weighted average discount rate |  | ​ | 4.6% - 5.0% (4.9%) | ​
​ | ​ | ​ | ​ | ​ | ​ |  | Adequate compensation | ​ | $ | 7/loan | ​
Contingent consideration | ​ | ​ | (5,150) | ​ | Discounted cash flow | ​ | Discount rate | ​ | ​ | 6.7% - 6.9% (6.9%) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Probability of achievement | ​ | ​ | 100% | ​
​ The significant unobservable inputs used in the determination of the fair value of assets classified as Level 3 have an inherent measurement uncertainty that, if changed, could result in higher or lower fair value measurements of these assets as of the reporting date. The weighted average of the estimated cost of disposal/market adjustment for individually assessed loans was calculated by dividing the total of the book value of the collateral of the individually assessed loans classified as Level 3 by the total of the fair value of the collateral of the individually assessed loans classified as Level 3. The weighted average of the estimated cost of disposal/market adjustment for other real estate owned was calculated by dividing the total of the differences between the appraisal values of the real estate and the book values of the real estate divided by the totals of the appraisal values of the real estate. The weighted average of the constant prepayment rate for mortgage servicing rights was calculated by adding the constant prepayment rates used in each loan pool weighted by the balance in each loan pool. The weighted average of the discount rate for mortgage servicing rights was calculated by adding the discount rates used in each loan pool weighted by the balance in each loan pool. The weighted average of the discount rate for the contingent consideration was calculated by adding the discount rates used for the calculation of the fair value of each payment of contingent consideration, weighted by the amount of the payment as part of the total fair value of contingent consideration. The weighted average of the probability of achievement was determined by calculating the proportion of the probability-weighted payment of the total maximum payment, weighted by the amount of the payment as part of the total fair value of contingent consideration. Certain financial instruments and all nonfinancial instruments are excluded from fair value disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The carrying amounts and estimated fair values of the Company’s other financial instruments that are not accounted for at fair value at March 31, 2024 and December 31, 2023 are presented below. The table presented below excludes other financial instruments for which the carrying value approximates fair value including cash and cash equivalents, accrued interest receivable and accrued interest payable. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | March 31, 2024 | ​ | December 31, 2023
​ |  | Carrying |  | Fair |  | Carrying |  | Fair
(000’s omitted) | ​ | Value | ​ | Value | ​ | Value | ​ | Value
Financial assets: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Net loans | ​ | $ | 9,813,409 | ​ | $ | 9,366,599 | ​ | $ | 9,637,929 | ​ | $ | 9,293,902
Held-to-maturity securities | ​ | ​ | 1,217,472 | ​ | ​ | 1,131,615 | ​ | ​ | 1,172,174 | ​ | ​ | 1,121,816
Financial liabilities: | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
Deposits | ​ |  | 13,352,022 | ​ |  | 13,326,950 | ​ |  | 12,928,121 | ​ |  | 12,907,605
Overnight borrowings | ​ |  | 0 | ​ |  | 0 | ​ |  | 53,000 | ​ |  | 53,000
Securities sold under agreement to repurchase, short-term | ​ |  | 287,241 | ​ |  | 287,241 | ​ |  | 304,595 | ​ |  | 304,595
Other Federal Home Loan Bank borrowings | ​ |  | 395,122 | ​ |  | 391,311 | ​ |  | 407,603 | ​ |  | 410,385
​ The following is a further description of the principal valuation methods used by the Company to estimate the fair values of its financial instruments. Loans have been classified as a Level 3 valuation. Fair values for variable rate loans that reprice frequently are based on carrying values. Fair values for fixed rate loans are estimated using discounted cash flows and interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Held-to-maturity U.S. Treasury and agency securities have been classified as a Level 1 valuation. The fair values of held-to-maturity U.S. Treasury and agency investment securities are based upon quoted prices, if available. If quoted prices are not available, fair values are measured using quoted market prices for similar securities or model-based valuation techniques. Held-to-maturity government agency mortgage-backed securities have been classified as a Level 2 valuation. The fair values of held-to-maturity government agency mortgage-backed securities are based on current market rates for similar products. Deposits have been classified as a Level 2 valuation. The fair value of demand deposits, interest-bearing checking deposits, savings accounts and money market deposits is the amount payable on demand at the reporting date. The fair value of time deposit obligations are based on current market rates for similar securities. Borrowings have been classified as a Level 2 valuation. The fair value of overnight borrowings and securities sold under agreement to repurchase, short-term, is the amount payable on demand at the reporting date. Fair values for other FHLB borrowings are estimated using discounted cash flows and interest rates currently being offered on similar securities. Other financial assets and liabilities – Cash and cash equivalents have been classified as a Level 1 valuation, while accrued interest receivable and accrued interest payable have been classified as a Level 2 valuation. The fair values of each approximate the respective carrying values because the instruments are payable on demand or have short-term maturities and present relatively low credit risk and interest rate risk.

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration