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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2023
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS We use fair value measurements when recording and disclosing certain financial assets and liabilities. Debt securities, equity securities and derivative financial instruments are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record other financial instruments at fair value on a nonrecurring basis, such as loans held for sale, individually assessed loans, other real estate owned, or OREO, and other repossessed assets, mortgage servicing rights, or MSRs, and certain other assets. Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities; it is not a forced transaction. In determining fair value, we use various valuation approaches, including market, income and cost approaches. The fair value standard establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing an asset or liability, which are developed based on market data that we have obtained from independent sources. Unobservable inputs reflect our estimates of assumptions that market participants would use in pricing an asset or liability, which are developed based on the best information available in the circumstances. The fair value hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows: Level 1: valuation is based upon unadjusted quoted market prices for identical instruments traded in active markets. Level 2: valuation is based upon quoted market prices for similar instruments traded in active markets, quoted market prices for identical or similar instruments traded in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by market data. Level 3: valuation is derived from other valuation methodologies, including discounted cash flow models and similar techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in determining fair value. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. There have been no changes in our valuation methodologies during the three and nine months ended September 30, 2023. Refer to Note 1 Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements in our 2022 Form 10-K for more information on the valuation methodologies that we use for financial instruments recorded at fair value on a recurring or nonrecurring basis. Assets and Liabilities Recorded at Fair Value on a Recurring Basis The following tables present our assets and liabilities that are measured at fair value on a recurring basis by fair value hierarchy level at the dates presented:
| September 30, 2023
(dollars in thousands) | Level 1 |  | Level 2 |  | Level 3 |  | Total
ASSETS |  |  |  |  |  |  |
Available-for-sale debt securities: |  |  |  |  |  |  |
U.S. Treasury securities | $ | 130,037 |  |  | $ | — |  |  | $ | — |  |  | $ | 130,037 |
Obligations of U.S. government corporations and agencies | — |  |  | 42,049 |  |  | — |  |  | 42,049 |
Collateralized mortgage obligations of U.S. government corporations and agencies | — |  |  | 429,978 |  |  | — |  |  | 429,978 |
Residential mortgage-backed securities of U.S. government corporations and agencies | — |  |  | 36,886 |  |  | — |  |  | 36,886 |
Commercial mortgage-backed securities of U.S. government corporations and agencies | — |  |  | 286,107 |  |  | — |  |  | 286,107 |
Obligations of states and political subdivisions | — |  |  | 29,210 |  |  | — |  |  | 29,210 |
Total Available-for-Sale Debt Securities | 130,037 |  |  | 824,230 |  |  | — |  |  | 954,267 |
Equity securities | 923 |  |  | 72 |  |  | — |  |  | 995 |
Total Securities Available for Sale | 130,960 |  |  | 824,302 |  |  | — |  |  | 955,262 |
Securities held in a deferred compensation plan | 8,289 |  |  | — |  |  | — |  |  | 8,289 |
Derivative financial assets: |  |  |  |  |  |  |
Interest rate swaps - commercial loans | — |  |  | 93,601 |  |  | — |  |  | 93,601 |
Total Assets | $ | 139,249 |  |  | $ | 917,903 |  |  | $ | — |  |  | $ | 1,057,152 |
LIABILITIES |  |  |  |  |  |  |
Derivative financial liabilities: |  |  |  |  |  |  |
Interest rate swaps - commercial loans | $ | — |  |  | $ | 94,438 |  |  | $ | — |  |  | $ | 94,438 |
Interest rate swaps - cash flow hedge | — |  |  | 25,668 |  |  | — |  |  | 25,668 |
Total Liabilities | $ | — |  |  | $ | 120,106 |  |  | $ | — |  |  | $ | 120,106 |
| December 31, 2022
(dollars in thousands) | Level 1 |  | Level 2 |  | Level 3 |  | Total
ASSETS |  |  |  |  |  |  |
Available-for-sale debt securities: |  |  |  |  |  |  |
U.S. Treasury securities | $ | 131,695 |  |  | $ | — |  |  | $ | — |  |  | $ | 131,695 |
Obligations of U.S. government corporations and agencies | — |  |  | 41,811 |  |  | — |  |  | 41,811 |
Collateralized mortgage obligations of U.S. government corporations and agencies | — |  |  | 428,407 |  |  | — |  |  | 428,407 |
Residential mortgage-backed securities of U.S. government corporations and agencies | — |  |  | 41,587 |  |  | — |  |  | 41,587 |
Commercial mortgage-backed securities of U.S. government corporations and agencies | — |  |  | 327,313 |  |  | — |  |  | 327,313 |
Corporate obligations | — |  |  | 500 |  |  | — |  |  | 500 |
Obligations of states and political subdivisions | — |  |  | 30,471 |  |  | — |  |  | 30,471 |
Total Available-for-Sale Debt Securities | 131,695 |  |  | 870,089 |  |  | — |  |  | 1,001,784 |
Equity securities | 952 |  |  | 42 |  |  | — |  |  | 994 |
Total Securities Available for Sale | 132,647 |  |  | 870,131 |  |  | — |  |  | 1,002,778 |
Securities held in a deferred compensation plan | 8,087 |  |  | — |  |  | — |  |  | 8,087 |
Derivative financial assets: |  |  |  |  |  |  |
Interest rate swaps - commercial loans | — |  |  | 83,449 |  |  | — |  |  | 83,449 |
Interest rate lock commitments | — |  |  | — |  |  | 5 |  |  | 5 |
Forward sale contracts - mortgage loans | — |  |  | — |  |  | 2 |  |  | 2 |
Total Assets | $ | 140,734 |  |  | $ | 953,580 |  |  | $ | 7 |  |  | $ | 1,094,321 |
LIABILITIES |  |  |  |  |  |  |
Derivative financial liabilities: |  |  |  |  |  |  |
Interest rate swaps - commercial loans | $ | — |  |  | $ | 83,449 |  |  | $ | — |  |  | $ | 83,449 |
Interest rate swaps - cash flow hedge | — |  |  | 21,368 |  |  | — |  |  | 21,368 |
Total Liabilities | $ | — |  |  | $ | 104,817 |  |  | $ | — |  |  | $ | 104,817 |
Assets Recorded at Fair Value on a Nonrecurring Basis We may be required to measure certain assets and liabilities at fair value on a nonrecurring basis. Nonrecurring assets are recorded at the lower of cost or fair value in our consolidated financial statements. There were no liabilities measured at fair value on a nonrecurring basis at either September 30, 2023 or December 31, 2022. There were no Level 3 assets measured at fair value on a nonrecurring basis as of September 30, 2023. At December 31, 2022, there was one Level 3 OREO property measured at fair value for $3.1 million. The following tables present the carrying values and fair values of our financial instruments at the dates presented:
| Carrying Value(1) |  | Fair Value Measurements at September 30, 2023
(dollars in thousands) |  | Total |  | Level 1 |  | Level 2 |  | Level 3
ASSETS |  |  |  |  |  |  |  |  |
Cash and due from banks, including interest-bearing deposits | $ | 238,453 |  |  | $ | 238,453 |  |  | $ | 238,453 |  |  | $ | — |  |  | $ | — |
Securities available for sale | 955,262 |  |  | 955,262 |  |  | 130,960 |  |  | 824,302 |  |  |
Loans held for sale | 257 |  |  | 257 |  |  | — |  |  | 257 |  |  | — |
Portfolio loans, net | 7,407,712 |  |  | 7,059,741 |  |  | — |  |  | — |  |  | 7,059,741 |
Collateral receivable | 10,506 |  |  | 10,506 |  |  | 10,506 |  |  | — |  |  | — |
Securities held in a deferred compensation plan | 8,289 |  |  | 8,289 |  |  | 8,289 |  |  | — |  |  | — |
Mortgage servicing rights | 6,534 |  |  | 9,411 |  |  | — |  |  | — |  |  | 9,411 |
Interest rate swaps - commercial loans | 93,601 |  |  | 93,601 |  |  | — |  |  | 93,601 |  |  | — |
LIABILITIES |  |  |  |  |  |  |  |  |
Deposits | $ | 7,222,897 |  |  | $ | 7,205,014 |  |  | $ | 5,735,018 |  |  | $ | 1,469,996 |  |  | $ | — |
Collateral payable | 77,049 |  |  | 77,049 |  |  | 77,049 |  |  | — |  |  | — |
Short-term borrowings | 630,000 |  |  | 630,000 |  |  | — |  |  | 630,000 |  |  | — |
Long-term borrowings | 39,396 |  |  | 38,983 |  |  | — |  |  | 38,983 |  |  | — |
Junior subordinated debt securities | 49,343 |  |  | 49,343 |  |  | — |  |  | 49,343 |  |  | — |
Interest rate swaps - commercial loans | 94,438 |  |  | 94,438 |  |  | — |  |  | 94,438 |  |  | — |
Interest rate swaps - cash flow hedge | 25,668 |  |  | 25,668 |  |  | — |  |  | 25,668 |  |  | — |
(1) As reported in the Consolidated Balance Sheets |  |  |  |  |  |  |  |  |
| Carrying Value(1) |  | Fair Value Measurements at December 31, 2022
(dollars in thousands) |  | Total |  | Level 1 |  | Level 2 |  | Level 3
ASSETS |  |  |  |  |  |  |  |  |
Cash and due from banks, including interest-bearing deposits | $ | 210,009 |  |  | $ | 210,009 |  |  | $ | 210,009 |  |  | $ | — |  |  | $ | — |
Securities available for sale | 1,002,778 |  |  | 1,002,778 |  |  | 132,647 |  |  | 870,131 |  |  | — |
Loans held for sale | 16 |  |  | 16 |  |  | — |  |  | 16 |  |  | — |
Portfolio loans, net | 7,082,629 |  |  | 6,815,167 |  |  | — |  |  | — |  |  | 6,815,167 |
Collateral receivable | 6,307 |  |  | 6,307 |  |  | 6,307 |  |  | — |  |  | — |
Securities held in a deferred compensation plan | 8,087 |  |  | 8,087 |  |  | 8,087 |  |  | — |  |  | — |
Mortgage servicing rights | 7,147 |  |  | 9,994 |  |  | — |  |  | — |  |  | 9,994 |
Interest rate swaps - commercial loans | 83,449 |  |  | 83,449 |  |  | — |  |  | 83,449 |  |  | — |
Interest rate lock commitments | 5 |  |  | 5 |  |  | — |  |  | — |  |  | 5 |
Forward sale contracts | 2 |  |  | 2 |  |  | — |  |  | — |  |  | 2 |
LIABILITIES |  |  |  |  |  |  |  |  |
Deposits | $ | 7,219,970 |  |  | $ | 7,194,225 |  |  | $ | 6,285,377 |  |  | $ | 908,848 |  |  | $ | — |
Collateral payable | 65,065 |  |  | 65,065 |  |  | 65,065 |  |  | — |  |  | — |
Short-term borrowings | 370,000 |  |  | 370,000 |  |  | — |  |  | 370,000 |  |  | — |
Long-term borrowings | 14,741 |  |  | 14,174 |  |  | — |  |  | 14,174 |  |  | — |
Junior subordinated debt securities | 54,453 |  |  | 54,453 |  |  | — |  |  | 54,453 |  |  | — |
Interest rate swaps - commercial loans | 83,449 |  |  | 83,449 |  |  | — |  |  | 83,449 |  |  | — |
Interest rate swaps - cash flow hedge | 21,368 |  |  | 21,368 |  |  | — |  |  | 21,368 |  |  | — |
(1) As reported in the Consolidated Balance Sheets |  |  |  |  |  |  |  |  |

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- 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
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