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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Schedule of Fair Value of Assets and Liabilities Recorded on a Recurring Basis

The following tables summarize financial assets and financial liabilities recorded at fair value on a recurring basis at September 30, 2024, and December 31, 2023, segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value. There were no changes in the valuation techniques during 2024 or 2023.

			September 30, 2024
(Dollars in thousands)			Level 1						Level 2						Level 3						Total
State and municipal securities			$	—					$	246,707					$	42,155					$	288,862
Corporate bonds			—						79,268						1,000						80,268
U.S. treasury securities			30,729						—						—						30,729
U.S. government agency securities			—						14,658						—						14,658
Commercial mortgage-backed securities			—						100,172						—						100,172
Residential mortgage-backed securities			—						475,169						—						475,169
Commercial collateralized mortgage obligations			—						48,510						—						48,510
Residential collateralized mortgage obligations			—						122,597						—						122,597
Securities available for sale			30,729						1,087,081						43,155						1,160,965
Securities carried at fair value through income			—						—						6,533						6,533
Loans held for sale			—						7,631						—						7,631
Other assets - derivatives			—						13,135						—						13,135
Total recurring fair value measurements - assets			$	30,729					$	1,107,847					$	49,688					$	1,188,264
Other liabilities - derivatives			$	—					$	(11,993)					$	—					$	(11,993)
Total recurring fair value measurements - liabilities			$	—					$	(11,993)					$	—					$	(11,993)

			December 31, 2023
(Dollars in thousands)			Level 1						Level 2						Level 3						Total
State and municipal securities			$	—					$	232,679					$	49,447					$	282,126
Corporate bonds			—						82,635						1,000						83,635
U.S. treasury securities			55,480						—						—						55,480
U.S. government agency securities			—						24,160						—						24,160
Commercial mortgage-backed securities			—						93,396						—						93,396
Residential mortgage-backed securities			—						506,502						—						506,502
Commercial collateralized mortgage obligations			—						35,183						—						35,183
Residential collateralized mortgage obligations			—						130,144						—						130,144
Asset-backed securities			—						43,005						—						43,005
Securities available for sale			55,480						1,147,704						50,447						1,253,631
Securities carried at fair value through income			—						—						6,808						6,808
Loans held for sale			—						16,852						—						16,852
Mortgage servicing rights			—						—						15,637						15,637
Other assets - derivatives			—						20,487						—						20,487
Total recurring fair value measurements - assets			$	55,480					$	1,185,043					$	72,892					$	1,313,415
Other liabilities - derivatives			$	—					$	(18,300)					$	—					$	(18,300)
Total recurring fair value measurements - liabilities			$	—					$	(18,300)					$	—					$	(18,300)

Schedule of Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the nine months ended September 30, 2024 and 2023, are summarized as follows:

(Dollars in thousands)									MSRs						Securities Available for Sale						Securities at Fair Value Through Income
Balance at January 1, 2024									$	15,637					$	50,447					$	6,808
Gain (loss) recognized in earnings:
Mortgage banking revenue									450						—						—
Other noninterest income									—						—						24
Loss recognized in AOCI									—						511						—
Purchases, issuances, sales and settlements:
Sales									(16,087)						—						—
Settlements									—						(7,803)						(299)
Balance at September 30, 2024									$	—					$	43,155					$	6,533

(Dollars in thousands)									MSRs						Securities Available for Sale						Securities at Fair Value Through Income
Balance at January 1, 2023									$	20,824					$	55,769					$	6,368
Gain (loss) recognized in earnings:
Mortgage banking revenue(1)									(485)						—						—
Other noninterest income									—						—						689
Loss recognized in AOCI									—						(703)						—
Purchases, issuances, sales and settlements:
Originations									656						—						—
Sales									(1,806)						—						—
Settlements									—						(2,627)						(285)
Balance at September 30, 2023									$	19,189					$	52,439					$	6,772

___________________________

(1)Total mortgage banking revenue includes changes in fair value due to market changes and run-off.

Schedule of Significant Assumptions Used to Value Mortgage Servicing Rights

The significant assumptions used to value MSRs were as follows:

									December 31, 2023
															Range						Weighted Average(1)
Prepayment speeds															7.49% - 8.50%						8.10		%
Discount rates															10.25% - 12.75%						10.31		%

__________________________

(1)The weighted average was calculated with reference to the principal balance of the underlying mortgages.

Schedule of Difference Between Fair Value and the Unpaid Principal Balance for Financial Instruments for which the Fair Value Option has been Elected and Classified in Income Statement

The following tables summarize the difference between the fair value and the unpaid principal balance for financial instruments for which the fair value option has been elected:

			September 30, 2024
(Dollars in thousands)			Aggregate Fair Value						Principal Balance/Amortized Cost						Difference
Loans held for sale(1)			$	7,631					$	7,394					$	237
Securities carried at fair value through income			6,533						6,515						18
Total			$	14,164					$	13,909					$	255

____________________________

(1)There were no loans held for sale that were designated as nonaccrual or 90 days or more past due at September 30, 2024.

			December 31, 2023
(Dollars in thousands)			Aggregate Fair Value						Principal Balance/Amortized Cost						Difference
Loans held for sale(1)			$	16,852					$	16,475					$	377
Securities carried at fair value through income			6,808						6,815						(7)
Total			$	23,660					$	23,290					$	370

____________________________

(1)There were no of loans held for sale that were designated as nonaccrual or 90 days or more past due at December 31, 2023.

Changes in the fair value of assets for which the Company elected the fair value option are classified in the consolidated statements of income line items reflected in the following table:

(Dollars in thousands)			Three Months Ended September 30,												Nine Months Ended September 30,
Changes in fair value included in noninterest income:			2024						2023						2024						2023
Mortgage banking revenue (loans held for sale)(1)			$	(273)					$	(22)					$	(139)					$	(214)
Other income:
Securities carried at fair value through income			35						666						25						689
Total fair value option impact on noninterest income			$	(238)					$	644					$	(114)					$	475

____________________________

(1)The fair value option impact on noninterest income is offset by the derivative gain/loss recognized in noninterest income. Please see Note 6 — Mortgage Banking for more detail.

Schedule of Carrying Value and Estimated Fair Value of Financial Instruments Not Measured at Fair Value

The carrying value and estimated fair values of financial instruments not recorded at fair value are as follows:

(Dollars in thousands)			September 30, 2024												December 31, 2023
Financial assets: Level 1 inputs:			Carrying Value						Estimated Fair Value						Carrying Value						Estimated Fair Value
Cash and cash equivalents			$	321,191					$	321,191					$	280,441					$	280,441
Level 2 inputs:
Non-marketable equity securities held in other financial institutions			67,068						67,068						55,190						55,190
Accrued interest and loan fees receivable			42,925						42,925						41,688						41,688
Level 3 inputs:
Securities held to maturity			11,096						10,701						11,615						10,848
LHFI, net			7,860,801						7,547,324						7,564,076						7,177,720
Financial liabilities:
Level 2 inputs:
Deposits			8,486,568						8,481,684						8,251,125						8,240,520
FHLB advances, repurchase agreements and other borrowings			30,446						30,359						83,598						83,187
Subordinated indebtedness			159,861						159,277						194,279						186,251
Accrued interest payable			15,510						15,510						12,272						12,272

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- 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.

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