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FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
 3 Months Ended
Mar. 31, 2025
Fair Value Disclosures [Abstract]  
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
15. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

Disclosures about Fair Value of Financial Instruments

Fair value estimates, methods and assumptions are set forth below for our financial instruments.

Short-Term Financial Instruments

The carrying values of short-term financial instruments are deemed to approximate fair values. Such instruments are considered readily convertible to cash and include cash and due from financial institutions, interest-bearing deposits in other financial institutions, accrued interest receivable, the majority of short-term FHLB advances and other short-term borrowings, and accrued interest payable.

Investment Securities

The fair value of investment securities is based on market price quotations received from third-party pricing services. The third-party pricing services utilize pricing models supported with timely market data information. Where quoted market prices are not available, fair values are based on quoted market prices of comparable securities.

Loans

Fair values of loans are estimated based on discounted cash flows of portfolios of loans with similar financial characteristics including the type of loan, interest terms and repayment history. Fair values are calculated by discounting scheduled cash flows through estimated maturities using estimated market discount rates. Estimated market discount rates are reflective of credit and interest rate risks inherent in the Company's various loan types and are derived from available market information, as well as specific borrower information. The weighted average discount rate used in the valuation of loans was 6.69% and 7.07% as of March 31, 2025 and December 31, 2024, respectively. In accordance with ASU 2016-01, the fair values of loans are measured based on the notion of exit price.

Loans Held for Sale

The fair value of loans classified as held for sale are generally based upon quoted prices for similar assets in active markets, acceptance of firm offer letters with agreed upon purchase prices, discounted cash flow models that take into account market observable assumptions, or independent appraisals of the underlying collateral securing the loans. We report loans previously held for investment that were transferred to loans held for sale, if any, at fair value, net of estimated selling costs on our consolidated balance sheets.
Deposit Liabilities

The fair values of deposits with no stated maturity, such as noninterest-bearing demand deposits and interest-bearing demand and savings accounts, for the purposes of this disclosure, are shown to equal the carrying amount which is the amount payable on demand. The fair value of time deposits is estimated by discounting future cash flows using rates currently offered for FHLB advances of similar remaining maturities. The weighted average discount rate used in the valuation of time deposits was 4.44% and 4.50% as of March 31, 2025 and December 31, 2024, respectively.

Long-Term Debt

The fair values of our long-term debt is estimated by discounting scheduled cash flows over the contractual borrowing period at the estimated market rate for similar borrowing arrangements. The weighted average discount rate used in the valuation of long-term debt was 7.13% and 6.68% as of March 31, 2025 and December 31, 2024, respectively.

Derivatives

The fair values of derivative financial instruments are based upon current market values, if available. If there are no relevant comparable values, fair values are based on pricing models using current assumptions for forward sale commitments, interest rate lock commitments, risk participation agreements, back-to-back swap agreements, and interest rate swaps.

Off-Balance Sheet Financial Instruments

The fair values of off-balance sheet financial instruments are estimated based on the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties, current settlement values or quoted market prices of comparable instruments.

Limitations

Fair value estimates are made at a specific point in time based on relevant market and financial instrument information. These estimates do not reflect any premium or discount that could result from offering for sale at one time our entire holdings of a particular financial instrument. Because no market exists for a significant portion of our financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates cannot be determined with precision as they are subjective in nature and involve uncertainties and matters of significant judgment. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of future business and the value of assets and liabilities that are not considered financial instruments. For example,
significant assets and liabilities that are not considered financial assets or liabilities include deferred tax assets and premises and equipment.

   Fair Value Measurement Using
(dollars in thousands)Carrying
Amount		Estimated
Fair Value		Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
March 31, 2025     
Financial assets:     
Cash and due from financial institutions$106,670 $106,670 $106,670 $— $— 
Interest-bearing deposits in other financial institutions170,226 170,226 170,226 — — 
Investment securities1,370,067 1,292,096 60,718 1,224,534 6,844 
Loans held for sale2,788 2,788 — 2,788 — 
Loans5,334,547 4,974,386 — — 4,974,386 
Accrued interest receivable24,743 24,743 873 4,544 19,326 
Financial liabilities:     
Deposits:     
Noninterest-bearing demand1,854,241 1,854,241 1,854,241 — — 
Interest-bearing demand and savings and money market3,684,935 3,684,935 3,684,935 — — 
Time1,056,872 1,049,635 — — 1,049,635 
Long-term debt131,405 126,098 — — 126,098 
Accrued interest payable8,757 8,757 107 — 8,650 

   Fair Value Measurement Using
(dollars in thousands)Notional
Amount		Carrying
Amount		Estimated
Fair Value		Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
March 31, 2025     
Off-balance sheet financial instruments: 
Commitments to extend credit$1,257,406 $— $1,179 $— $1,179 $— 
Standby letters of credit and financial guarantees written2,714 — 41 — 41 — 
Derivatives:
Forward sale commitments2,370 1 1 — 1 — 
Risk participation agreements34,969 — — — — — 
Back-to-back swap agreements:
Assets61,909 3,604 3,604 — — 3,604 
Liabilities(61,909)(3,604)(3,604)— — (3,604)
Interest rate swap agreements115,545 6,353 6,353 — 6,353 — 
   Fair Value Measurement Using
(dollars in thousands)Carrying
Amount		Estimated
Fair Value		Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
December 31, 2024     
Financial assets:     
Cash and due from financial institutions$77,774 $77,774 $77,774 $— $— 
Interest-bearing deposits in other financial institutions303,167 303,167 303,167 — — 
Investment securities1,334,588 1,244,339 59,498 1,177,994 6,847 
Loans held for sale5,662 5,662 — 5,662 — 
Loans5,332,852 4,916,765 — — 4,916,765 
Accrued interest receivable 23,378 23,378 462 4,607 18,309 
Financial liabilities:     
Deposits:     
Noninterest-bearing demand1,888,937 1,888,937 1,888,937 — — 
Interest-bearing demand and savings and money market3,667,889 3,667,889 3,667,889 — — 
Time1,087,185 1,079,275 — — 1,079,275 
Long-term debt156,345 153,760 — — 153,760 
Accrued interest payable10,051 10,051 113 — 9,938 

   Fair Value Measurement Using
(dollars in thousands)Notional
Amount		Carrying
Amount		Estimated
Fair Value		Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
December 31, 2024
Off-balance sheet financial instruments:      
Commitments to extend credit$1,219,537 $— $1,167 $— $1,167 $— 
Standby letters of credit and financial guarantees written2,702 — 41 — 41 — 
Derivatives:
Interest rate lock commitments469 (4)(4)— (4)— 
Forward sale commitments4,909 46 46 — 46 — 
Risk participation agreements35,183 — — — — — 
Back-to-back swap agreements:
Assets50,202 3,840 3,840 — — 3,840 
Liabilities(50,202)(3,840)(3,840)— — (3,840)
Interest rate swap agreements115,545 8,382 8,382 — 8,382 — 

Fair Value Measurements

We group our financial assets and liabilities at fair value into three levels based on the markets in which the financial assets and liabilities are traded and the reliability of the assumptions used to determine fair value as follows:

•Level 1 — Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities traded in active markets. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available.

•Level 2 — Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
•Level 3 — Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of discounted cash flow models and similar techniques that requires the use of significant judgment or estimation.

We base our fair values on the price that we would expect to receive if an asset were sold, or the price that we would expect to pay to transfer a liability in an orderly transaction between market participants at the measurement date. We also maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements.

We use fair value measurements to record adjustments to certain financial assets and liabilities and to determine fair value disclosures. Available-for-sale securities and derivatives are recorded at fair value on a recurring basis. Periodically, we may be required to record other financial assets at fair value on a nonrecurring basis such as loans held for sale, individually evaluated loans, mortgage servicing rights, and other real estate owned. These nonrecurring fair value adjustments typically involve application of the lower of cost or fair value accounting or write-downs of individual assets.

During the year ended December 31, 2024, the Company transferred an interest rate swap from Level 3 to Level 2 of the fair value hierarchy. The transfer was due to a change in the methodology used. There were no transfers of financial assets and liabilities into and out of Level 3 of the fair value hierarchy during the three months ended March 31, 2025.

The following tables present the fair value of financial assets and liabilities measured on a recurring basis as of the dates presented:
  Fair Value at Reporting Date Using
(dollars in thousands)Fair ValueQuoted Prices
in Active
Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
March 31, 2025    
Available-for-sale securities:    
Debt securities:    
States and political subdivisions$118,629 $— $112,467 $6,162 
U.S. Treasury and other government-sponsored entities and agencies103,787 60,718 43,069 — 
Collateralized loan obligations30,989 — 30,989 — 
Mortgage-backed securities:    
Residential - U.S. government-sponsored entities and agencies432,051 — 432,051 — 
Residential - Non-government agencies16,602 — 15,920 682 
Commercial - U.S. government-sponsored entities and agencies68,364 — 68,364 — 
Commercial - Non-government agencies9,957 — 9,957 — 
Total available-for-sale investment securities780,379 60,718 712,817 6,844 
Derivatives:
Forward sale commitments1 — 1 — 
Interest rate swap agreements6,353 — 6,353 — 
Total derivatives6,354 — 6,354 — 
Total$786,733 $60,718 $719,171 $6,844 
  Fair Value at Reporting Date Using
(dollars in thousands)Fair ValueQuoted Prices
in Active
Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
December 31, 2024    
Available-for-sale securities:    
Debt securities:    
States and political subdivisions$116,833 $— $110,668 $6,165 
U.S. Treasury and other government-sponsored entities and agencies81,200 59,498 21,702 — 
Collateralized loan obligations31,140 — 31,140 — 
Mortgage-backed securities:    
Residential - U.S. government-sponsored entities and agencies414,471 — 414,471 — 
Residential - Non-government agencies16,926 — 16,244 682 
Commercial - U.S. government-sponsored entities and agencies67,161 — 67,161 — 
Commercial - Non-government agencies9,927 — 9,927 — 
Total available-for-sale investment securities737,658 59,498 671,313 6,847 
Derivatives:
Interest rate lock commitments(4)— (4)— 
Forward sale commitments46 — 46 — 
Interest rate swap agreements8,382 — 8,382 — 
Total derivatives8,424 — 8,424 — 
Total$746,082 $59,498 $679,737 $6,847 

The following table presents changes in Level 3 financial assets and liabilities measured at fair value on a recurring basis for the periods presented:
Available-For-Sale Debt Securities:
(dollars in thousands)States and Political SubdivisionsResidential - Non-Government AgenciesInterest Rate Swap AgreementsTotal
Balance at December 31, 2024$6,165 $682 $— $6,847 
Principal payments received(51)(6)— (57)
Unrealized net gain (loss) included in other comprehensive income48 6 — 54 
Balance at March 31, 2025$6,162 $682 $— $6,844 
  
Balance at December 31, 2023$6,436 $714 $6,440 $13,590 
Principal payments received(58)(6)— (64)
Unrealized net gain (loss) included in other comprehensive income(55)(4)2,935 2,876 
Balance at March 31, 2024$6,323 $704 $9,375 $16,402 

Based on a discounted cash flow model that calculates the present value of estimated future principal and interest payments, the estimated aggregate fair value of Level 3 financial assets and liabilities measured at fair value on a recurring basis was $6.8 million and $6.8 million as of March 31, 2025 and December 31, 2024, respectively.

The weighted-average discount rate was used as the significant unobservable input in the fair value measurement of the available-for-sale debt securities. The weighted average discount rate utilized was 6.03% and 6.22% as of March 31, 2025 and December 31, 2024, respectively, which was derived by incorporating a credit spread over the FHLB Fixed-Rate Advance
curve. Significant increases (decreases) in the weighted-average discount rate could result in a significantly lower (higher) fair value measurement.

The significant unobservable input used in the fair value measurement of the Company's interest rate swap is the weighted-average discount rate. The weighted average discount rate utilized was 3.70% and 4.02% as of March 31, 2025 and December 31, 2024, respectively.

There were no financial assets or liabilities measured on a nonrecurring basis as of March 31, 2025 and December 31, 2024.