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FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES | 6 Months Ended
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Jun. 30, 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 int erest 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 6.52% and 7.07% as of June 30, 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 4.46% and 4.50% as of June 30, 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 7.09% and 6.68% a s of June 30, 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.
(dollars in thousands) |  |  |  |  | Fair Value Measurement Using
June 30, 2025 | 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)
Financial assets: |  |  |  |  |  |  |  |  |
Cash and due from financial institutions | $ | 110,935 |  |  | $ | 110,935 |  |  | $ | 110,935 |  |  | $ | — |  |  | $ | — |
Interest-bearing deposits in other financial institutions | 206,035 |  |  | 206,035 |  |  | 206,035 |  |  | — |  |  | — |
Investment securities | 1,345,689 |  |  | 1,265,046 |  |  | 61,063 |  |  | 1,197,211 |  |  | 6,772 |
Loans | 5,289,809 |  |  | 4,976,272 |  |  | — |  |  | — |  |  | 4,976,272 |
Accrued interest receivable | 23,518 |  |  | 23,518 |  |  | 410 |  |  | 4,425 |  |  | 18,683 |
Financial liabilities: |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |
Noninterest-bearing demand | 1,938,226 |  |  | 1,938,226 |  |  | 1,938,226 |  |  | — |  |  | — |
Interest-bearing demand and savings and money market | 3,578,742 |  |  | 3,578,742 |  |  | 3,578,742 |  |  | — |  |  | — |
Time | 1,028,021 |  |  | 1,020,979 |  |  | — |  |  | — |  |  | 1,020,979 |
Long-term debt | 131,466 |  |  | 126,705 |  |  | — |  |  | — |  |  | 126,705 |
Accrued interest payable | 8,755 |  |  | 8,755 |  |  | 109 |  |  | — |  |  | 8,646 |
(dollars in thousands) |  |  |  |  |  |  | Fair Value Measurement Using
June 30, 2025 | 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)
Off-balance sheet financial instruments: |  |  |  |  |  |  |  |  |  |  |
Commitments to extend credit | $ | 1,350,411 |  |  | $ | — |  |  | $ | 1,314 |  |  | $ | — |  |  | $ | 1,314 |  |  | $ | — |
Standby letters of credit and financial guarantees written | 2,520 |  |  | — |  |  | 38 |  |  | — |  |  | 38 |  |  | — |
Derivatives: |  |  |  |  |  |  |  |  |  |  |
Back-to-back swap agreements: |  |  |  |  |  |  |  |  |  |  |
Assets | 61,525 |  |  | 3,321 |  |  | 3,321 |  |  | — |  |  | — |  |  | 3,321 |
Liabilities | (61,525) |  |  | (3,321) |  |  | (3,321) |  |  | — |  |  | — |  |  | (3,321) |
Risk participation agreements | 34,750 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Interest rate swap agreements | 114,580 |  |  | 4,890 |  |  | 4,890 |  |  | — |  |  | 4,890 |  |  | — |
(dollars in thousands) |  |  |  |  | Fair Value Measurement Using
December 31, 2024 | 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)
Financial assets: |  |  |  |  |  |  |  |  |
Cash and due from financial institutions | $ | 77,774 |  |  | $ | 77,774 |  |  | $ | 77,774 |  |  | $ | — |  |  | $ | — |
Interest-bearing deposits in other financial institutions | 303,167 |  |  | 303,167 |  |  | 303,167 |  |  | — |  |  | — |
Investment securities | 1,334,588 |  |  | 1,244,339 |  |  | 59,498 |  |  | 1,177,994 |  |  | 6,847 |
Loans held for sale | 5,662 |  |  | 5,662 |  |  | — |  |  | 5,662 |  |  | — |
Loans | 5,332,852 |  |  | 4,916,765 |  |  | — |  |  | — |  |  | 4,916,765 |
Accrued interest receivable | 23,378 |  |  | 23,378 |  |  | 462 |  |  | 4,607 |  |  | 18,309 |
Financial liabilities: |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |
Noninterest-bearing demand | 1,888,937 |  |  | 1,888,937 |  |  | 1,888,937 |  |  | — |  |  | — |
Interest-bearing demand and savings and money market | 3,667,889 |  |  | 3,667,889 |  |  | 3,667,889 |  |  | — |  |  | — |
Time | 1,087,185 |  |  | 1,079,275 |  |  | — |  |  | — |  |  | 1,079,275 |
Long-term debt | 156,345 |  |  | 153,760 |  |  | — |  |  | — |  |  | 153,760 |
Accrued interest payable | 10,051 |  |  | 10,051 |  |  | 113 |  |  | — |  |  | 9,938 |
(dollars in thousands) |  |  |  |  |  |  | Fair Value Measurement Using
December 31, 2024 | 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)
Off-balance sheet financial instruments: |  |  |  |  |  |  |  |  |  |  |
Commitments to extend credit | $ | 1,219,537 |  |  | $ | — |  |  | $ | 1,167 |  |  | $ | — |  |  | $ | 1,167 |  |  | $ | — |
Standby letters of credit and financial guarantees written | 2,702 |  |  | — |  |  | 41 |  |  | — |  |  | 41 |  |  | — |
Derivatives: |  |  |  |  |  |  |  |  |  |  |
Back-to-back swap agreements: |  |  |  |  |  |  |  |  |  |  |
Assets | 50,202 |  |  | 3,840 |  |  | 3,840 |  |  | — |  |  | — |  |  | 3,840 |
Liabilities | (50,202) |  |  | (3,840) |  |  | (3,840) |  |  | — |  |  | — |  |  | (3,840) |
Interest rate lock commitments | 469 |  |  | (4) |  |  | (4) |  |  | — |  |  | (4) |  |  | — |
Forward sale commitments | 4,909 |  |  | 46 |  |  | 46 |  |  | — |  |  | 46 |  |  | — |
Risk participation agreements | 35,183 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Interest rate swap agreements | 115,545 |  |  | 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 its 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 and six months ended June 30, 2025. The following tables present the fair value of financial assets and liabilities measured on a recurring basis as of the dates presented:
(dollars in thousands) |  |  |  | Fair Value at Reporting Date Using
June 30, 2025 |  | Fair Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Available-for-sale securities: |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |
States and political subdivisions |  | $ | 114,776 |  |  | $ | — |  |  | $ | 108,675 |  |  | $ | 6,101 |
U.S. Treasury and other government-sponsored entities and agencies |  | 101,415 |  |  | 61,063 |  |  | 40,352 |  |  | — |
Collateralized loan obligations |  | 40,916 |  |  | — |  |  | 40,916 |  |  | — |
Mortgage-backed securities: |  |  |  |  |  |  |  |
Residential - U.S. government-sponsored entities and agencies |  | 422,068 |  |  | — |  |  | 422,068 |  |  | — |
Residential - Non-government agencies |  | 16,139 |  |  | — |  |  | 15,468 |  |  | 671 |
Commercial - U.S. government-sponsored entities and agencies |  | 68,304 |  |  | — |  |  | 68,304 |  |  | — |
Commercial - Non-government agencies |  | 1,595 |  |  | — |  |  | 1,595 |  |  | — |
Total available-for-sale investment securities |  | 765,213 |  |  | 61,063 |  |  | 697,378 |  |  | 6,772 |
Derivatives: |  |  |  |  |  |  |  |
Interest rate swap agreements |  | 4,890 |  |  | — |  |  | 4,890 |  |  | — |
Total derivatives |  | 4,890 |  |  | — |  |  | 4,890 |  |  | — |
Total |  | $ | 770,103 |  |  | $ | 61,063 |  |  | $ | 702,268 |  |  | $ | 6,772 |
(dollars in thousands) |  |  |  | Fair Value at Reporting Date Using
December 31, 2024 |  | Fair Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
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 agencies |  | 81,200 |  |  | 59,498 |  |  | 21,702 |  |  | — |
Collateralized loan obligations |  | 31,140 |  |  | — |  |  | 31,140 |  |  | — |
Mortgage-backed securities: |  |  |  |  |  |  |  |
Residential - U.S. government-sponsored entities and agencies |  | 414,471 |  |  | — |  |  | 414,471 |  |  | — |
Residential - Non-government agencies |  | 16,926 |  |  | — |  |  | 16,244 |  |  | 682 |
Commercial - U.S. government-sponsored entities and agencies |  | 67,161 |  |  | — |  |  | 67,161 |  |  | — |
Commercial - Non-government agencies |  | 9,927 |  |  | — |  |  | 9,927 |  |  | — |
Total available-for-sale investment securities |  | 737,658 |  |  | 59,498 |  |  | 671,313 |  |  | 6,847 |
Derivatives: |  |  |  |  |  |  |  |
Interest rate lock commitments |  | (4) |  |  | — |  |  | (4) |  |  | — |
Forward sale commitments |  | 46 |  |  | — |  |  | 46 |  |  | — |
Interest rate swap agreements |  | 8,382 |  |  | — |  |  | 8,382 |  |  | — |
Total derivatives |  | 8,424 |  |  | — |  |  | 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 Subdivisions |  | Residential - Non-Government Agencies |  | Interest Rate Swap Agreements |  | Total
Balance at December 31, 2024 | $ | 6,165 |  |  | $ | 682 |  |  | $ | — |  |  | $ | 6,847 |
Principal payments received | (129) |  |  | (12) |  |  | — |  |  | (141) |
Unrealized net gain (loss) included in other comprehensive income | 65 |  |  | 1 |  |  | — |  |  | 66 |
Balance at June 30, 2025 | $ | 6,101 |  |  | $ | 671 |  |  | $ | — |  |  | $ | 6,772 |
Balance at December 31, 2023 | $ | 6,436 |  |  | $ | 714 |  |  | $ | 6,440 |  |  | $ | 13,590 |
Principal payments received | (120) |  |  | (12) |  |  | — |  |  | (132) |
Unrealized net gain (loss) included in other comprehensive income | (62) |  |  | (8) |  |  | 2,864 |  |  | 2,794 |
Balance at June 30, 2024 | $ | 6,254 |  |  | $ | 694 |  |  | $ | 9,304 |  |  | $ | 16,252 |
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 June 30, 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 6.04%, 6.22% and 6.54% as of June 30, 2025, December 31, 2024 and June 30, 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. There were no financial assets or liabilities measured on a nonrecurring basis as of June 30, 2025 and December 31, 2024.

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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/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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