XML 33 R22.htm IDEA: XBRL DOCUMENT
v3.21.2

Fair Value | 9 Months Ended
--- | ---
Sep. 30, 2021
Fair Value Disclosures [Abstract] |
Fair Value | FAIR VALUE Fair Value Measurement Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The following three levels of inputs are used to measure fair value: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The Corporation used the following methods and significant assumptions to estimate fair value: Investment Securities: The fair values of most trading securities and debt securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather relying on the securities’ relationship to other benchmark quoted securities (Level 2). These models utilize the market approach with standard inputs that include, but are not limited to benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. For certain securities that observable inputs about the specific issuer are not available, fair values are estimated using observable data from other securities presumed to be similar or other market data on other similar securities (Level 3). Derivatives: The Corporation’s derivative instruments are interest rate swaps that are similar to those that trade in liquid markets. As such, significant fair value inputs can generally be verified and do not typically involve significant management judgments (Level 2). Individually Evaluated Loans: The fair value of individually evaluated loans with specific allocations of the allowance for credit losses is generally based on recent real estate appraisals prepared by third-parties. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Management also adjusts appraised values based on the length of time that has passed since the appraisal date and other factors. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower's financial statements, or aging reports, adjusted or discounted based on management's historical knowledge, changes in market conditions from the time of the valuation, and management's expertise and knowledge of the client and client's business, resulting in a Level 3 fair value classification. Individually evaluated loans are evaluated on a quarterly basis for additional impairment and adjusted in accordance with the allowance policy. Assets and liabilities measured at fair value on a recurring basis are as follows at September 30, 2021 and December 31, 2020:
|  |  | Fair Value Measurements at September 30, 2021 Using:
|  |  | Quoted Prices in Active Markets for Identical Assets |  | Significant Other Observable Inputs |  | Significant Unobservable Inputs
Description | Total |  | (Level 1) |  | (Level 2) |  | (Level 3)
Assets: |  |  |  |  |  |  |
Securities Available For Sale: |  |  |  |  |  |  |
U.S. Government sponsored entities | $ | 150,576 |  |  | $ | 0 |  |  | $ | 150,576 |  |  | $ | 0 |
States and political subdivisions | 108,831 |  |  | 0 |  |  | 108,831 |  |  | 0 |
Residential and multi-family mortgage | 428,809 |  |  | 20,016 |  |  | 408,793 |  |  | 0 |
Corporate notes and bonds | 23,239 |  |  | 0 |  |  | 23,239 |  |  | 0 |
Pooled SBA | 21,338 |  |  | 0 |  |  | 21,338 |  |  | 0 |
Total Securities Available For Sale | $ | 732,793 |  |  | $ | 20,016 |  |  | $ | 712,777 |  |  | $ | 0 |
Interest Rate swaps | $ | 2,569 |  |  | $ | 0 |  |  | $ | 2,569 |  |  | $ | 0 |
Trading Securities: |  |  |  |  |  |  |
Corporate equity securities | $ | 6,451 |  |  | $ | 6,451 |  |  | $ | 0 |  |  | $ | 0 |
Mutual funds | 2,607 |  |  | 2,607 |  |  | 0 |  |  | 0 |
Certificates of deposit | 296 |  |  | 296 |  |  | 0 |  |  | 0 |
Corporate notes and bonds | 587 |  |  | 587 |  |  | 0 |  |  | 0 |
Total Trading Securities | $ | 9,941 |  |  | $ | 9,941 |  |  | $ | 0 |  |  | $ | 0 |
Liabilities: |  |  |  |  |  |  |
Interest rate swaps | $ | (3,101) |  |  | $ | 0 |  |  | $ | (3,101) |  |  | $ | 0 |
|  |  | Fair Value Measurements at December 31, 2020 Using:
|  |  | Quoted Prices in Active Markets for Identical Assets |  | Significant Other Observable Inputs |  | Significant Unobservable Inputs
Description | Total |  | (Level 1) |  | (Level 2) |  | (Level 3)
Assets: |  |  |  |  |  |  |
Securities Available For Sale: |  |  |  |  |  |  |
U.S. Government sponsored entities | $ | 157,042 |  |  | $ | 0 |  |  | $ | 157,042 |  |  | $ | 0 |
States and political subdivisions | 70,883 |  |  | 0 |  |  | 70,819 |  |  | 64 |
Residential and multi-family mortgage | 315,192 |  |  | 15,039 |  |  | 300,153 |  |  | 0 |
Corporate notes and bonds | 14,926 |  |  | 0 |  |  | 14,926 |  |  | 0 |
Pooled SBA | 25,886 |  |  | 0 |  |  | 25,886 |  |  | 0 |
Other | 979 |  |  | 979 |  |  | 0 |  |  | 0 |
Total Securities Available For Sale | $ | 584,908 |  |  | $ | 16,018 |  |  | $ | 568,826 |  |  | $ | 64 |
Interest Rate swaps | $ | 4,017 |  |  | $ | 0 |  |  | $ | 4,017 |  |  | $ | 0 |
Trading Securities: |  |  |  |  |  |  |
Corporate equity securities | $ | 4,343 |  |  | $ | 4,343 |  |  | $ | 0 |  |  | $ | 0 |
Mutual funds | 1,283 |  |  | 1,283 |  |  | 0 |  |  | 0 |
Certificates of deposit | 404 |  |  | 404 |  |  | 0 |  |  | 0 |
Corporate notes and bonds | 569 |  |  | 569 |  |  | 0 |  |  | 0 |
U.S. Government sponsored entities | 50 |  |  | 0 |  |  | 50 |  |  | 0 |
Total Trading Securities | $ | 6,649 |  |  | $ | 6,599 |  |  | $ | 50 |  |  | $ | 0 |
Liabilities: |  |  |  |  |  |  |
Interest rate swaps | $ | (4,785) |  |  | $ | 0 |  |  | $ | (4,785) |  |  | $ | 0 |
The table below presents a reconciliation of the fair value of securities available for sale measured on a recurring basis using significant unobservable inputs (Level 3) for the three months ended September 30, 2021:
| Corporate Notes and Bonds
Balance, July 1, 2021 | $ | 9,826 |
Purchases | 0 |
Total gains or (losses): |
Included in other comprehensive income (loss) | (76) |
Settlements | 0 |
Transfers into Level 3 | 0 |
Transfers out of Level 3 | $ | (9,750) |
Balance, September 30, 2021 | $ | 0 |
The Corporation's corporate notes and bonds with a fair value of $9,750 for the three months ended September 30, 2021 were transferred out of Level 3 and into Level 2 because of available observable market data for these investments. The table below presents a reconciliation of the fair value of securities available for sale measured on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2021:
| States and Political Subdivisions |  | Corporate Notes and Bonds
Balance, January 1, 2021 | $ | 64 |  |  | $ | 0 |
Purchases | 0 |  |  | 8,250 |
Total gains or (losses): |  |  |
Included in other comprehensive income (loss) | 0 |  |  | 0 |
Settlements | 64 |  |  | 0 |
Transfers into Level 3 | 0 |  |  |
Transfers out of Level 3 | 0 |  |  | $ | (8,250) |
Balance, September 30, 2021 | $ | 0 |  |  | $ | 0 |
The Corporation's corporate notes and bonds with a fair value of $8,250 for the nine months ended September 30, 2021 were transferred out of Level 3 and into Level 2 because of available observable market data for these investments. Assets and liabilities measured at fair value on a non-recurring basis are as follows at September 30, 2021 and December 31, 2020:
|  |  | Fair Value Measurements at September 30, 2021 Using
Description | Total |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Assets: |  |  |  |  |  |  |
Collateral-dependent loans: |  |  |  |  |  |  |
Farmland | $ | 591 |  |  | 0 |  |  | 0 |  |  | $ | 591 |
Owner-occupied, nonfarm nonresidential properties | 224 |  |  | 0 |  |  | 0 |  |  | 224 |
Commercial and industrial | 1,547 |  |  | 0 |  |  | 0 |  |  | 1,547 |
Other construction loans and all land development loans and other land loans | 225 |  |  | 0 |  |  | 0 |  |  | 225 |
Multifamily (5 or more) residential properties | 646 |  |  | 0 |  |  | 0 |  |  | 646 |
Non-owner occupied, nonfarm nonresidential | 2,971 |  |  | 0 |  |  | 0 |  |  | 2,971 |
Obligations (other than securities and leases) of states and political subdivisions | 269 |  |  | 0 |  |  | 0 |  |  | 269 |
|  |  | Fair Value Measurements at December 31, 2020 Using
Description | Total |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Assets: |  |  |  |  |  |  |
Collateral-dependent loans: |  |  |  |  |  |  |
Farmland | $ | 659 |  |  | 0 |  |  | 0 |  |  | $ | 659 |
Owner-occupied, nonfarm nonresidential properties | 329 |  |  | 0 |  |  | 0 |  |  | 329 |
Commercial and industrial | 3,680 |  |  | 0 |  |  | 0 |  |  | 3,680 |
Other construction loans and all land development loans and other land loans | 1,790 |  |  | 0 |  |  | 0 |  |  | 1,790 |
Non-owner occupied, nonfarm nonresidential | 9,622 |  |  | 0 |  |  | 0 |  |  | 9,622 |
Residential mortgages secured by first liens | 659 |  |  | 0 |  |  | 0 |  |  | 659 |
A loan is considered to be a collateral dependent loan when, based on current information and events, the Corporation expects repayment of the financial assets to be provided substantially through the operation or sale of the collateral and the Corporation has determined that the borrower is experiencing financial difficulty as of the measurement date. The allowance for credit losses is measured by estimating the fair value of the loan based on the present value of expected cash flows, the market price of the loan, or the underlying fair value of the loan’s collateral. For real estate loans, fair value of the loan’s collateral is determined by third-party appraisals, which are then adjusted for the estimated selling and closing costs related to liquidation of the collateral. For this asset class, the actual valuation methods (income, sales comparable, or cost) vary based on the status of the project or property. For example, land is generally based on the sales comparable method while construction is based on the income and/or sales comparable methods. The unobservable inputs may vary depending on the individual assets with no one of the three methods being the predominant approach. The Corporation reviews the third-party appraisal for appropriateness and may adjust the value downward to consider selling and closing costs. For non-real estate loans, fair value of the loan’s collateral may be determined using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business. The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at September 30, 2021:
| Fair value |  | Valuation Technique |  | Unobservable Inputs |  | Range (Weighted Average)
Collateral-dependent loans: |  |  |  |  |  |  |
Farmland | $ | 591 |  |  | Valuation of third party appraisal on underlying collateral |  | Loss severity rates |  | 60% (60%)
Owner-occupied, nonfarm nonresidential properties | 224 |  |  | Valuation of third party appraisal on underlying collateral |  | Loss severity rates |  | 0%-60% (56%)
Commercial and industrial | 1,547 |  |  | Valuation of third party appraisal on underlying collateral |  | Loss severity rates |  | 0%-50% (35%)
Other construction loans and all land development loans and other land loans | 225 |  |  | Valuation of third party appraisal on underlying collateral |  | Loss severity rates |  | 25%-25% (25%)
Multifamily (5 or more) residential properties | 646 |  |  | Valuation of third party appraisal on underlying collateral |  | Loss severity rates |  | 0%-58% (22%)
Non-owner occupied, nonfarm nonresidential | 2,971 |  |  | Valuation of third party appraisal on underlying collateral |  | Loss severity rates |  | 25%-60% (34%)
Obligations (other than securities and leases) of states and political subdivisions | 269 |  |  | Valuation of third party appraisal on underlying collateral |  | Loss severity rates |  | 0% (0%)
The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2020:
| Fair value |  | Valuation Technique |  | Unobservable Inputs |  | Range (Weighted Average)
Collateral-dependent loans: |  |  |  |  |  |  |
Farmland | $ | 659 |  |  | Valuation of third party appraisal on underlying collateral |  | Loss severity rates |  | 45%-54% (47%)
Owner-occupied, nonfarm nonresidential properties | 329 |  |  | Valuation of third party appraisal on underlying collateral |  | Loss severity rates |  | 60%-90% (80%)
Commercial and industrial | 3,680 |  |  | Valuation of third party appraisal on underlying collateral |  | Loss severity rates |  | 0%-100% (39%)
Other construction loans and all land development loans and other land loans | 1,790 |  |  | Valuation of third party appraisal on underlying collateral |  | Loss severity rates |  | 25%-41% (28%)
Non-owner occupied, nonfarm nonresidential | 9,622 |  |  | Valuation of third party appraisal on underlying collateral |  | Loss severity rates |  | 25%-100% (29%)
Residential mortgages secured by first liens | 659 |  |  | Valuation of third party appraisal on underlying collateral |  | Loss severity rates |  | 31% (31%)
Fair Value of Financial Instruments The following table presents the carrying amount and fair value of financial instruments at September 30, 2021:
| Carrying |  | Fair Value Measurement Using: |  | Total
| Amount |  | Level 1 |  | Level 2 |  | Level 3 |  | Fair Value
ASSETS |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 737,050 |  |  | $ | 737,050 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 737,050 |
Securities available for sale | $ | 732,793 |  |  | $ | 20,016 |  |  | $ | 712,777 |  |  | $ | 0 |  |  | $ | 732,793 |
Trading securities | $ | 9,941 |  |  | $ | 9,941 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 9,941 |
Loans held for sale | $ | 3,415 |  |  | $ | 0 |  |  | $ | 3,478 |  |  | $ | 0 |  |  | $ | 3,478 |
Net loans | $ | 3,473,895 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 3,497,209 |  |  | $ | 3,497,209 |
FHLB and other restricted interests | $ | 22,259 |  |  | n/a |  | n/a |  | n/a |  | n/a
Interest rate swaps | $ | 2,569 |  |  | $ | 0 |  |  | $ | 2,569 |  |  | $ | 0 |  |  | $ | 2,569 |
Accrued interest receivable | $ | 17,226 |  |  | $ | 67 |  |  | $ | 2,385 |  |  | $ | 14,774 |  |  | $ | 17,226 |
LIABILITIES |  |  |  |  |  |  |  |  |
Deposits | $ | (4,593,628) |  |  | $ | (4,156,609) |  |  | $ | (444,679) |  |  | $ | 0 |  |  | $ | (4,601,288) |
Subordinated notes and debentures | $ | (154,212) |  |  | $ | 0 |  |  | $ | (140,046) |  |  | $ | 0 |  |  | $ | (140,046) |
Interest rate swaps | $ | (3,101) |  |  | $ | 0 |  |  | $ | (3,101) |  |  | $ | 0 |  |  | $ | (3,101) |
Accrued interest payable | $ | (1,350) |  |  | $ | 0 |  |  | $ | (1,350) |  |  | $ | 0 |  |  | $ | (1,350) |
The following table presents the carrying amount and fair value of financial instruments at December 31, 2020:
| Carrying |  | Fair Value Measurement Using: |  | Total
| Amount |  | Level 1 |  | Level 2 |  | Level 3 |  | Fair Value
ASSETS |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 532,694 |  |  | $ | 532,694 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 532,694 |
Securities available for sale | 584,908 |  |  | 16,018 |  |  | 568,826 |  |  | 64 |  |  | 584,908 |
Trading securities | 6,649 |  |  | 6,599 |  |  | 50 |  |  | 0 |  |  | 6,649 |
Loans held for sale | 8,514 |  |  | 0 |  |  | 8,617 |  |  | 0 |  |  | 8,617 |
Net loans | 3,337,449 |  |  | 0 |  |  | 0 |  |  | 3,339,482 |  |  | 3,339,482 |
FHLB and other restricted interests | 21,018 |  |  | n/a |  | n/a |  | n/a |  | n/a
Interest rate swaps | 4,017 |  |  | 0 |  |  | 4,017 |  |  | 0 |  |  | 4,017 |
Accrued interest receivable | 17,659 |  |  | 61 |  |  | 2,152 |  |  | 15,446 |  |  | 17,659 |
LIABILITIES |  |  |  |  |  |  |  |  |
Deposits | $ | (4,181,744) |  |  | $ | (3,705,200) |  |  | $ | (488,000) |  |  | $ | 0 |  |  | $ | (4,193,200) |
Subordinated notes and debentures | (70,620) |  |  | 0 |  |  | (62,583) |  |  | 0 |  |  | (62,583) |
Interest rate swaps | (4,785) |  |  | 0 |  |  | (4,785) |  |  | 0 |  |  | (4,785) |
Accrued interest payable | (1,096) |  |  | 0 |  |  | (1,096) |  |  | 0 |  |  | (1,096) |
While estimates of fair value are based on management’s judgment of the most appropriate factors as of the balance sheet date, there is no assurance that the estimated fair values would have been realized if the assets had been disposed of or the liabilities settled at that date, since market values may differ depending on various circumstances. The estimated fair values would also not apply to subsequent dates. The fair value of other equity interests is based on the net asset values provided by the underlying investment partnership. ASU 2015-7 removes the requirement to categorize within the fair value hierarchy all investments measured using the net asset value per share practical expedient and related disclosures. In addition, other assets and liabilities that are not financial instruments, such as premises and equipment, are not included in the disclosures. Also, non-financial assets such as, among other things, the estimated earnings power of core deposits, the earnings potential of trust accounts, the trained workforce, and customer goodwill, which typically are not recognized on the balance sheet, may have value but are not included in the fair value disclosures.

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 -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=123874694&loc=d3e19207-110258 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration