v3.21.1

Fair Value of Financial Instruments and Fair Value Measurements | 3 Months Ended
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Mar. 31, 2021
Fair Value Disclosures [Abstract] |
Fair Value of Financial Instruments and Fair Value Measurements | Fair Value of Financial Instruments and Fair Value Measurements Fair value is the exchange price that would be received for an asset or paid to transfer a liability (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. There are three levels of inputs that may be used to measure fair values: •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. For information regarding the valuation methodologies used to measure the Company's assets recorded at fair value (under ASC Topic 820), and for estimating fair value for financial instruments not recorded at fair value (under ASC Topic 825, as amended by ASU 2016-01 and ASU 2018-03), see Note 1. Nature of Business and Significant Accounting Policies and Note 20. Estimated Fair Value of Financial Instruments and Fair Value Measurements to the consolidated financial statements in the Company's 2020 Annual Report on Form 10-K, filed with the SEC on March 11, 2021. The Company uses fair value to measure certain assets and liabilities on a recurring basis, primarily available for sale debt securities, derivatives and mortgage servicing rights. For assets measured at the lower of cost or fair value, the fair value measurement criteria may or may not be met during a reporting period and such measurements are therefore considered "nonrecurring" for purposes of disclosing the Company's fair value measurements. Fair value is used on a nonrecurring basis to adjust carrying values for collateral dependent individually analyzed loans and other real estate owned. Recurring Basis The following table summarizes assets and liabilities measured at fair value on a recurring basis as of the dates indicated, by level within the fair value hierarchy:
| Fair Value Measurement at March 31, 2021 Using
(in thousands) | Total |  | Level 1 |  | Level 2 |  | Level 3
Assets: |  |  |  |  |  |  |
Available for sale debt securities: |  |  |  |  |  |  |
U.S. Government agencies and corporations | $ | 340 |  |  | $ | — |  |  | $ | 340 |  |  | $ | — |
State and political subdivisions | 673,923 |  |  | — |  |  | 673,923 |  |  | — |
Mortgage-backed securities | 79,005 |  |  | — |  |  | 79,005 |  |  | — |
Collateralized mortgage obligations | 715,981 |  |  | — |  |  | 715,981 |  |  | — |
Corporate debt securities | 427,645 |  |  | — |  |  | 427,645 |  |  | — |
Derivative assets | 6,894 |  |  | — |  |  | 6,894 |  |  | — |
Mortgage servicing rights | 5,928 |  |  | — |  |  | 5,928 |  |  | — |
Liabilities: |  |  |  |  |  |  |
Derivative liabilities | $ | 7,694 |  |  | $ | — |  |  | $ | 7,694 |  |  | $ | — |
| Fair Value Measurement at December 31, 2020 Using
(in thousands) | Total |  | Level 1 |  | Level 2 |  | Level 3
Assets: |  |  |  |  |  |  |
Debt securities available for sale: |  |  |  |  |  |  |
U.S. Government agencies and corporations | $ | 361 |  |  | $ | — |  |  | $ | 361 |  |  | $ | — |
State and political subdivisions | 628,346 |  |  | — |  |  | 628,346 |  |  | — |
Mortgage-backed securities | 94,018 |  |  | — |  |  | 94,018 |  |  | — |
Collateralized mortgage obligations | 565,836 |  |  | — |  |  | 565,836 |  |  | — |
Corporate debt securities | 368,820 |  |  | — |  |  | 368,820 |  |  | — |
Derivative assets | 10,796 |  |  | — |  |  | 10,796 |  |  | — |
Mortgage servicing rights | 5,137 |  |  | — |  |  | 5,137 |  |  | — |
Liabilities: |  |  |  |  |  |  |
Derivative liabilities | $ | 13,267 |  |  | $ | — |  |  | $ | 13,267 |  |  | $ | — |
There were no transfers of assets between Level 3 and other levels of the fair value hierarchy during the three months ended March 31, 2021 or the year ended December 31, 2020. Changes in the fair value of available for sale debt securities are included in other comprehensive income. Nonrecurring Basis The following tables presents assets measured at fair value on a nonrecurring basis as of the dates indicated:
| Fair Value Measurement at March 31, 2021 Using
(in thousands) | Total |  | Level 1 |  | Level 2 |  | Level 3
Collateral dependent individually analyzed loans | $ | 36,235 |  |  | $ | — |  |  | $ | — |  |  | $ | 36,235 |
Foreclosed assets, net | 1,487 |  |  | — |  |  | — |  |  | 1,487 |
| Fair Value Measurement at December 31, 2020 Using
(in thousands) | Total |  | Level 1 |  | Level 2 |  | Level 3
Collateral dependent individually analyzed loans | $ | 34,265 |  |  | $ | — |  |  | $ | — |  |  | $ | 34,265 |
Foreclosed assets, net | 2,316 |  |  | — |  |  | — |  |  | 2,316 |
The following table presents the valuation technique(s), unobservable inputs, and quantitative information about the unobservable inputs used for fair value measurements of the financial instruments held by the Company and categorized within Level 3 of the fair value hierarchy as of the dates indicated:
| Fair Value at |  |  |  |  |  |  |  |  |  |
(dollars in thousands) | March 31, 2021 |  | December 31, 2020 |  | Valuation Techniques(s) |  | Unobservable Input |  | Range of Inputs |  | Weighted Average
Collateral dependent individually analyzed loans | $ | 36,235 |  |  | $ | 34,265 |  |  | Fair value of collateral |  | Valuation adjustments |  | — | % | - | 91 | % |  | 22 | %
Foreclosed assets, net | $ | 1,487 |  |  | $ | 2,316 |  |  | Fair value of collateral |  | Valuation adjustments |  | 8 | % | - | 66 | % |  | 32 | %
Changes in assumptions or estimation methodologies may have a material effect on these estimated fair values. The carrying amount and estimated fair value of financial instruments at March 31, 2021 and December 31, 2020 were as follows:
| March 31, 2021
(in thousands) | Carrying Amount |  | Estimated Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Financial assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 145,769 |  |  | $ | 145,769 |  |  | $ | 145,769 |  |  | $ | — |  |  | $ | — |
Debt securities available for sale | 1,896,894 |  |  | 1,896,894 |  |  | — |  |  | 1,896,894 |  |  | — |
Loans held for sale | 58,333 |  |  | 58,608 |  |  | — |  |  | 58,608 |  |  | — |
Loans held for investment, net | 3,307,511 |  |  | 3,341,347 |  |  | — |  |  | — |  |  | 3,341,347 |
Interest receivable | 19,749 |  |  | 19,749 |  |  | — |  |  | 19,749 |  |  | — |
FHLB stock | 12,170 |  |  | 12,170 |  |  | — |  |  | 12,170 |  |  | — |
Derivative assets | 6,894 |  |  | 6,894 |  |  | — |  |  | 6,894 |  |  | — |
Financial liabilities: |  |  |  |  |  |  |  |  |
Noninterest bearing deposits | 958,526 |  |  | 958,526 |  |  | 958,526 |  |  | — |  |  | — |
Interest bearing deposits | 3,836,037 |  |  | 3,838,265 |  |  | 2,937,232 |  |  | 901,033 |  |  | — |
Short-term borrowings | 175,785 |  |  | 175,785 |  |  | 175,785 |  |  | — |  |  | — |
Finance leases payable | 1,061 |  |  | 1,061 |  |  | — |  |  | 1,061 |  |  | — |
FHLB borrowings | 84,174 |  |  | 85,986 |  |  | — |  |  | 85,986 |  |  | — |
Junior subordinated notes issued to capital trusts | 41,807 |  |  | 34,066 |  |  | — |  |  | 34,066 |  |  | — |
Subordinated debentures | 74,654 |  |  | 78,388 |  |  | — |  |  | 78,388 |  |  | — |
Derivative liabilities | 7,694 |  |  | 7,694 |  |  | — |  |  | 7,694 |  |  | — |
| December 31, 2020
(in thousands) | Carrying Amount |  | Estimated Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Financial assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 82,659 |  |  | $ | 82,659 |  |  | $ | 82,659 |  |  | $ | — |  |  | $ | — |
Debt securities available for sale | 1,657,381 |  |  | 1,657,381 |  |  | — |  |  | 1,657,381 |  |  | — |
Loans held for sale | 59,956 |  |  | 60,039 |  |  | — |  |  | 60,039 |  |  | — |
Loans held for investment, net | 3,426,723 |  |  | 3,469,515 |  |  | — |  |  | — |  |  | 3,469,515 |
Interest receivable | 21,706 |  |  | 21,706 |  |  | — |  |  | 21,706 |  |  | — |
FHLB stock | 13,784 |  |  | 13,784 |  |  | — |  |  | 13,784 |  |  | — |
Derivative assets | 10,796 |  |  | 10,796 |  |  | — |  |  | 10,796 |  |  | — |
Financial liabilities: |  |  |  |  |  |  |  |  |
Noninterest bearing deposits | 910,655 |  |  | 910,655 |  |  | 910,655 |  |  | — |  |  | — |
Interest bearing deposits | 3,636,394 |  |  | 3,640,365 |  |  | 2,800,046 |  |  | 840,319 |  |  |
Short-term borrowings | 230,789 |  |  | 230,789 |  |  | 230,789 |  |  | — |  |  | — |
Finance leases payable | 1,096 |  |  | 1,096 |  |  | — |  |  | 1,096 |  |  | — |
FHLB borrowings | 91,198 |  |  | 93,380 |  |  | — |  |  | 93,380 |  |  |
Junior subordinated notes issued to capital trusts | 41,763 |  |  | 33,986 |  |  | — |  |  | 33,986 |  |  |
Subordinated debentures | 74,634 |  |  | 77,228 |  |  | — |  |  | 77,228 |  |  |
Derivative liabilities | 13,267 |  |  | 13,267 |  |  | — |  |  | 13,267 |  |  | — |

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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 -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
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