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FAIR VALUE OF FINANCIAL INSTRUMENTS
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
FAIR VALUE OF FINANCIAL INSTRUMENTS FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date reflecting assumptions that a market participant would use when pricing an asset or liability. The hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:
•Level 1: Unadjusted quoted prices for identical assets or liabilities traded in active markets.
•Level 2: Significant other observable inputs other than Level 1, including quoted prices for similar assets and liabilities in active markets, quoted prices in less active markets, or other observable inputs that 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 Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:
Investment securities. The fair value of investment securities available for sale are determined by quoted market prices, if available (Level 1). For investment securities available for sale where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For investment securities available for sale where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other
market indicators (Level 3). Securities classified as Level 3 are not actively traded, and as a result, fair value is determined utilizing third-party valuation services through consensus pricing. There were no transfers between Levels 1, 2 or 3 during the period presented for assets measured at fair value on a recurring basis. The fair value of equity securities is determined using quoted prices or market prices for similar securities (Level 2).
Loans held for sale. The fair value of loans held for sale is determined using quoted prices for a similar asset, adjusted for specific attributes of that loan (Level 2).
Derivative instruments. The fair value of derivative instruments are determined based on derivative valuation models using observable market data as of the measurement date (Level 2).
Nonperforming loans. All of our nonaccrual loans are considered nonperforming and are reviewed individually for the amount of impairment, if any. We measure collateral dependent nonperforming loans based on the estimated fair value of such collateral. In cases where the Company has an agreed upon selling price for the collateral, the fair value is set at the selling price (Level 1). The fair value of each loan’s collateral is generally based on estimated market prices from an independently prepared appraisal, which is then adjusted for the cost related to liquidating such collateral (Level 2). When adjustments are made to an appraised value to reflect various factors such as the age of the appraisal or known changes in the market or the collateral, such valuation inputs are considered unobservable (Level 3). The nonperforming loans categorized as Level 3 also include unsecured loans and other secured loans whose fair values are based significantly on unobservable inputs such as the strength of a guarantor, cash flows discounted at the effective loan rate, and management’s judgment.
Other Real Estate Owned. OREO is initially recorded at fair value at the date of foreclosure less estimated costs of disposal, which establishes a new cost basis. After foreclosure, OREO is held for sale and is carried at the lower of cost or fair value less estimated costs of disposal. Fair value for OREO is based on an appraisal performed upon foreclosure. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between comparable sales and income data available. Property is evaluated regularly to ensure the recorded amount is supported by its fair value less estimated costs to dispose. After the initial foreclosure appraisal, fair value is generally determined by an annual appraisal unless known events warrant adjustments to the recorded value (Level 2).
Assets and liabilities measured and recorded at fair value, including financial assets for which the Company has elected the fair value option, on a recurring and nonrecurring basis at September 30, 2024 and December 31, 2023, are summarized below:
September 30, 2024
(dollars in thousands)Carrying
amount		Quoted prices
in active
markets
for identical
assets
(Level 1)		Significant
other
observable
inputs
(Level 2)		Significant unobservable
inputs
(Level 3)
Assets and liabilities measured at fair value on a recurring basis:
Assets
Investment securities available for sale:
U.S. government sponsored entities and U.S. agency securities$42,824 $— $42,824 $— 
Mortgage-backed securities - agency834,764 — 834,764 — 
Mortgage-backed securities - non-agency85,926 — 85,926 — 
State and municipal securities70,471 — 70,471 — 
Corporate securities87,962 — 87,962 — 
Other securities90,143 — 90,143 — 
Equity securities4,705 4,705 — — 
Loans held for sale8,001 — 8,001 — 
Derivative assets313 — 313 — 
Total$1,225,109 $4,705 $1,220,404 $— 
Liabilities
Derivative liabilities$6,825 $— $6,825 $— 
Total$6,825 $— $6,825 $— 
Assets measured at fair value on a non-recurring basis:
Nonperforming loans$68,213 $— $57,128 $11,085 
Other real estate owned8,646 — 8,646 — 
December 31, 2023
(dollars in thousands)Carrying
amount		Quoted prices
in active
markets
for identical
assets
(Level 1)		Significant
other
observable
inputs
(Level 2)		Significant unobservable
inputs
(Level 3)
Assets and liabilities measured at fair value on a recurring basis:
Assets
Investment securities available for sale:
U.S. Treasury securities$1,097 $1,097 $— $— 
U.S. government sponsored entities and U.S. agency securities72,572 — 72,572 — 
Mortgage-backed securities - agency574,500 — 574,500 — 
Mortgage-backed securities - non-agency83,529 — 83,529 — 
State and municipal securities57,460 — 57,460 — 
Corporate securities99,172 — 99,172 — 
Equity securities4,501 4,501 — — 
Loans held for sale3,811 — 3,811 — 
Derivative assets372 — 372 — 
Total$924,579 $5,598 $918,981 $— 
Liabilities
Derivative liabilities$8,836 $— $8,836 $— 
Total$8,836 $— $8,836 $— 
Assets measured at fair value on a non-recurring basis:
Nonperforming loans$4,633 $— $3,964 $669 
Other real estate owned9,112 — 9,112 — 
    The following table presents losses recognized on assets measured on a nonrecurring basis for the three and nine months ended September 30, 2024 and 2023:
Three Months Ended September 30,Nine Months Ended September 30,
(dollars in thousands)2024202320242023
Nonperforming loans$355 $10,085 14,225 14,761 
Other real estate owned548 — 1,278 — 
Total losses on assets measured on a nonrecurring basis$903 $10,085 $15,503 $14,761 
    The following tables present quantitative information about significant unobservable inputs used in fair value measurements of Level 3 assets measured on a nonrecurring basis at September 30, 2024 and December 31, 2023:
(dollars in thousands)Fair valueValuation
technique		Unobservable
input / assumptions
Range (weighted average)(1)
September 30, 2024
Nonperforming loans$11,085 Collateral based measurementsDiscount to reflect current market conditions and ultimate collectability
0.00% - 51.00% (44.69%)
December 31, 2023
Nonperforming loans$669 Collateral based measurementsDiscount to reflect current market conditions and ultimate collectability
24.38% - 100.00% (27.46%)
(1)Unobservable inputs were weighted by the relative fair value of the instruments.
ASC Topic 825, Financial Instruments, requires disclosure of the estimated fair value of certain financial instruments and the methods and significant assumptions used to estimate such fair values. Additionally, certain financial instruments and all nonfinancial instruments are excluded from the applicable disclosure requirements.
The Company has elected the fair value option for newly originated residential loans held for sale. These loans are intended for sale and are hedged with derivative instruments. We have elected the fair value option to mitigate accounting mismatches in cases where hedge accounting is complex and to achieve operational simplification.

The following table presents the difference between the aggregate fair value and the aggregate remaining principal balance for loans for which the fair value option has been elected as of September 30, 2024 and December 31, 2023:
September 30, 2024December 31, 2023
(dollars in thousands)Aggregate
fair value		DifferenceContractual
principal		Aggregate
fair value		DifferenceContractual
principal
Residential loans held for sale$8,001 $393 $7,608 $3,811 $203 $3,608 
The following table presents the amount of gains from fair value changes included in income before income taxes for financial assets carried at fair value for the three and nine months ended September 30, 2024 and 2023:
Three Months Ended September 30,Nine Months Ended September 30,
(dollars in thousands)2024202320242023
Residential loans held for sale$133 $(37)150 112 
    The carrying values and estimated fair value of certain financial instruments not carried at fair value at September 30, 2024 and December 31, 2023 were as follows:
September 30, 2024
(dollars in thousands)Carrying
amount		Fair valueQuoted prices
in active
markets
for identical
assets
(Level 1)		Significant
other
observable
inputs
(Level 2)		Significant
unobservable
inputs
(Level 3)
Assets
Cash and due from banks$121,220 $121,220 $121,220 $— $— 
Federal funds sold653 653 653 — — 
Loans5,748,819 5,581,468 — — 5,581,468 
Accrued interest receivable27,099 27,099 — 27,099 — 
Liabilities
Deposits$6,256,836 $6,243,589 $— $6,243,589 $— 
Short-term borrowings13,849 13,849 — 13,849 — 
FHLB and other borrowings425,000 426,209 — 426,209 — 
Subordinated debt82,744 78,208 — 78,208 — 
Trust preferred debentures51,058 53,336 — 53,336 — 
December 31, 2023
(dollars in thousands)Carrying
amount		Fair valueQuoted prices
in active
markets
for identical
assets
(Level 1)		Significant
other
observable
inputs
(Level 2)		Significant
unobservable
inputs
(Level 3)
Assets
Cash and due from banks$134,212 $134,212 $134,212 $— $— 
Federal funds sold849 849 849 — — 
Loans6,131,079 6,129,244 — — 6,129,244 
Accrued interest receivable24,934 24,934 — 24,934 — 
Liabilities
Deposits$6,309,529 $6,294,979 $— $6,294,979 $— 
Short-term borrowings34,865 34,865 25,000 9,865 — 
FHLB and other borrowings476,000 475,240 — 475,240 — 
Subordinated debt93,546 90,253 — 90,253 — 
Trust preferred debentures50,616 51,626 — 51,626 — 
The methods utilized to measure fair value of financial instruments at September 30, 2024 and December 31, 2023 represent an approximation of exit price; however, an actual exit price may differ.