Fair Value Measurements

9 Months Ended

Sep. 30, 2020

FAIR VALUE MEASUREMENTS

The following table summarizes financial instruments measured at fair value on a recurring basis segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:


	September 30, 2020
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Securities available for sale
Obligations of U.S. Government-sponsored enterprises	$	—	$	10,200	$	—	$	10,200
Obligations of states and political subdivisions	—		366,122		—		366,122
Agency mortgage-backed securities	—		605,949		—		605,949
U.S. Treasury bills	—		11,521		—		11,521
Corporate debt securities	—		11,634		—		11,634
Total securities available for sale	—		1,005,426		—		1,005,426



Derivatives	—		33,999		—		33,999
Total assets	$	—	$	1,039,425	$	—	$	1,039,425

Liabilities
Derivatives	$	—	$	44,240	$	—	$	44,240
Total liabilities	$	—	$	44,240	$	—	$	44,240


	December 31, 2019
(in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Securities available for sale
Obligations of U.S. Government-sponsored enterprises	$	—	$	10,046	$	—	$	10,046
Obligations of states and political subdivisions	—		213,024		—		213,024
Residential mortgage-backed securities	—		902,021		—		902,021
U.S. Treasury bills	—		10,226		—		10,226
Total securities available-for-sale	—		1,135,317		—		1,135,317



Derivative financial instruments	—		11,055		—		11,055
Total assets	$	—	$	1,146,372	$	—	$	1,146,372

Liabilities
Derivatives	$	—	$	14,747	$	—	$	14,747
Total liabilities	$	—	$	14,747	$	—	$	14,747

From time to time, the Company measures certain assets at fair value on a nonrecurring basis. These include assets measured at the lower of cost or fair value that were recognized at fair value below cost at the end of the period.



	(1)		(1)		(1)		(1)
(in thousands)	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total losses for the three months ended September 30, 2020		Total losses for the nine months ended September 30, 2020
Impaired loans	$	1,639	$	—	$	—	$	1,639	$	1,788	$	4,756
Other real estate	3,600		—		—		3,600		248		1,000
Total	$	5,239	$	—	$	—	$	5,239	$	2,036	$	5,756

(1) The amounts represent only balances measured at fair value during the period and still held as of the reporting date.

Following is a summary of the carrying amounts and fair values of certain financial instruments:


	September 30, 2020									December 31, 2019
(in thousands)	Carrying Amount		Estimated fair value		Level	Carrying Amount		Estimated fair value		Level
Balance sheet assets




Securities held-to-maturity, net	$	327,049	$	338,774	Level 2	$	181,166	$	181,939	Level 2
Other investments	43,456		43,456		Level 2	38,044		38,044		Level 2
Loans held for sale	14,032		14,032		Level 2	5,570		5,570		Level 2

Loans, net	6,003,037		5,961,862		Level 3	5,271,049		5,205,651		Level 3
State tax credits, held for sale	42,497		48,327		Level 3	36,802		39,046		Level 3


Balance sheet liabilities
Certificates of deposit	$	612,045	$	617,277	Level 3	$	826,447	$	825,203	Level 3
Subordinated debentures and notes	203,510		193,059		Level 2	141,258		130,985		Level 2
FHLB advances	250,000		251,942		Level 2	222,406		221,402		Level 2
Other borrowings and notes payable	239,038		239,038		Level 2	265,172		265,172		Level 2

For information regarding the methods and assumptions used to estimate the fair value of each class of financial instruments refer to Note 19 – Fair Value Measurements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC.

- 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.

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