Fair Value Measurements

9 Months Ended

Sep. 30, 2021

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, 2021
(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	$	—	$	114,937	$	—	$	114,937
Obligations of states and political subdivisions	—		515,416		—		515,416
Agency mortgage-backed securities	—		505,766		—		505,766
U.S. Treasury bills	—		71,292		—		71,292
Corporate debt securities	—		12,403		—		12,403
Total securities available for sale	—		1,219,814		—		1,219,814

Other investments	217		2,782		—		2,999

Derivatives	—		17,442		—		17,442
Total assets	$	217	$	1,240,038	$	—	$	1,240,255

Liabilities
Derivatives	$	—	$	21,428	$	—	$	21,428
Total liabilities	$	—	$	21,428	$	—	$	21,428


	December 31, 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	$	—	$	15,161	$	—	$	15,161
Obligations of states and political subdivisions	—		344,232		—		344,232
Residential mortgage-backed securities	—		526,572		—		526,572
Corporate debt securities	—		14,998		—		14,998
U.S. Treasury bills	—		11,466		—		11,466
Total securities available-for-sale	—		912,429		—		912,429



Derivative financial instruments	—		28,703		—		28,703
Total assets	$	—	$	941,132	$	—	$	941,132

Liabilities
Derivatives	$	—	$	34,967	$	—	$	34,967
Total liabilities	$	—	$	34,967	$	—	$	34,967

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.




	September 30, 2021
(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)
Nonaccrual loans (1)	$	1,373	$	—	$	—	$	1,373

Fixed assets	940		—		—		940
Total	$	2,313	$	—	$	—	$	2,313

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

The following table presents the losses recorded in relation to assets measured on a nonrecurring basis and still held as of the reporting date.




	Three months ended				Nine months ended
(in thousands)	September 30, 2021		June 30, 2021		September 30, 2021		September 30, 2020
Nonaccrual loans	$	1,126	$	—	$	1,126	$	4,756
Other real estate	—		—		—		1,000
Fixed assets	2,546		—		2,546		—
Total	$	3,672	$	—	$	3,672	$	5,756

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


	September 30, 2021					December 31, 2020
(in thousands)	Carrying Amount		Estimated fair value		Level	Carrying Amount		Estimated fair value		Level
Balance sheet assets




Securities held-to-maturity, net	$	438,472	$	444,625	Level 2	$	487,610	$	501,523	Level 2
Other investments	59,156		59,156		Level 2	48,764		48,764		Level 2
Loans held for sale	5,068		5,068		Level 2	13,564		13,564		Level 2

Loans, net	8,964,487		8,954,895		Level 3	7,088,264		7,067,562		Level 3
State tax credits, held for sale	37,184		41,306		Level 3	36,853		39,925		Level 3

Servicing asset	7,965		7,965		Level 2	5,721		5,721		Level 2

Balance sheet liabilities
Certificates of deposit	$	627,171	$	628,425	Level 3	$	550,095	$	553,946	Level 3
Subordinated debentures and notes	204,103		193,752		Level 2	203,637		192,889		Level 2
FHLB advances	50,000		51,527		Level 2	50,000		51,871		Level 2
Other borrowings and notes payable	243,770		243,770		Level 2	301,081		301,081		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, 2020, 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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