Fair Value of Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2021

Assets Measured at Fair Value on Recurring Basis

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall as of June 30, 2021 and December 31, 2020 (in thousands):

	Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
June 30, 2021
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	192,179	$	—	$	192,179	$	—
Obligations of states and political subdivisions		305,626		—		305,011		615
Mortgage-backed securities		688,570		—		688,570		—
Other securities		35,823		—		35,823		—
Total available-for-sale securities		1,222,198		—		1,221,583		615
Equity securities		301		301		—		—
Derivative assets: interest rate swaps		181		—		181		—
Total assets	$	1,222,680	$	301	$	1,221,764	$	615

Derivative liabilities: interest rate swaps	$	1,083	$	—	$	1,083	$	—

December 31, 2020
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	127,069	$	—	$	127,069	$	—
Obligations of states and political subdivisions		249,844		—		249,050		794
Mortgage-backed securities		491,348		—		491,348		—
Other securities		10,979		—		10,979		—
Total available-for-sale securities		879,240		—		878,446		794
Equity securities		218		218		193		—
Derivative assets: interest rate swaps		1,399		-		1,399		—
Total assets	$	880,857	$	218	$	880,038	$	794

Derivative liabilities: interest rate swaps	$	2,892	$	—	$	2,892	$	—

Fair Value of Assets Measured on a Recurring Basis Using Significant Unobservable Inputs

The change in fair value of assets measured on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2021 and 2020 is summarized as follows (in thousands):

	Obligation of State and Political Subdivisions
	Three months ended				Six months ended
	June 30, 2021		June 30, 2020		June 30, 2021			June 30, 2020
Beginning balance	$	614	$	790	$	794		$	973
Transfers into Level 3		—		—		—			—
Transfers out of Level 3		—		—		—			—
Total gains or losses:
Included in net income		1		1		2			2
Included in other comprehensive income (loss)		—		—		—			—
Purchases, issuances, sales and settlements:
Purchases		—		—		—			—
Issuances		—		—		—			—
Sales		—		—		—			—
Settlements		—		—		(181	)		(184	)
Ending balance	$	615	$	791	$	615		$	791
Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date	$	—	$	—	$	—		$	—

Assets Measured at Fair Value on a Nonrecurring Basis

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2021 and December 31, 2020 (in thousands):

	Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
June 30, 2021
Collateral dependent loans	$	12,487	$	—	$	—	$	12,487
Foreclosed assets held for sale		3,303		—		—		3,303
Mortgage servicing rights		473		—		—		473
December 31, 2020
Collateral dependent loans	$	14,876	$	—	$	—	$	14,876
Foreclosed assets held for sale		290		—		—		290
Mortgage servicing rights		516		—		—		517

Significant Unobservable Inputs Used in Valuation of Level 3 Fair Value Measurements

The following table presents quantitative information about unobservable inputs used in Level 3 fair value measurements other than goodwill at June 30, 2021.

June 30, 2021	Fair Value		Valuation Technique	Unobservable Inputs	Range	Weighted Average
Collateral dependent loans	$	12,487	Third party valuations	Discount to reflect realizable value	0% - 40%	20%
Foreclosed assets held for sale		3,303	Third party valuations	Discount to reflect realizable value less estimated selling costs	0% - 40%	35%
Mortgage servicing rights		473	Third party valuations	PSA standard prepayment model rate	248 - 444		314

December 31, 2020	Fair Value		Valuation Technique	Unobservable Inputs	Range	Weighted Average
Collateral dependent loans	$	14,876	Third party valuations	Discount to reflect realizable value	0% - 40%	20%
Foreclosed assets held for sale		290	Third party valuations	Discount to reflect realizable value less estimated selling costs	0% - 40%	35%
Mortgage servicing rights		517	Third party valuations	PSA standard prepayment model rate	242 - 441		384

Summary of Estimated Fair Values of Company Financial Instruments

The following tables present estimated fair values of the Company’s financial instruments at June 30, 2021 and December 31, 2020 in accordance with ASC 825 (in thousands):

	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
June 30, 2021
Financial assets
Cash and due from banks	$	339,407	$	339,407	$	339,407	$	—	$	—
Federal funds sold		1,334		1,334		1,334		—		—
Certificates of deposit investments		2,450		2,450		—		2,450		—
Available-for-sale securities		1,222,198		1,222,198		—		1,221,583		615
Held-to-maturity securities		7,049		7,105		2,041		5,064		—
Equity securities		301		301		301		—		—
Loans held for sale		2,867		2,867		—		2,867		—
Loans net of allowance for credit losses		3,738,840		3,690,274		—		—		3,690,274
Interest receivable		19,124		19,124		—		19,124		—
Federal Reserve Bank stock		13,799		13,799		—		13,799		—
Federal Home Loan Bank stock		6,528		6,528		—		6,528		—
Financial liabilities
Deposits	$	4,739,322	$	4,743,431	$	—	$	4,016,729	$	726,702
Securities sold under agreements to repurchase		151,394		151,400		—		151,400		—
Interest payable		1,831		1,831		—		1,831		—
Federal Home Loan Bank borrowings		112,753		113,852		—		113,852		—
Subordinated debt, net		94,326		94,326				94,326
Junior subordinated debentures, net		19,111		14,444		—		14,444		—

December 31, 2020
Financial assets
Cash and due from banks	$	415,973	$	415,973	$	415,973	$	—	$	—
Federal funds sold		1,308		1,308		1,308		—		—
Certificates of deposit investments		2,695		2,695		—		2,695		—
Available-for-sale securities		879,240		879,240		—		878,446		794
Held-to-maturity securities		5,016		5,119		—		5,119		—
Equity securities		218		218		218		—		—
Loans held for sale		1,924		1,924		—		1,924		—
Loans net of allowance for credit losses		3,094,585		3,056,344		—		—		3,056,344
Interest receivable		19,287		19,287		—		19,287		—
Federal Reserve Bank stock		9,401		9,401		—		9,401		—
Federal Home Loan Bank stock		5,450		5,450		—		5,450		—
Financial liabilities
Deposits	$	3,692,784	$	3,697,105	$	—	$	3,215,715	$	481,390
Securities sold under agreements to repurchase		206,937		206,945		—		206,945		—
Interest payable		2,345		2,345		—		2,345		—
Federal Home Loan Bank borrowings		93,969		96,669		—		96,669		—
Subordinated debt, net		94,253		94,253		—		94,253		—
Junior subordinated debentures, net		19,027		14,604		—		14,604		—