Fair Value of Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2022

Assets and Liabilities 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 March 31, 2022 and December 31, 2021 (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)
March 31, 2022
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	247,976	$	—	$	247,976	$	—
Obligations of states and political subdivisions		358,679		—		358,679		—
Mortgage-backed securities		761,527		—		761,527		—
Other securities		98,768		—		98,768		—
Total available-for-sale securities		1,466,950		—		1,466,950		—
Equity securities		369		369		—		—
Derivative assets: interest rate swaps		2,286		—		2,286		—
Total assets	$	1,469,605	$	369	$	1,469,236	$	—

Derivative liabilities: interest rate swaps	$	2,167	$	—	$	2,167	$	—

December 31, 2021
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	203,815	$	—	$	203,815	$	—
Obligations of states and political subdivisions		395,457		—		395,358		99
Mortgage-backed securities		791,038		—		791,038		—
Other securities		31,112		—		31,112		—
Total available-for-sale securities		1,421,422		—		1,421,323		99
Equity securities		397		397		—		—
Derivative assets: interest rate swaps		809		—		809		—
Total assets	$	1,422,628	$	397	$	1,422,132	$	99

Derivative liabilities: interest rate swaps	$	1,476	$	—	$	1,476	$	—

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 months ended March 31, 2022 and 2021 is summarized as follows (in thousands):

	Obligation of State and Political Subdivisions
	Three months ended
	March 31, 2022			March 31, 2021
Beginning balance	$	99		$	794
Transfers into Level 3		—			—
Transfers out of Level 3		—			—
Total gains or losses:
Included in net income		—			1
Included in other comprehensive income (loss)		—			—
Purchases, issuances, sales and settlements:
Purchases		—			—
Issuances		—			—
Sales		—			(181	)
Settlements		(99	)		—
Ending balance	$	—		$	614
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 March 31, 2022 and December 31, 2021 (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)
March 31, 2022
Collateral dependent loans	$	4,596	$	—	$	—	$	4,596
Foreclosed assets held for sale		28		—		—		28
Mortgage servicing rights		432		—		—		432
December 31, 2021
Collateral dependent loans	$	6,750	$	—	$	—	$	6,750
Foreclosed assets held for sale		2,068		—		—		2,068
Mortgage servicing rights		420		—		—		420

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 March 31, 2022.

March 31, 2022	Fair Value		Valuation Technique	Unobservable Inputs	Range	Weighted Average
Collateral dependent loans	$	4,596	Third party valuations	Discount to reflect realizable value	0% - 40%	20%
Foreclosed assets held for sale		28	Third party valuations	Discount to reflect realizable value less estimated selling costs	0% - 40%	35%
Mortgage servicing rights		432	Third party valuations	PSA standard prepayment model rate	177 - 438		189

December 31, 2021	Fair Value		Valuation Technique	Unobservable Inputs	Range	Weighted Average
Collateral dependent loans	$	6,750	Third party valuations	Discount to reflect realizable value	0% - 40%	20%
Foreclosed assets held for sale		2,068	Third party valuations	Discount to reflect realizable value less estimated selling costs	0% - 40%	35%
Mortgage servicing rights		420	Third party valuations	PSA standard prepayment model rate	205 - 513		273

Summary of Estimated Fair Values of Company Financial Instruments

The following tables present estimated fair values of the Company’s financial instruments at March 31, 2022 and December 31, 2021 in accordance with ASC 825 (in thousands):

	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
March 31, 2022
Financial assets
Cash and due from banks	$	218,072	$	218,072	$	218,072	$	—	$	—
Federal funds sold		5,908		5,908		5,908		—		—
Certificates of deposit investments		1,960		1,960		—		1,960		—
Available-for-sale securities		1,466,950		1,466,950		—		1,466,950		—
Held-to-maturity securities		2,998		2,998		2,998		—		—
Equity securities		369		369		369		—		—
Loans held for sale		2,037		2,037		—		2,037		—
Loans net of allowance for credit losses		4,394,050		4,280,190		—		—		4,280,190
Interest receivable		22,365		22,365		—		22,365		—
Federal Reserve Bank stock		13,845		13,845		—		13,845		—
Federal Home Loan Bank stock		6,484		6,484		—		6,484		—
Financial liabilities
Deposits	$	5,487,305	$	5,482,217	$	—	$	4,821,794	$	660,423
Securities sold under agreements to repurchase		187,326		152,086		—		152,086		—
Interest payable		2,466		2,466		—		2,466		—
Federal Home Loan Bank borrowings		126,396		123,295		—		123,295		—
Subordinated debt, net		94,438		94,438				94,438
Junior subordinated debentures, net		19,237		15,458		—		15,458		—

December 31, 2021
Financial assets
Cash and due from banks	$	167,242	$	167,242	$	167,242	$	—	$	—
Federal funds sold		1,360		1,360		1,360		—		—
Certificates of deposit investments		2,450		2,450		—		2,450		—
Available-for-sale securities		1,421,422		1,421,422		—		1,421,323		99
Held-to-maturity securities		7,030		7,034		2,029		5,005		—
Equity securities		397		397		397		—		—
Loans held for sale		2,748		2,748		—		2,748		—
Loans net of allowance for credit losses		3,938,120		3,889,870		—		—		3,889,870
Interest receivable		19,868		19,868		—		19,868		—
Federal Reserve Bank stock		13,845		13,845		—		13,845		—
Federal Home Loan Bank stock		6,484		6,484		—		6,484		—
Financial liabilities
Deposits	$	4,956,486	$	4,956,738	$	—	$	4,394,434	$	562,304
Securities sold under agreements to repurchase		146,268		146,274		—		146,274		—
Interest payable		1,346		1,346		—		1,346		—
Federal Home Loan Bank borrowings		86,446		86,248		—		86,248		—
Subordinated debt, net		94,400		94,400		—		94,400		—
Junior subordinated debentures, net		19,195		15,012		—		15,012		—