| FAIR VALUE |
NOTE 19 – FAIR VALUE The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to disclose the fair value of its financial instruments. Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. For disclosure purposes, the Company groups its financial and non-financial assets and liabilities into three different levels based on the nature of the instrument and the availability and reliability of the information that is used to determine fair value. The three levels of inputs that may be used to measure fair values are defined as follows. Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. Level 1 inputs are considered to be the most transparent and reliable. The Company assumes the use of the principal market to conduct a transaction of each particular asset or liability being measured and then considers the assumptions that market participants would use when pricing the asset or liability. Whenever possible, the Company first looks for quoted prices for identical assets or liabilities in active markets (Level 1 inputs) to value each asset or liability. However, when inputs from identical assets or liabilities on active markets are not available, the Company utilizes market observable data for similar assets and liabilities. The Company maximizes the use of observable inputs and limits the use of unobservable inputs to occasions when observable inputs are not available. The need to use unobservable inputs generally results from the lack of market liquidity of the actual financial instrument or of the underlying collateral. Although, in some instances, third party price indications may be available, limited trading activity can challenge the implied value of those quotations. The following is a description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of each instrument under the hierarchy. Fair Value of Assets and Liabilities Measured on a Recurring Basis The fair values of available-for-sale securities are carried at fair value on a recurring basis. To the extent possible, observable quoted prices in an active market are used to determine fair value and, as such, these securities are classified as Level 1. For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities, generally determined by matrix pricing, which is a mathematical technique widely used in the industry to value securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The Company’s available-for-sale securities include residential mortgage-backed securities (all of which are issued or guaranteed by government sponsored agencies) and are classified as Level 2. The fair values of derivatives are determined based on a valuation pricing model using readily available observable market parameters such as interest rate yield curves (Level 2 inputs) adjusted for credit risk attributable to the seller of the derivative. Assets and liabilities measured at fair value on a recurring basis are summarized below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2025 |
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Assets: |
|
|
|
|
|
|
|
|
|
Available-for-sale securities: |
|
|
|
|
|
|
|
|
|
U.S. Government-sponsored entities |
|
$ |
— |
|
|
$ |
26,298 |
|
|
$ |
— |
|
U.S. Treasury securities |
|
|
35,250 |
|
|
|
— |
|
|
|
— |
|
Mortgage backed securities |
|
|
|
|
|
|
|
|
|
Government-sponsored residential mortgage backed securities |
|
|
— |
|
|
|
772,145 |
|
|
|
— |
|
Private label residential mortgage backed securities |
|
|
— |
|
|
|
4,326 |
|
|
|
— |
|
Corporate |
|
|
— |
|
|
|
91,798 |
|
|
|
— |
|
Small Business Administration loan pools |
|
|
— |
|
|
|
80,205 |
|
|
|
— |
|
State and political subdivisions |
|
|
— |
|
|
|
20,546 |
|
|
|
— |
|
Derivative assets: |
|
|
|
|
|
|
|
|
|
Derivative assets (included in other assets) |
|
|
— |
|
|
|
5,758 |
|
|
|
— |
|
Cash collateral held by counterparty and netting
adjustments |
|
|
(3,367 |
) |
|
— |
|
|
|
— |
|
Total derivative assets |
|
|
(3,367 |
) |
|
|
5,758 |
|
|
|
— |
|
Other assets: |
|
|
|
|
|
|
|
|
|
Equity securities with readily determinable fair value |
|
|
1,182 |
|
|
|
— |
|
|
|
— |
|
Total other assets |
|
|
1,182 |
|
|
|
— |
|
|
|
— |
|
Total assets |
|
$ |
33,065 |
|
|
$ |
1,001,076 |
|
|
$ |
— |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
Derivative liabilities: |
|
|
|
|
|
|
|
|
|
Derivative liabilities (included in other liabilities) |
|
$ |
— |
|
|
$ |
2,808 |
|
|
$ |
— |
|
Cash collateral held by counterparty and netting
adjustments |
|
|
(8 |
) |
|
|
— |
|
|
|
— |
|
Total derivative liabilities |
|
|
(8 |
) |
|
|
2,808 |
|
|
|
— |
|
Total liabilities |
|
$ |
(8 |
) |
|
$ |
2,808 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Assets: |
|
|
|
|
|
|
|
|
|
Available-for-sale securities: |
|
|
|
|
|
|
|
|
|
U.S. Government-sponsored entities |
|
$ |
— |
|
|
$ |
65,094 |
|
|
$ |
— |
|
U.S. Treasury securities |
|
|
86,563 |
|
|
|
— |
|
|
|
— |
|
Mortgage backed securities |
|
|
|
|
|
|
|
|
|
Government-sponsored residential mortgage backed securities |
|
|
— |
|
|
|
565,510 |
|
|
|
— |
|
Private label residential mortgage backed securities |
|
|
— |
|
|
|
124,664 |
|
|
|
— |
|
Corporate |
|
|
— |
|
|
|
58,652 |
|
|
|
— |
|
Small Business Administration loan pools |
|
|
— |
|
|
|
29,928 |
|
|
|
— |
|
State and political subdivisions |
|
|
— |
|
|
|
74,044 |
|
|
|
— |
|
Derivative assets: |
|
|
|
|
|
|
|
|
|
Derivative assets (included in other assets) |
|
|
— |
|
|
|
8,055 |
|
|
|
— |
|
Cash collateral held by counterparty and netting
adjustments |
|
|
(7,173 |
) |
|
— |
|
|
|
— |
|
Total derivative assets |
|
|
(7,173 |
) |
|
|
8,055 |
|
|
|
— |
|
Other assets: |
|
|
|
|
|
|
|
|
|
Equity securities with readily determinable fair value |
|
|
1,009 |
|
|
|
— |
|
|
|
— |
|
Total other assets |
|
|
1,009 |
|
|
|
— |
|
|
|
— |
|
Total assets |
|
$ |
80,399 |
|
|
$ |
925,947 |
|
|
$ |
— |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
Derivative liabilities: |
|
|
|
|
|
|
|
|
|
Derivative liabilities (included in other liabilities) |
|
$ |
— |
|
|
$ |
3,546 |
|
|
$ |
— |
|
Cash collateral held by counterparty and netting
adjustments |
|
|
97 |
|
|
|
— |
|
|
|
— |
|
Total derivative liabilities |
|
|
97 |
|
|
|
3,546 |
|
|
|
— |
|
Total liabilities |
|
$ |
97 |
|
|
$ |
3,546 |
|
|
$ |
— |
|
There were no transfers between Levels during 2025 or 2024. The Company’s policy is to recognize transfers into or out of a level as of the end of a reporting period. Fair Value of Assets and Liabilities Measured on a Non-recurring Basis Certain assets are measured at fair value on a non-recurring basis when there is evidence of loans individually assessed for credit losses. The fair values of loans individually assessed for credit losses with specific allocations of the allowance for credit losses are generally based on recent real estate appraisals of the collateral. Declines in the fair values of other real estate owned, subsequent to their initial acquisitions, are also based on recent real estate appraisals less selling costs. Real estate appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Assets measured at fair value on a non-recurring basis are summarized below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2025 |
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Loans individually evaluated for credit losses: |
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5,119 |
|
Commercial and industrial |
|
|
— |
|
|
|
— |
|
|
|
18,517 |
|
Residential real estate |
|
|
— |
|
|
|
— |
|
|
|
2,829 |
|
Agricultural real estate |
|
— |
|
|
— |
|
|
|
905 |
|
Other |
|
|
— |
|
|
|
— |
|
|
|
1,257 |
|
Other real estate owned: |
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
|
— |
|
|
|
— |
|
|
|
2,173 |
|
Residential real estate |
|
|
— |
|
|
|
— |
|
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Loans individually evaluated for credit losses: |
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
3,375 |
|
Commercial and industrial |
|
|
— |
|
|
|
— |
|
|
|
6,316 |
|
Residential real estate |
|
|
— |
|
|
|
— |
|
|
|
3,525 |
|
Agricultural real estate |
|
— |
|
|
— |
|
|
|
3,040 |
|
Other |
|
|
— |
|
|
|
— |
|
|
|
1,113 |
|
Other real estate owned: |
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
|
— |
|
|
|
— |
|
|
|
2,173 |
|
Residential real estate |
|
|
— |
|
|
|
— |
|
|
|
25 |
|
The Company did not record any liabilities for which the fair value was measured on a non-recurring basis during the years ended December 31, 2025 and 2024. Valuations of loans and other real estate owned individually assessed for credit losses utilize third party appraisals or broker price opinions and are classified as Level 3 due to the significant judgment involved. Appraisals may include the utilization of unobservable inputs, subjective factors and utilize quantitative data to estimate fair market value. The following table presents additional information about the unobservable inputs used in the fair value measurement of financial assets measured on a nonrecurring basis that were categorized with Level 3 of the fair value hierarchy.
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value |
|
|
Valuation
Technique |
|
Unobservable
Input |
|
Range
(weighted
average) |
December 31, 2025 |
|
|
|
|
|
|
|
|
|
Real estate loans individually evaluated
for credit losses |
|
$ |
13,337 |
|
|
Sales Comparison
Approach |
|
Adjustments for differences
between comparable sales |
|
4% - 22%
(13%) |
Commercial business |
|
$ |
15,290 |
|
|
Market Comparable Companies |
|
Adjustments for differences between EBITDA multiples and
revenue multiples |
|
6% - 21%
(10%)
.1% - 1%
(1%) |
|
|
|
|
|
|
|
|
|
|
Other real estate owned individually evaluated
for credit losses |
|
$ |
2,198 |
|
|
Sales Comparison
Approach |
|
Adjustments for differences
between comparable sales |
|
3% - 13%
(8%) |
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
|
|
|
|
|
|
|
|
|
Real estate loans individually evaluated
for credit losses |
|
$ |
17,369 |
|
|
Sales Comparison
Approach |
|
Adjustments for differences
between comparable sales |
|
5% - 44%
(24%) |
|
|
|
|
|
|
|
|
|
|
Other real estate owned individually evaluated
for credit losses |
|
$ |
2,198 |
|
|
Sales Comparison
Approach |
|
Adjustments for differences
between comparable sales |
|
3% - 13%
(8%) |
Carrying amounts and estimated fair values of financial instruments at year end were as follows as of the date indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2025 |
|
|
|
Carrying
Amount |
|
|
Estimated
Fair Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
607,817 |
|
|
$ |
607,817 |
|
|
$ |
607,817 |
|
|
$ |
— |
|
|
$ |
— |
|
Interest bearing deposits in other bank |
|
|
575 |
|
|
|
575 |
|
|
|
— |
|
|
|
575 |
|
|
|
— |
|
Available-for-sale securities |
|
|
1,030,568 |
|
|
|
1,030,568 |
|
|
|
35,250 |
|
|
|
995,318 |
|
|
|
— |
|
Held-to-maturity securities |
|
|
5,248 |
|
|
|
5,409 |
|
|
|
— |
|
|
|
5,409 |
|
|
|
— |
|
Loans held for sale |
|
|
1,392 |
|
|
|
1,392 |
|
|
|
— |
|
|
|
1,392 |
|
|
|
|
Loans, net of allowance for credit losses |
|
|
4,145,424 |
|
|
|
4,126,632 |
|
|
|
— |
|
|
|
— |
|
|
|
4,126,632 |
|
Federal Reserve Bank and Federal Home Loan
Bank stock |
|
|
34,053 |
|
|
|
34,053 |
|
|
|
— |
|
|
|
34,053 |
|
|
|
— |
|
Interest receivable |
|
|
33,322 |
|
|
|
33,322 |
|
|
|
— |
|
|
|
33,322 |
|
|
|
— |
|
Derivative assets |
|
|
5,758 |
|
|
|
5,758 |
|
|
|
— |
|
|
|
5,758 |
|
|
|
— |
|
Cash collateral held by derivative counterparty and
netting adjustments |
|
|
(3,367 |
) |
|
|
(3,367 |
) |
|
|
(3,367 |
) |
|
|
— |
|
|
|
— |
|
Total derivative assets |
|
|
2,391 |
|
|
|
2,391 |
|
|
|
(3,367 |
) |
|
|
5,758 |
|
|
|
— |
|
Equity securities with readily determinable fair value |
|
|
1,182 |
|
|
|
1,182 |
|
|
|
1,182 |
|
|
|
— |
|
|
|
— |
|
Total assets |
|
$ |
5,861,972 |
|
|
$ |
5,843,341 |
|
|
$ |
640,882 |
|
|
$ |
1,075,827 |
|
|
$ |
4,126,632 |
|
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
$ |
5,138,264 |
|
|
$ |
5,135,904 |
|
|
$ |
— |
|
|
$ |
5,135,904 |
|
|
$ |
— |
|
Federal funds purchased and retail repurchase
agreements |
|
|
39,864 |
|
|
|
39,864 |
|
|
|
— |
|
|
|
39,864 |
|
|
|
— |
|
Federal Home Loan Bank advances |
|
|
300,000 |
|
|
|
300,000 |
|
|
|
— |
|
|
|
300,000 |
|
|
|
— |
|
Subordinated debentures |
|
|
24,308 |
|
|
|
24,308 |
|
|
|
— |
|
|
|
24,308 |
|
|
|
— |
|
Subordinated notes |
|
|
73,837 |
|
|
|
75,524 |
|
|
|
— |
|
|
|
75,524 |
|
|
|
— |
|
Contractual obligations |
|
|
10,208 |
|
|
|
10,208 |
|
|
|
— |
|
|
|
10,208 |
|
|
|
— |
|
Interest payable |
|
|
9,757 |
|
|
|
9,757 |
|
|
|
— |
|
|
|
9,757 |
|
|
|
— |
|
Derivative liabilities |
|
|
2,808 |
|
|
|
2,808 |
|
|
|
— |
|
|
|
2,808 |
|
|
|
— |
|
Cash collateral held by derivative counterparty and
netting adjustments |
|
|
(8 |
) |
|
|
(8 |
) |
|
|
(8 |
) |
|
|
— |
|
|
|
— |
|
Total derivative liabilities |
|
|
2,800 |
|
|
|
2,800 |
|
|
|
(8 |
) |
|
|
2,808 |
|
|
|
— |
|
Total liabilities |
|
$ |
5,599,038 |
|
|
$ |
5,598,365 |
|
|
$ |
(8 |
) |
|
$ |
5,598,373 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2024 |
|
|
|
Carrying
Amount |
|
|
Estimated
Fair Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
383,747 |
|
|
$ |
383,747 |
|
|
$ |
383,747 |
|
|
$ |
— |
|
|
$ |
— |
|
Available-for-sale securities |
|
|
1,004,455 |
|
|
|
1,004,455 |
|
|
|
86,563 |
|
|
|
917,892 |
|
|
|
— |
|
Held-to-maturity securities |
|
|
5,217 |
|
|
|
5,214 |
|
|
|
— |
|
|
|
5,214 |
|
|
|
— |
|
Loans held for sale |
|
|
513 |
|
|
|
513 |
|
|
|
— |
|
|
|
513 |
|
|
|
|
Loans, net of allowance for credit losses |
|
|
3,457,549 |
|
|
|
3,405,767 |
|
|
|
— |
|
|
|
— |
|
|
|
3,405,767 |
|
Federal Reserve Bank and Federal Home Loan
Bank stock |
|
|
27,875 |
|
|
|
27,875 |
|
|
|
— |
|
|
|
27,875 |
|
|
|
— |
|
Interest receivable |
|
|
28,913 |
|
|
|
28,913 |
|
|
|
— |
|
|
|
28,913 |
|
|
|
— |
|
Derivative assets |
|
|
8,055 |
|
|
|
8,055 |
|
|
|
— |
|
|
|
8,055 |
|
|
|
— |
|
Cash collateral held by derivative counterparty and
netting adjustments |
|
|
(7,173 |
) |
|
|
(7,173 |
) |
|
|
(7,173 |
) |
|
|
— |
|
|
|
— |
|
Total derivative assets |
|
|
882 |
|
|
|
882 |
|
|
|
(7,173 |
) |
|
|
8,055 |
|
|
|
— |
|
Equity securities with readily determinable fair value |
|
|
1,031 |
|
|
|
1,031 |
|
|
|
1,031 |
|
|
|
— |
|
|
|
— |
|
Total assets |
|
$ |
4,910,182 |
|
|
$ |
4,858,397 |
|
|
$ |
464,168 |
|
|
$ |
988,462 |
|
|
$ |
3,405,767 |
|
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
$ |
4,374,789 |
|
|
$ |
4,370,728 |
|
|
$ |
— |
|
|
$ |
4,370,728 |
|
|
$ |
— |
|
Federal funds purchased and retail repurchase
agreements |
|
|
37,246 |
|
|
|
37,246 |
|
|
|
— |
|
|
|
37,246 |
|
|
|
— |
|
Federal Home Loan Bank advances |
|
|
178,073 |
|
|
|
178,073 |
|
|
|
— |
|
|
|
178,073 |
|
|
|
— |
|
Subordinated debentures |
|
|
23,946 |
|
|
|
23,946 |
|
|
|
— |
|
|
|
23,946 |
|
|
|
— |
|
Subordinated notes |
|
|
73,531 |
|
|
|
73,156 |
|
|
|
— |
|
|
|
73,156 |
|
|
|
— |
|
Contractual obligations |
|
|
12,067 |
|
|
|
12,067 |
|
|
|
— |
|
|
|
12,067 |
|
|
|
— |
|
Interest payable |
|
|
5,032 |
|
|
|
5,032 |
|
|
|
— |
|
|
|
5,032 |
|
|
|
— |
|
Derivative liabilities |
|
|
3,546 |
|
|
|
3,546 |
|
|
|
— |
|
|
|
3,546 |
|
|
|
— |
|
Cash collateral held by derivative counterparty and
netting adjustments |
|
|
97 |
|
|
|
97 |
|
|
|
97 |
|
|
|
— |
|
|
|
— |
|
Total derivative liabilities |
|
|
3,643 |
|
|
|
3,643 |
|
|
|
97 |
|
|
|
3,546 |
|
|
|
— |
|
Total liabilities |
|
$ |
4,708,327 |
|
|
$ |
4,703,891 |
|
|
$ |
97 |
|
|
$ |
4,703,794 |
|
|
$ |
— |
|
The fair value of off-balance-sheet items is not considered material.
|