v3.26.1
Fair Value Measurements
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Determination of Fair Value
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an 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. There are three levels of inputs that may be used to measure fair values:
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 our own assumptions that market participants would use in pricing an asset or liability.
In instances in which multiple levels of inputs are used to measure fair value, hierarchy classification is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
The Company used the following methods and significant assumptions to estimate fair value:
Investment securities
The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing. Matrix pricing is a mathematical technique commonly used to price debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on securities’ relationship to other benchmark quoted securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).
Equity Investments
Equity investments are recorded at fair value on a recurring basis, with changes in fair value reported in net income. Through the Summit Merger we acquired an investment in an S&P 500 index mutual fund that is traded on an exchange, and we classify it as Level 2 as of March 31, 2026.
Through the Summit Merger, we acquired perpetual preferred stock of a bank holding company issued in October 2022 in a private offering. The perpetual preferred stock does not trade on an exchange or in an active over-the-counter market; therefore, we estimate its fair value using the present value of its future cash flows using observed discount rates of similar publicly-traded securities, adjusted for a liquidity premium. We classify the perpetual preferred stock as Level 2.
Equity securities without readily determinable fair values are carried at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment. Such equity securities are included in other assets on the accompanying Consolidated Balance Sheets.
Derivatives
The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2). The Company has contracted with a third-party vendor to provide valuations for interest rate swaps using standard swap valuation techniques. The Company has considered counterparty credit risk in the valuation of its interest rate swap assets and has considered its own credit risk in the valuation of its interest rate swap liabilities.
Loans held-for-sale
The fair value of loans held-for-sale is determined using quoted prices for similar assets, adjusted for specific attributes of that loan (Level 2). These loans currently consist of one-to-four family residential loans originated for sale in the secondary market.
Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):
Fair Value Measurements at March 31, 2026, Using:
Quoted Prices in Active Markets for Identical AssetsSignificant Other Observable InputsSignificant Unobservable Inputs
(Level 1)(Level 2)(Level 3)Total
Financial assets
Investment Securities
U.S. Treasuries and government agencies$149,463 $— $— $149,463 
Obligations of states and municipalities— 990,269 — 990,269 
Residential mortgage backed - agency— 57,375 — 57,375 
Residential mortgage backed - non-agency— 372,486 — 372,486 
Commercial mortgage backed - agency— 71,684 — 71,684 
Commercial mortgage backed - non-agency— 98,377 — 98,377 
Asset-backed— 50,300 — 50,300 
Other— 36,083 — 36,083 
Total investment securities available-for-sale$149,463 $1,676,574 $— $1,826,037 
Loans held-for-sale$— $— $— $— 
Equity investments$— $13,919 $— $13,919 
Derivatives$— $3,036 $— $3,036 
Financial liabilities
Derivatives$— $1,452 $— $1,452 
Fair Value Measurements at December 31, 2025, Using:
Quoted Prices in Active Markets for Identical AssetsSignificant Other Observable InputsSignificant Unobservable Inputs
(Level 1)(Level 2)(Level 3)Total
Financial assets
Investment Securities
U.S. Treasuries and government agencies$150,124 $— $— $150,124 
Obligations of states and municipalities— 922,574 — 922,574 
Residential mortgage backed - agency— 55,385 — 55,385 
Residential mortgage backed - non-agency— 218,092 — 218,092 
Commercial mortgage backed - agency— 73,896 — 73,896 
Commercial mortgage backed - non-agency— 111,109 — 111,109 
Asset-backed— 53,466 — 53,466 
Other— 31,308 — 31,308 
Total investment securities available-for-sale$150,124 $1,465,830 $— $1,615,954 
Loans held-for-sale$— $365 $— $365 
Equity investments$— $14,201 $— $14,201 
Derivatives$— $2,604 $— $2,604 
Financial liabilities
Derivatives$— $2,671 $— $2,671 
The following describes the valuation techniques used by the Company to measure certain assets recorded at fair value on a non-recurring basis in the financial statements:
Collateral dependent loans
Loans for which the borrower is experiencing financial difficulty and repayment is dependent upon the operation or sale of collateral, are considered collateral-dependent. For collateral-dependent loans, the fair value is measured based on the value of the collateral securing the loans, less estimated costs of disposal. Collateral may be in the form of real estate or business assets, including equipment, inventory, and accounts receivable. The vast majority of the collateral underlying collateral-dependent loans is real estate, the fair value of which is measured through an appraisal. The appraisals of the collateral supporting collateral-dependent loans may utilize a single valuation approach or a combination of approaches, including comparable sales and the income approach. Any fair value adjustments are recorded in the period incurred as provision for (recapture of) credit losses on the Consolidated Statements of Income. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business.
Other real estate owned
Assets acquired through foreclosure or other proceedings are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. The fair value of foreclosed properties is determined on a nonrecurring basis generally utilizing current appraisals performed by an independent, licensed appraiser applying an income or market value approach using observable market data. Updated appraisals of foreclosed properties are generally obtained if the existing appraisal is more than 18 months old or more frequently if there is a known deterioration in value. However, if a current appraisal is not available, the original appraised value is discounted, as appropriate, to compensate for the estimated depreciation in the value of the real estate since the date of its original appraisal. Such discounts are generally estimated based upon management’s knowledge of sales of similar property within the applicable market area and its knowledge of other real estate market-related data as well as general economic trends. Upon foreclosure, any fair value adjustment is charged against the allowance for credit losses on loans. Subsequent fair value adjustments are recorded in the period incurred and included in other noninterest expense in the Consolidated Statements of Income.
Assets that were measured at fair value on a non-recurring basis during the period are summarized below (in thousands):
Fair Value Measurements at March 31, 2026, Using:
Quoted Prices in Active Markets for Identical AssetsSignificant Other Observable InputsSignificant Unobservable Inputs
(Level 1)(Level 2)(Level 3)Total
Collateral dependent loans
Commercial real estate$— $— $15,820 $15,820 
Owner-occupied commercial real estate— — 328 328 
Acquisition, construction & development— — 5,804 5,804 
Commercial & industrial— — 194 194 
Single family residential— — 633 633 
Consumer non-real estate and other— — — — 
Other real estate owned— — 3,106 3,106 
Fair Value Measurements at December 31, 2025, Using:
Quoted Prices in Active Markets for Identical AssetsSignificant Other Observable InputsSignificant Unobservable Inputs
(Level 1)(Level 2)(Level 3)Total
Collateral dependent loans
Commercial real estate$— $— $10,377 $10,377 
Owner-occupied commercial real estate— — — — 
Acquisition, construction & development— — 2,640 2,640 
Commercial & industrial— — 213 213 
Single family residential— — 223 223 
Consumer non-real estate and other— — — — 
Other real estate owned— — 2,689 2,689 
The following table presents quantitative information about Level 3 Fair Value Measurements for assets measured at fair value on a non-recurring basis at March 31, 2026, and December 31, 2025 (in thousands except for percentages):
DescriptionFair ValueValuation TechniquesUnobservable InputsRange
March 31, 2026
Collateral dependent loans$22,779 Appraisal of collateralManagement adjustments (e.g., liquidity, selling costs, etc.)
5.0% to 20.0% for liquidity, 6.0% to 8.0% for selling costs
Other real estate owned3,106 Appraisal of collateralManagement adjustments (e.g., liquidity, selling costs, etc.)
5.0% to 20.0% for liquidity, 6.0% to 8.0% for selling costs
December 31, 2025
Collateral dependent loans$13,453 Appraisal of collateralManagement adjustments (e.g., liquidity, selling costs, etc.)
5.0% to 20.0% for liquidity, 6.0% to 8.0% for selling costs
Other real estate owned2,689 Appraisal of collateralManagement adjustments (e.g., liquidity, selling costs, etc.)
5.0% to 20.0% for liquidity, 6.0% to 8.0% for selling costs
Fair value of financial instruments
The carrying amounts and estimated fair values of financial instruments not carried at fair value, at March 31, 2026, and December 31, 2025, were as follows (in thousands):
Fair Value Measurements at March 31, 2026, Using:
Carrying AmountQuoted Prices in Active Markets for Identical AssetsSignificant Other Observable InputsSignificant Unobservable Inputs
(Level 1)(Level 2)(Level 3)Total
Financial Assets
Cash and due from banks$53,940 $53,940 $— $— $53,940 
Interest-earning deposits with banks15,652 15,652 — — 15,652 
Loans, net5,336,712 — — 5,312,163 5,312,163 
Accrued interest37,625 — 37,625 — 37,625 
Financial Liabilities
Non-interest-bearing deposits$1,367,050 $— $1,367,050 $— $1,367,050 
Interest-bearing deposits4,965,215 — 4,959,923 — 4,959,923 
Short-term borrowings525,000 — 523,406 — 523,406 
Subordinated debentures, net71,510 — 68,093 — 68,093 
Subordinated debentures owed to unconsolidated subsidiary trusts17,331 — 16,438 — 16,438 
Accrued interest6,637 — 6,637 — 6,637 
Fair Value Measurements at December 31, 2025, Using:
Carrying AmountQuoted Prices in Active Markets for Identical AssetsSignificant Other Observable InputsSignificant Unobservable Inputs
(Level 1)(Level 2)(Level 3)Total
Financial Assets
Cash and due from banks$53,497 $53,497 $— $— $53,497 
Interest-bearing deposits with banks235,630 235,630 — — 235,630 
Loans, net5,319,853 — — 5,284,210 5,284,210 
Accrued interest35,442 — 35,442 — 35,442 
Financial Liabilities
Non-interest-bearing deposits$1,336,380 $— $1,336,380 $— $1,336,380 
Interest-bearing deposits5,067,561 — 5,062,925 — 5,062,925 
Short-term borrowings450,000 — 450,005 — 450,005 
Subordinated debentures, net70,222 — 70,800 — 70,800 
Subordinated debentures owed to unconsolidated subsidiary trusts17,268 — 16,494 — 16,494 
Accrued interest4,447 — 4,447 — 4,447