v3.26.1
Fair Value Measurements and Disclosures
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements and Disclosures Fair Value Measurements and Disclosures
The Corporation uses fair value measurements to record fair value adjustments to certain assets and liabilities. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Corporation’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.
The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation techniques or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions.
In accordance with this guidance, the Corporation groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.
Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 – Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on 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 for substantially the full term of the asset or liability.
Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.
Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis.
Securities
The fair value of securities available-for-sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. The fair value of certain other securities available-for-sale (carried at fair value) are based on quoted prices obtained from dealers or brokers in active over-the-counter markets (Level 1).
Mortgage Loans Held for Sale
The fair value of loans held for sale is based on secondary market prices.
Mortgage Loans Held for Investment
The fair value of mortgage loans held for investment is based on the price secondary markets are currently offering for similar loans using observable market data.
Derivative Financial Instruments
The fair values of forward commitments and interest rate swaps are based on market pricing and therefore are considered Level 2. Derivatives classified as Level 3 consist of interest rate lock commitments related to mortgage loan commitments. The determination of fair value includes assumptions related to the likelihood that a commitment will ultimately result in a closed loan, which is a significant unobservable assumption. A significant increase or decrease in the external market price would result in a significantly higher or lower fair value measurement.

The following table presents the fair value of financial assets measured at fair value on a recurring basis by level within the fair value hierarchy at the dates indicated:
March 31, 2026
(dollars in thousands)TotalLevel 1Level 2Level 3
Assets
Securities available for sale:
U.S. asset backed securities$25,361 $— $25,361 $— 
U.S. government agency MBS21,816 — 21,816 — 
March 31, 2026
(dollars in thousands)TotalLevel 1Level 2Level 3
U.S. government agency CMO69,242 — 69,242 — 
State and municipal securities39,636 — 39,636 — 
U.S. Treasuries16,193 16,193 — — 
Non-U.S. government agency CMO7,687 — 7,687 
Corporate bonds16,077 — 16,077 — 
Equity investments2,137 — 2,137 — 
Mortgage loans held for sale38,960 — 38,960 — 
Mortgage loans held for investment14,090 — 14,090 — 
Interest rate lock commitments355 — — 355 
Forward commitments130 — 130 — 
Customer derivatives - interest rate swaps1,728 — 1,728 — 
Fair Value Hedge13 — 13 — 
Total$253,425 $16,193 $236,877 $355 
Liabilities
Interest rate lock commitments$169 $— $— $169 
Forward commitments13 — 13 — 
Customer derivatives - interest rate swaps1,745 — 1,745 — 
Customer derivatives - Risk Participation Agreements22 — 22 — 
Interest rate swaps123 — 123 — 
Total$2,072 $— $1,903 $169 

December 31, 2025
(dollars in thousands)TotalLevel 1Level 2Level 3
Assets
Securities available for sale:
U.S. asset backed securities$26,217 $— $26,217 $— 
U.S. government agency MBS22,351 — 22,351 — 
U.S. government agency CMO66,131 — 66,131 — 
State and municipal securities40,032 — 40,032 — 
U.S. Treasuries16,206 16,206 — — 
Non-U.S. government agency CMO8,606 — 8,606 — 
Corporate bonds13,914 — 13,914 — 
Equity investments2,166 — 2,166 — 
Mortgage loans held for sale33,762 — 33,762 — 
Mortgage loans held for investment14,396 — 14,396 — 
Interest rate lock commitments402 — — 402 
Customer derivatives - interest rate swaps1,909 — 1,909 — 
Fair Value Hedge21 — 21 — 
Total$246,112 $16,206 $229,504 $402 
Liabilities
Interest rate lock commitments$13 $— $— $13 
Forward commitments32 — 32 — 
Customer derivatives - interest rate swaps1,929 — 1,929 — 
Customer derivatives - Risk Participation Agreements23 — 23 — 
Interest rate swaps281 — 281 — 
Total$2,278 $— $2,265 $13 
The following table presents assets measured at fair value on a nonrecurring basis at the dates indicated:
(dollars in thousands)March 31,
2026		December 31,
2025
Mortgage servicing rights$84 $86 
SBA loan servicing rights3,610 3,846 
OREO and other repossessed assets6,009 5,997 
Individually evaluated loans (1)
Commercial and industrial122—
       Construction3,7134,430
Small business loans2,9253,745
Total$16,463 $18,103 
(1) Individually evaluated loans are those in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral.
The following table details the valuation techniques for Level 3 assets.

(dollars in thousands)March 31, 2026
Financial InstrumentFair ValueValuation TechniqueUnobservable InputRange of InputsWeighted Average
OREO and other repossessed assets$6,009 Appraisal of collateralCosts to sell
6% - 13% discount
10%
Individually evaluated loans6,759 Appraisal of collateralCosts to sell
10%-85% discount
28%

(dollars in thousands)December 31, 2025
Financial InstrumentFair ValueValuation TechniqueUnobservable InputRange of InputsWeighted Average
OREO and other repossessed assets$5,997 Appraisal of collateralCosts to sell
6% - 13% discount
10%
Individually evaluated loans8,175 Appraisal of collateralCosts to sell
2%-48% discount
24%

Below is management’s estimate of the fair value of all financial instruments, whether carried at cost or fair value on the Corporation’s balance sheet. The following information should not be interpreted as an estimate of the fair value of the entire Corporation since a fair value calculation is only provided for a limited portion of the Corporation’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Corporation’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair value of the Corporation’s financial instruments:
Cash and Cash Equivalents
The carrying amounts reported in the balance sheet for cash and short-term instruments approximate those assets’ fair values.
Loans Receivable
The fair value of loans receivable is estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair value below is reflective of an exit price.
Servicing Assets
The Corporation estimates the fair value of mortgage servicing rights and SBA loan servicing rights using discounted cash flow models that calculate the present value of estimated future net servicing income. The model uses readily available prepayment speed assumptions for the interest rates of the portfolios serviced. These servicing rights are classified within Level 3 in the fair value hierarchy based upon management’s assessment of the inputs. The Corporation reviews the servicing rights portfolios on a quarterly basis for impairment.
Other Real Estate Owned
Other real estate owned (“OREO”) consists of loan collateral which has been repossessed through foreclosure or other measures. Initially, foreclosed assets are recorded at the fair value of the collateral less estimated selling costs. Subsequent to foreclosure, valuations are updated periodically and the assets may be marked down further, reflecting a new cost basis. The fair value of OREO was estimated using Level 3 inputs based on appraisals, letters of intent or agreement of sale received from third parties.
Repossessed Assets
Repossessed assets represents non-real estate assets that the Corporation has acquired by taking possession of the asset that collateralized a loan or lease. The Corporation reports repossessed assets at the fair value less cost to sell, adjusted periodically based on a current appraisal provided by a third party based on their assumptions and quoted market prices for similar assets, when available. Write-downs and any gain or loss upon the sale of repossessed assets is recorded in other noninterest income. The fair value of repossessed assets was estimated using Level 3 inputs based on appraisals, letters of intent or agreement of sale received from third parties.

Individually Evaluated Loans
Individually evaluated loans are those in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third party appraisals of the properties, or discounted cash flows based upon the expected proceeds. 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. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. Individually evaluated loans are evaluated on a quarterly basis for additional impairment and adjusted in accordance with the ACL policy.
Accrued Interest Receivable and Payable
The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value.
Deposit Liabilities
The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.
Short-Term Borrowings
The carrying amounts of short-term borrowings approximate their fair values.
Long-Term Debt
Fair values of FHLB advances and the acquisition purchase note payable are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party.

Subordinated Debt
Fair values of junior subordinated debt are estimated using discounted cash flow analysis, based on market rates currently offered on such debt with similar credit risk characteristics, terms and remaining maturity.
Off-Balance Sheet Financial Instruments
Off-balance sheet instruments are primarily comprised of loan commitments, which are generally priced at market at the time of funding. Fees on commitments to extend credit and stand-by letters of credit are deemed to be immaterial and these instruments are expected to be settled at face value or expire unused. It is impractical to assign any fair value to these instruments and as a result they are not included in the table below. Fair values assigned to the notional value of interest rate lock commitments and forward sale contracts are based on market quotes.
Derivative Financial Instruments
The fair value of forward commitments and interest rate swaps is based on market pricing and therefore are considered Level 2. Derivatives classified as Level 3 consist of interest rate lock commitments related to mortgage loan commitments. The determination of fair value includes assumptions related to the likelihood that a commitment will ultimately result in a closed loan, which is a significant unobservable assumption. A significant increase or decrease in the external market price would result in a significantly higher or lower fair value measurement.

The following table presents the estimated fair values of the Corporation’s financial instruments at the dates indicated:
Fair Value
Hierarchy Level		March 31, 2026December 31, 2025
(dollars in thousands)Carrying
amount		Fair valueCarrying
amount		Fair value
Financial assets:
Cash and cash equivalentsLevel 1$28,269 $28,269 $35,778 $35,778 
Mortgage loans held for saleLevel 238,960 38,960 33,762 33,762 
Loans and other finance receivables, net of ACLLevel 32,146,233 2,116,050 2,134,630 2,108,242 
Mortgage loans held for investmentLevel 214,090 14,090 14,396 14,396 
Financial liabilities:
DepositsLevel 2$2,169,960 $2,182,600 $2,158,128 $2,179,800 
BorrowingsLevel 2120,838 121,000 117,338 117,700 
Subordinated debenturesLevel 249,675 49,569 49,853 49,597 
The following table includes a rollforward of interest rate lock commitments for which the Corporation utilized Level 3 inputs to determine fair value on a recurring basis for the periods indicated.
Three months ended
March 31,
(dollars in thousands)20262025
Balance at beginning of the period$402 $216 
Change in value(47)148 
Balance at end of the period$355 $364 
The following table details the valuation techniques for Level 3 interest rate lock commitments.
(dollars in thousands)Fair ValueValuation TechniqueSignificant Unobservable InputRange of InputsWeighted Average
March 31, 2026$355 Market comparable pricingPull through
1 - 99%
85.52%
December 31, 2025402 Market comparable pricingPull through
1 - 99%
85.31%