v3.26.3
Fair Value of Financial Instruments
 9 Months Ended
Sep. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments Fair value of financial instruments
ASC 820-10 defines fair value as 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. ASC 820-10 also establishes a framework for measuring the fair value of assets and liabilities according to a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs derived from management's estimate of the assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances.
The hierarchy is broken down into the following three levels, based on the reliability of inputs:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at 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 for assets or liabilities that are derived from assumptions based on management’s estimate of assumptions that market participants would use in pricing the assets or liabilities.
The Company records the fair values of financial assets and liabilities on a recurring and nonrecurring basis using the following methods and assumptions:
Investment securities
Investment securities are recorded at fair value on a recurring basis. Fair values for securities are based on quoted market prices, where available. If available, these securities are classified as Level 1. If quoted prices are not available, fair values are based on quoted market prices of similar instruments or are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the pricing relationship or correlation among other benchmark quoted securities. Investment securities valued using quoted market prices of similar instruments or that are valued using matrix pricing are classified as Level 2.
Loans held for sale
Mortgage loans held for sale are carried at fair value determined using current secondary market prices for loans with similar characteristics, that is, using Level 2 inputs.
Derivatives
The fair value of the Company’s interest rate swap agreements to facilitate customer transactions is based on fair values obtained from entities that engage in interest rate swap activity and reflects projected future cash flows and interest rates. The fair value of interest rate lock commitments associated with the mortgage pipeline is based on fees currently charged to enter into similar agreements, and for fixed‑rate commitments, also reflects the difference between current market interest rates and the committed rates. The fair values of the Company’s derivatives are determined using pricing models that incorporate observable market inputs. These financial instruments are classified as Level 2.
OREO
OREO is comprised of properties obtained in partial or total satisfaction of loan obligations and excess land and facilities held for sale. OREO acquired in settlement of indebtedness is recorded at the lower of the carrying amount of the loan or the fair value of the real estate less costs to sell. Fair value is determined on a nonrecurring basis based on appraisals by qualified licensed appraisers and is adjusted for management’s estimates of costs to sell and holding period discounts. OREO valuations are classified as Level 3.
Mortgage servicing rights
MSRs are carried at fair value. Fair value is determined using an income approach with various assumptions including expected cash flows, market discount rates, prepayment speeds, servicing costs, and other factors. As such, MSRs are considered Level 3.
Collateral- dependent loans
Collateral-dependent loans are loans for which the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. Collateral-dependent loans are classified as Level 3.

The balances and levels of the assets and liabilities measured at fair value on a recurring basis as of September 30, 2026 and December 31, 2025 are presented in the following tables:
At September 30, 2026Quoted prices
in active
markets for
identical assets
(liabilities)
(level 1)		Significant
other
observable
inputs
(level 2) 		Significant unobservable
inputs
(level 3) 		Total
Financial assets:
AFS debt securities:
U.S. government agency securities$— $789,987 $— $789,987 
Mortgage-backed securities - residential— 568,520 — 568,520 
Mortgage-backed securities - commercial— 18,644 — 18,644 
Municipal securities— 152,325 — 152,325 
U.S. Treasury securities— 6,964 — 6,964 
Corporate securities— 1,690 — 1,690 
Equity securities, at fair value5,759 — — 5,759 
Total securities$5,759 $1,538,130 $— $1,543,889 
Loans held for sale, at fair value$— $225,935 $— $225,935 
Mortgage servicing rights— — 150,873 150,873 
Derivatives— 35,686 — 35,686 
Financial liabilities:
Derivatives— 31,838 — 31,838 
At December 31, 2025Quoted prices
in active
markets for
identical assets
(liabilities)
(level 1)		Significant
other
observable
inputs
(level 2) 		Significant unobservable
inputs
(level 3) 		Total
Financial assets:
AFS debt securities:
U.S. government agency securities$— $670,088 $— $670,088 
Mortgage-backed securities - residential— 602,320 — 602,320 
Mortgage-backed securities - commercial— 10,678 — 10,678 
Municipal securities — 168,370 — 168,370 
U.S. Treasury securities— 7,125 — 7,125 
Corporate securities— 998 — 998 
Equity securities, at fair value— 155 — 155 
Total securities$— $1,459,734 $— $1,459,734 
Loans held for sale, at fair value$— $172,974 $— $172,974 
Mortgage servicing rights— — 148,795 148,795 
Derivatives— 24,316 — 24,316 
Financial liabilities:
Derivatives— 23,509 — 23,509 
The balances and levels of the assets measured at fair value on a nonrecurring basis as of September 30, 2026 and December 31, 2025 are presented in the following tables: 
September 30, 2026Quoted prices
in active
markets for
identical assets
(liabilities)
(level 1)		Significant
other
observable
inputs
(level 2) 		Significant unobservable
inputs
(level 3) 		Total
Nonrecurring valuations:
Financial assets:
Other real estate owned$— $— $3,480 $3,480 
Collateral-dependent net loans held for
   investment:
Commercial and industrial$— $— $3,217 $3,217 
Construction— — 21,511 21,511 
Residential real estate:
1-to-4 family mortgage— — 262 262 
   Multi-family mortgage— — 2,113 2,113 
Commercial real estate:
Owner-occupied— — 5,479 5,479 
Non-owner occupied— — 9,770 9,770 
Total collateral-dependent loans$— $— $42,352 $42,352 
 
December 31, 2025Quoted prices
in active
markets for
identical assets
(liabilities)
(level 1)		Significant
other
observable
inputs
(level 2)		Significant unobservable
inputs
(level 3)		Total
Nonrecurring valuations:
Other real estate owned$— $— $4,757 $4,757 
Collateral-dependent net loans held for
    investment:
Commercial and industrial$— $— $1,538 $1,538 
Construction— — 18,281 18,281 
Residential real estate:
1-to-4 family mortgage— — 287 287 
Commercial real estate:
Owner-occupied— — 5,479 5,479 
Non-owner occupied— — 640 640 
Total collateral-dependent loans$— $— $26,225 $26,225 
The significant unobservable inputs (Level 3) used in the valuation and changes in fair value associated with the Company’s mortgage servicing rights for the three and nine months ended September 30, 2026 and 2025 are detailed at Note 7, “Mortgage servicing rights.”
The following tables present information as of September 30, 2026 and December 31, 2025 about significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a nonrecurring basis:
September 30, 2026
Financial instrumentFair ValueValuation techniqueSignificant 
unobservable inputs		Range of
inputs
Collateral-dependent net loans
   held for investment:
Commercial and industrial$3,217 Appraised valueDiscount for costs to sell
0%-28%
Construction21,511 Appraised valueDiscount for costs to sell
10%-18%
Residential real estate:
1-to-4 family mortgage262 Appraised valueDiscount for costs to sell
10%-10%
Multi-family mortgage2,113 Appraised valueDiscount for costs to sell
10%-10%
Commercial real estate:
Owner-occupied5,479 Appraised valueDiscount for costs to sell
10%-10%
Non-owner occupied9,770 Appraised valueDiscount for costs to sell
10%-12%
Other real estate owned$3,480 Appraised valueDiscount for costs to sell
0%-10%
December 31, 2025
Financial instrumentFair ValueValuation techniqueSignificant 
unobservable inputs		Range of
inputs
Collateral-dependent net loans
   held for investment:
Commercial and industrial$1,538 Appraised valueDiscount for costs to sell
10%-10%
Construction18,281 Appraised valueDiscount for costs to sell
10%-22%
Residential real estate:
1-to-4 family mortgage287 Appraised valueDiscount for costs to sell
10%-10%
Commercial real estate:
Owner-occupied5,479 Appraised valueDiscount for costs to sell
10%-10%
Non-owner occupied640 Appraised valueDiscount for costs to sell
11%-11%
Other real estate owned$4,757 Appraised valueDiscount for costs to sell
0%-10%

Fair value for collateral-dependent loans is determined based on the estimated value of the collateral securing the loans, less estimated selling costs and closing costs related to liquidation of the collateral. For loans secured by real estate, the fair value is determined based on appraisals performed by qualified appraisers and reviewed by qualified personnel. For non-real estate collateral, fair value is determined based on various sources, including third-party asset valuation and internally determined values based on cost adjusted or other judgmentally determined factors. Collateral-dependent loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on changes in market conditions from the time of valuation and management’s knowledge of the borrower and borrower’s business. As of September 30, 2026 and December 31, 2025, total amortized cost of collateral-dependent loans measured on a nonrecurring basis amounted to $52,011 and $29,057, respectively. The allowance for credit losses is calculated as the amount for which the loan’s amortized cost basis exceeds fair value.
Other real estate owned acquired in settlement of indebtedness is recorded at fair value of the real estate less estimated costs to sell. Subsequently, it may be necessary to record nonrecurring fair value adjustments for declines in fair value. Any write-downs based on the asset’s fair value at the date of foreclosure are charged to the allowance for credit losses.
Appraisals for both collateral-dependent loans and other real estate owned are performed by certified appraisers whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the lending administrative department reviews the assumptions and approaches utilized in the appraisal as well as the overall
resulting fair value in comparison with independent data sources such as recent market data or industry wide statistics. Collateral-dependent loans for which repayment is expected through the sale of equipment, such as farm equipment, automobiles, and aircraft, are generally valued based on public source pricing or subscription services while more complex assets are valued through leveraging brokers who have expertise in the collateral involved.
Fair value option
The following table summarizes the Company’s loans held for sale as of the dates presented:
September 30,December 31,
20262025
Loans held for sale under a fair value option:
  Mortgage loans held for sale$225,935 $172,974 
Loans held for sale not accounted for under a fair value option:
  Mortgage loans held for sale - guaranteed GNMA repurchase option29,134 28,102 
               Total loans held for sale$255,069 $201,076 
Mortgage loans held for sale
Net losses of $6,726 and $7,976 resulting from fair value changes of mortgage loans held for sale were recorded in income during the three and nine months ended September 30, 2026, respectively, compared to net gains of $405 and $2,233 during the three and nine months ended September 30, 2025, respectively. The Company also recognized fair value changes on derivative instruments used to hedge market-related risk associated with these mortgage loans. When combined with the fair value changes of the underlying loans, the total resulted in net losses of $1,717 and $1,730 for the three and nine months ended September 30, 2026, respectively, compared to net gains of $801 and $2,741 for the three and nine months ended September 30, 2025, respectively.
The change in fair value of mortgage loans held for sale and the related derivative instruments are recorded in mortgage banking income in the consolidated statements of income. Election of the fair value option allows the Company to reduce the accounting volatility that would otherwise result from the asymmetry created by accounting for the financial instruments at the lower of cost or fair value and the derivatives at fair value.
The Company’s valuation of mortgage loans held for sale incorporates an assumption for credit risk; however, given the short-term period that the Company holds these mortgage loans held for sale, valuation adjustments attributable to instrument-specific credit risk are nominal.
The following table summarizes the differences between the fair value and the principal balance for mortgage loans held for sale measured at fair value as of September 30, 2026 and December 31, 2025: 
September 30,December 31,
20262025
Aggregate fair value$225,935 $172,974 
Aggregate unpaid principal balance229,629 168,692 
     Difference$(3,694)$4,282 
The following table contains the estimated fair values and the related carrying values of the Company’s financial instruments. Non-financial instruments are excluded from the table below.
 Fair Value
September 30, 2026Carrying amount Level 1Level 2Level 3Total
Financial assets:
Cash and cash equivalents$1,017,689 $1,017,689 $— $— $1,017,689 
Investment securities1,543,889 5,759 1,538,130 — 1,543,889 
Net loans HFI12,985,604 — — 12,884,630 12,884,630 
Loans held for sale, at fair value225,935 — 225,935 — 225,935 
Interest receivable60,369 605 8,877 50,887 60,369 
Mortgage servicing rights150,873 — — 150,873 150,873 
Derivatives35,686 — 35,686 — 35,686 
Financial liabilities:
Deposits:
Without stated maturities$11,663,440 $11,663,440 $— $— $11,663,440 
With stated maturities3,002,556 — 2,997,977 — 2,997,977 
Securities sold under agreements to repurchase
     and federal funds purchased		27,484 27,484 — — 27,484 
Subordinated debt, net207,722 — — 210,287 210,287 
Interest payable24,550 3,160 21,229 161 24,550 
Derivatives31,838 — 31,838 — 31,838 
 Fair Value
December 31, 2025Carrying amount Level 1Level 2Level 3Total
Financial assets:
Cash and cash equivalents$1,155,895 $1,155,895 $— $— $1,155,895 
Investment securities1,459,734 — 1,459,734 — 1,459,734 
Net loans HFI12,197,643 — — 12,155,340 12,155,340 
Loans held for sale, at fair value172,974 — 172,974 — 172,974 
Interest receivable58,565 463 7,962 50,140 58,565 
Mortgage servicing rights148,795 — — 148,795 148,795 
Derivatives24,316 — 24,316 — 24,316 
Financial liabilities:
Deposits:
Without stated maturities$11,255,404 $11,255,404 $— $— $11,255,404 
With stated maturities2,654,557 — 2,655,532 — 2,655,532 
Securities sold under agreements to
repurchase and federal funds purchased
99,865 99,865 — — 99,865 
Subordinated debt, net83,670 — — 88,281 88,281 
Interest payable21,549 3,677 17,872 — 21,549 
Derivatives23,509 — 23,509 — 23,509