v3.26.3
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS
 9 Months Ended
Sep. 30, 2026
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS
In accordance with ASC 820-10, we group 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. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described as follows:
Fair Value Hierarchy
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, prepayment speeds, volatilities, etc.) or model-based valuation techniques where all significant assumptions are observable, either directly or indirectly, in the market.
Level 3 - Valuation is generated from model-based techniques where one or more significant inputs are not observable, either directly or indirectly, in the market. These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques may include use of matrix pricing, discounted cash flow models, and similar techniques.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Securities
The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1) or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2).
Assets and Liabilities Measured on a Non-Recurring Basis
Collateral-dependent individually evaluated loans
Collateral-dependent individually evaluated loans are carried at fair value when it is probable that we will be unable to collect all amounts due according to the contractual terms of the original loan agreement and the loan has been written down to the fair value of its underlying collateral, net of expected selling costs.
The fair value of collateral-dependent individually evaluated loans is based on third party appraisals of the property, less management’s estimate of selling costs. Third party appraisals generally use a sales comparison or income capitalization approach to derive the appraised value based on market transactions involving similar or comparable properties. Adjustments are routinely made by the third party appraisers to adjust for differences between the comparable sales and income data used in the appraisal. Adjustments may also result from the consideration of relevant economic and demographic factors which may affect property values. Positive adjustments in the appraisal represent increases to the sales comparisons and negative adjustments represent decreases.
Other Real Estate Owned ("OREO")
OREO (included in “Accrued interest and other assets” in the consolidated balance sheets) is initially recorded at fair value less estimated selling costs at the date of transfer. This amount becomes the property's new basis. Fair values are generally based on third party appraisals of the property and discounted by management to reflect estimated selling costs (Level 3).
Appraisals for OREO and collateral-dependent loans are performed by state licensed appraisers (for commercial properties) or state certified appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by us. We review the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison to independent data sources such as recent market data or industry wide statistics for residential appraisals. We also consider the actual selling price of collateral that has been sold in recent periods to determine what additional adjustments, if any, should be made to the appraisal values to arrive at fair value. In determining the net realizable value of the underlying collateral for individually evaluated loans and OREO, we typically apply a discount of 6% to 10% of the collateral value to cover market price fluctuations and estimated selling costs that may be incurred in the event of foreclosure. Generally, if the existing appraisal is older than twelve months for OREO or collateral-dependent loans, a new appraisal report is ordered.
The following table presents our financial assets and liabilities measured at fair value on a recurring basis or on a non-recurring basis as of the dates indicated:
Fair Value Measurements Using:
September 30, 2026Level 1Level 2Level 3Total
Assets measured at fair value:(dollars in thousands)
On a recurring basis:
Securities available for sale:
Government agency securities$— $18,176 $— $18,176 
SBA agency securities— 18,531 — 18,531 
Mortgage-backed securities— 96,510 — 96,510 
Collateralized mortgage obligations— 176,970 — 176,970 
Commercial paper— 39,699 — 39,699 
Corporate debt securities— 23,091 — 23,091 
Municipal securities— 8,367 — 8,367 
$— $381,344 $— $381,344 
On a non-recurring basis:
Collateral dependent individually evaluated loans:
Commercial real estate loans$— $— $3,057 $3,057 
Commercial and industrial loans— — 4,708 4,708 
SBA loans— — 883 883 
Other real estate owned (1)
— — 19,820 19,820 
$— $— $28,468 $28,468 
(1)Included in “Accrued interest and other assets” on the consolidated balance sheets.
December 31, 2025Level 1Level 2Level 3Total
Assets measured at fair value:
On a recurring basis:
Securities available for sale:
Government agency securities$— $22,705 $— $22,705 
SBA agency securities— 21,180 — 21,180 
Mortgage-backed securities— 92,155 — 92,155 
Collateralized mortgage obligations— 213,272 — 213,272 
Commercial paper— 19,948 — 19,948 
Corporate debt securities— 28,429 — 28,429 
Municipal securities— 9,515 — 9,515 
Forward mortgage loan sale contracts (1)
— — 11 11 
$— $407,204 $11 $407,215 
On a non-recurring basis:
Collateral dependent individually evaluated loans:
Commercial real estate loans$— $— $3,071 $3,071 
Construction and land development loans— — 19,465 19,465 
Commercial and industrial loans— — 4,708 4,708 
Other real estate owned (1)
— — 8,830 8,830 
$— $— $36,074 $36,074 
(1)Included in “Accrued interest and other assets” on the consolidated balance sheets.
The fair value of assets evaluated on a non-recurring basis is based on third party appraisals, including adjustments to comparable market data as summarized in the table below.
September 30, 2026Fair ValueValuation TechniquesUnobservable Input(s)
Range (1)
Collateral dependent loans:(dollars in thousands)
Commercial real estate loans$3,057 Market approachAdjustments
(41)% to 4%
Commercial and industrial loans4,708 Market approachAdjustments
(4)% to 26%
SBA loans883 Market approachAdjustments
0% to 22%
Other Real Estate Owned (2)
19,820 Market approachAdjustments
6% to 26%
Total$28,468 
(1)Represents the minimum and maximum range of adjustments made by appraisers for differences in comparable sales.
(2)Included in “Accrued interest and other assets” on the consolidated balance sheets.
December 31, 2025Fair Value Valuation TechniquesUnobservable Input(s)
Range (1)
Collateral dependent loans:(dollars in thousands)
Commercial real estate loans$3,071 Market approachAdjustments
(41)% to 4%
Construction and land development loans19,465 Market approachAdjustments
9% to 23%
Commercial and industrial loans4,708 Market approachAdjustments
(20)% to 20%
Other Real Estate Owned(2)
8,830 Market approachAdjustments
(10)% to 21%
Total$36,074 
(1)Represents the minimum and maximum range of adjustments made by appraisers for differences in comparable sales.
(2)Included in "Accrued interest and other assets" on the consolidated balance sheets.
The fair value hierarchy level and estimated fair value of significant financial instruments as of the dates indicated are summarized as follows:
September 30, 2026December 31, 2025
Fair Value
Hierarchy		Carrying
Value		Fair
Value		Carrying
Value		Fair
Value
Financial Assets:(dollars in thousands)
Cash and cash equivalentsLevel 1$190,290 $190,290 $212,317 $212,317 
Interest-earning deposits in other financial institutionsLevel 1600 600 600 600 
Investment securities – AFSLevel 2381,344 381,344 407,204 407,204 
Investment securities – HTMLevel 24,179 3,803 4,184 4,103 
Loans held for saleLevel 2— — 2,067 2,067 
Loans, netLevel 33,355,176 3,304,069 3,270,413 3,221,797 
Equity securities (1)
Level 336,133 36,133 26,086 26,086 
Investment in FHLB stockLevel 215,000 15,000 15,000 15,000 
Servicing assets (1)
Level 35,644 11,644 6,041 11,521 
Accrued interest receivable (1)
Level 1/2/316,608 16,608 16,230 16,230 
NotionalFairNotionalFair
ValueValueValueValue
Derivative Assets:
Forward mortgage loan sale contracts (1)
Level 3$— $— $515 $11 
CarryingFairCarryingFair
Financial Liabilities:ValueValueValueValue
DepositsLevel 2$3,395,280 $3,391,247 $3,350,398 $3,350,982 
FHLB advancesLevel 3180,000 173,992 130,000 129,198 
Long-term debtLevel 380,000 79,663 119,911 114,691 
Subordinated debenturesLevel 315,538 15,308 15,375 15,227 
Accrued interest payable (2)
Level 2/35,460 5,460 7,960 7,960 
(1)Included in “Accrued interest and other assets” on the consolidated balance sheets.
(2)Included in “Accrued interest and other liabilities” on the consolidated balance sheets.