Fair Value Measurements (Tables)
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9 Months Ended |
Sep. 30, 2023 |
Fair Value Disclosures [Abstract] |
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Assets and Liabilities Measured at Fair Value on Recurring Basis |
As of September 30, 2023 and December 31, 2022, assets and liabilities measured at fair value on a recurring basis are as follows:
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Level 1 |
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Level 2 |
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Level 3 |
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Significant |
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Observable |
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Quoted Prices in |
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Inputs with No |
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Active Markets |
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Active Market |
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Significant |
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for Identical |
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with Identical |
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Unobservable |
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Assets |
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Characteristics |
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Inputs |
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Total Fair Value |
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(in thousands) |
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September 30, 2023 |
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Assets: |
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Securities available for sale: |
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U.S. Treasury securities |
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$ |
70,922 |
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$ |
— |
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$ |
— |
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$ |
70,922 |
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U.S. government agency and sponsored agency obligations: |
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Mortgage-backed securities - residential |
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— |
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422,726 |
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— |
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422,726 |
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Mortgage-backed securities - commercial |
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— |
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45,966 |
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— |
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45,966 |
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Collateralized mortgage obligations |
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— |
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86,258 |
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— |
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86,258 |
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Debt securities |
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— |
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129,919 |
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— |
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129,919 |
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Total U.S. government agency and sponsored agency obligations |
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— |
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684,869 |
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— |
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684,869 |
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Municipal bonds-tax exempt |
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— |
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61,451 |
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— |
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61,451 |
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Total securities available for sale |
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$ |
70,922 |
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$ |
746,320 |
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$ |
— |
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$ |
817,242 |
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Derivative financial instruments |
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$ |
— |
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$ |
8,602 |
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$ |
— |
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$ |
8,602 |
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Liabilities: |
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Derivative financial instruments |
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$ |
— |
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$ |
8,493 |
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$ |
— |
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$ |
8,493 |
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December 31, 2022 |
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Assets: |
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Securities available for sale: |
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U.S. Treasury securities |
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$ |
48,026 |
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$ |
— |
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$ |
— |
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$ |
48,026 |
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U.S. government agency and sponsored agency obligations: |
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Mortgage-backed securities - residential |
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— |
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465,152 |
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— |
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465,152 |
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Mortgage-backed securities - commercial |
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— |
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51,292 |
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— |
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51,292 |
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Collateralized mortgage obligations |
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— |
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85,485 |
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— |
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85,485 |
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Debt securities |
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— |
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138,499 |
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— |
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138,499 |
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Total U.S. government agency and sponsored agency obligations |
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— |
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740,428 |
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— |
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740,428 |
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Municipal bonds-tax exempt |
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— |
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65,384 |
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— |
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65,384 |
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Total securities available for sale |
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$ |
48,026 |
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$ |
805,812 |
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$ |
— |
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$ |
853,838 |
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Derivative financial instruments |
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$ |
— |
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$ |
7,507 |
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$ |
— |
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$ |
7,507 |
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Liabilities: |
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Derivative financial instruments |
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$ |
— |
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$ |
7,375 |
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$ |
— |
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$ |
7,375 |
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Assets and Liabilities Measured at Fair Value on Non-Recurring Basis |
As of September 30, 2023 and December 31, 2022, assets and liabilities measured at fair value on a non-recurring basis are as follows:
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Level 1 |
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Level 2 |
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Level 3 |
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Significant |
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Observable |
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Quoted Prices in |
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Inputs With No |
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Active Markets |
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Active Market |
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Significant |
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for Identical |
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With Identical |
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Unobservable |
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Total |
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Assets |
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Characteristics |
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Inputs |
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(in thousands) |
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September 30, 2023 |
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Assets: |
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Collateral dependent loans (1) |
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$ |
6,842 |
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$ |
— |
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$ |
— |
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$ |
6,842 |
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Other real estate owned |
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117 |
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— |
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— |
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117 |
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Repossessed personal property |
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1,320 |
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— |
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— |
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1,320 |
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December 31, 2022 |
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Assets: |
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Collateral dependent loans (2) |
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$ |
2,694 |
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$ |
— |
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$ |
— |
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$ |
2,694 |
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Other real estate owned |
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117 |
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— |
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— |
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|
117 |
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Repossessed personal property |
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467 |
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— |
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— |
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|
467 |
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Servicing assets |
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7,176 |
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— |
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— |
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7,176 |
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(1)
Consisted of real estate loans of $2.0 million and commercial and industrial loans of $4.8 million, which were secured by real estate and business assets.
(2)
Consisted of real estate loans of $2.7 million.
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Quantitative Information about Level 3 Fair Value Assumptions for Assets Measured at Fair Value on Non-Recurring Basis |
The following table represents quantitative information about Level 3 fair value assumptions for assets measured at fair value on a non-recurring basis at September 30, 2023 and December 31, 2022:
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Fair Value |
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Valuation Techniques |
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Unobservable Input(s) |
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Range (Weighted Average) |
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(in thousands) |
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September 30, 2023 |
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Collateral dependent loans: |
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Real estate loans: |
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Commercial property |
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Retail |
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$ |
1,637 |
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Market approach |
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Adjustments to market data |
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5% to 20% / 15% |
(1) |
Hospitality |
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333 |
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Market approach |
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Adjustments to market data |
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(30)% to 35% / (3)% |
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Other |
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22 |
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Market approach |
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Adjustments to market data |
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(25)% to 5% / (10%) |
(1) |
Residential |
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3 |
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Market approach |
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Adjustments to market data |
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(15)% to 3% / (6)% |
(1) |
Total real estate loans |
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1,995 |
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Commercial and industrial loans |
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4,847 |
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Market approach |
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Adjustments to market data |
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(20)% to 55% / (3)% |
(1) |
Total |
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$ |
6,842 |
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Other real estate owned |
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$ |
117 |
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Market approach |
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Adjustments to market data |
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(10)% to 5% / (2)% |
(1) |
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Repossessed personal property |
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1,320 |
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Market approach |
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Adjustments to market data |
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(2) |
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December 31, 2022 |
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Collateral dependent loans: |
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Real estate loans: |
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Commercial property |
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Retail |
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$ |
1,930 |
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Market approach |
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Adjustments to market data |
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5% to 25% / 16% |
(1) |
Other |
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256 |
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Market approach |
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Adjustments to market data |
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(42)% to 3% / (24)% |
(1) |
Residential |
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508 |
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Market approach |
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Adjustments to market data |
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(15)% to 3% / (1)% |
(1) |
Total real estate loans |
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2,694 |
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Total |
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$ |
2,694 |
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Other real estate owned |
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$ |
117 |
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Market approach |
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Adjustments to market data |
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(20)% to 20% / (2)% |
(1) |
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Repossessed personal property |
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467 |
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Market approach |
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Adjustments to market data |
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(2) |
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Servicing assets |
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7,176 |
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Market approach |
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Prepayment rate Discount rate |
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11% to 17% / 16% 22% to 25% / 22% |
(3) |
(1)Appraisal reports utilize a combination of valuation techniques including a market approach, where prices and other relevant information generated by market transactions involving similar or comparable properties are used to determine the appraised value. Appraisals may include an ‘as is’ and ‘upon completion’ valuation scenarios. Adjustments are routinely made in the appraisal process by third-party appraisers to adjust for differences between the comparable sales and income data. Adjustments also result from the consideration of relevant economic and demographic factors with the potential to affect property values. Also, prospective values are based on the market conditions which exist at the date of inspection combined with informed forecasts based on current trends in supply and demand for the property types under appraisal. Positive adjustments disclosed in this table represent increases to the sales comparison and negative adjustments represent decreases.
(2)The equipment is usually too small in value to use a professional appraisal service. The values are determined internally using a combination of auction values, vendor recommendations and sales comparisons depending on the equipment type. Some highly commoditized equipment, such as commercial trucks have services that provide industry values.
(3)Fair value is based on a valuation model using the present value of estimated future cash flows, prepayment speeds, default rates, and discount rates. Servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into income over the period of the estimated future net servicing income of the underlying loans.
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Estimated Fair Values of Financial Instruments |
The estimated fair values of financial instruments were as follows:
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September 30, 2023 |
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Carrying |
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Fair Value |
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Amount |
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Level 1 |
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Level 2 |
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Level 3 |
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(in thousands) |
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Financial assets: |
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Cash and due from banks |
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$ |
289,006 |
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$ |
289,006 |
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$ |
— |
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$ |
— |
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Securities available for sale |
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|
817,242 |
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70,922 |
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746,320 |
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— |
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Loans held for sale |
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11,767 |
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— |
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11,721 |
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— |
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Loans receivable, net of allowance for credit losses |
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5,953,472 |
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— |
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— |
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5,784,828 |
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Accrued interest receivable |
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20,715 |
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20,715 |
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— |
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— |
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Financial liabilities: |
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Noninterest-bearing deposits |
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2,161,238 |
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— |
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2,161,238 |
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— |
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Interest-bearing deposits |
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4,098,834 |
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— |
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— |
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4,098,244 |
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Borrowings and subordinated debentures |
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292,360 |
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— |
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|
159,632 |
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|
127,334 |
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Accrued interest payable |
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50,286 |
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50,286 |
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— |
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— |
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December 31, 2022 |
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Carrying |
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Fair Value |
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Amount |
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Level 1 |
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Level 2 |
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Level 3 |
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(in thousands) |
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Financial assets: |
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Cash and due from banks |
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$ |
352,421 |
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$ |
352,421 |
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$ |
— |
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$ |
— |
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Securities available for sale |
|
|
853,838 |
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|
48,026 |
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|
805,812 |
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|
|
— |
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Loans held for sale |
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|
8,043 |
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— |
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|
8,423 |
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|
— |
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Loans receivable, net of allowance for credit losses |
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|
5,895,610 |
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— |
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|
— |
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|
|
5,808,190 |
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Accrued interest receivable |
|
|
18,537 |
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|
18,537 |
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|
|
— |
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|
— |
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Financial liabilities: |
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Noninterest-bearing deposits |
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2,539,602 |
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— |
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2,539,602 |
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|
— |
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Interest-bearing deposits |
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|
3,628,470 |
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|
— |
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|
|
— |
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|
|
3,623,827 |
|
Borrowings and subordinated debentures |
|
|
479,409 |
|
|
|
— |
|
|
|
345,867 |
|
|
|
126,828 |
|
Accrued interest payable |
|
|
7,792 |
|
|
|
7,792 |
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|
|
— |
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|
— |
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