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Fair Value | 3 Months Ended
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Mar. 31, 2024
Fair Value Disclosures [Abstract] |
Fair Value | 6. FAIR VALUE The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Fair values represent the estimated price that would be received from selling an asset or paid to transfer a liability, otherwise known as an “exit price.” Securities available for sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis. These nonrecurring fair value adjustments typically involve application of lower-of-cost-or-market accounting or write-downs of individual assets. ASC Topic 820, “Fair Value Measurements and Disclosures” establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows: Fair Value Hierarchy The Company groups 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. These levels are: • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Other significant observable inputs (including quoted prices in active markets for similar assets or liabilities) or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. The fair value disclosures below represent the Company’s estimates based on relevant market information and information about the financial instruments. Fair value estimates are based on judgments regarding current economic conditions, risk characteristics of the various instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in the above methodologies and assumptions could significantly affect the estimates. The following tables present fair values for assets and liabilities measured at fair value on a recurring basis:
|  | As of March 31, 2024 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | (Dollars in thousands) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Available for sale securities: |  |  |  |  |  |  |  |  |  |  |  |
Corporate debt securities |  | $ | — |  |  | $ | 15,845 |  |  | $ | — |  |  | $ | 15,845 |
Collateralized mortgage obligations |  |  | — |  |  |  | 194,806 |  |  |  | — |  |  |  | 194,806 |
Mortgage-backed securities |  |  | — |  |  |  | 104,649 |  |  |  | — |  |  |  | 104,649 |
Total |  | $ | — |  |  | $ | 315,300 |  |  | $ | — |  |  | $ | 315,300 |
Derivative financial instruments: |  |  |  |  |  |  |  |  |  |  |  |
Interest rate lock commitments |  | $ | — |  |  | $ | 256 |  |  | $ | — |  |  | $ | 256 |
Forward mortgage-backed securities trades |  |  | — |  |  |  | 8 |  |  |  | — |  |  |  | 8 |
Loan customer counterparty |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Financial institution counterparty |  |  | — |  |  |  | 4,309 |  |  |  | — |  |  |  | 4,309 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Derivative financial instruments: |  |  |  |  |  |  |  |  |  |  |  |
Interest rate lock commitments |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Forward mortgage-backed securities trades |  |  | — |  |  |  | 74 |  |  |  | — |  |  |  | 74 |
Loan customer counterparty |  |  | — |  |  |  | 4,330 |  |  |  | — |  |  |  | 4,330 |
Financial institution counterparty |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | As of December 31, 2023 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | (Dollars in thousands) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Available for sale securities: |  |  |  |  |  |  |  |  |  |  |  |
Corporate debt securities |  | $ | — |  |  | $ | 21,787 |  |  | $ | — |  |  | $ | 21,787 |
Collateralized mortgage obligations |  |  | — |  |  |  | 320,044 |  |  |  | — |  |  |  | 320,044 |
Mortgage-backed securities |  |  | — |  |  |  | 96,757 |  |  |  | — |  |  |  | 96,757 |
Total available for sale securities |  | $ | — |  |  | $ | 438,588 |  |  | $ | — |  |  | $ | 438,588 |
Derivative financial instruments: |  |  |  |  |  |  |  |  |  |  |  |
Interest rate lock commitments |  | $ | — |  |  | $ | 218 |  |  | $ | — |  |  | $ | 218 |
Forward mortgage-backed securities trades |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 1 |
Loan customer counterparty |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Financial institution counterparty |  |  | — |  |  |  | 3,876 |  |  |  | — |  |  |  | 3,876 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Derivative financial instruments: |  |  |  |  |  |  |  |  |  |  |  |
Interest rate lock commitments |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Forward mortgage-backed securities trades |  |  | — |  |  |  | 161 |  |  |  | — |  |  |  | 161 |
Loan customer counterparty |  |  | — |  |  |  | 3,899 |  |  |  | — |  |  |  | 3,899 |
Financial institution counterparty |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). These instruments include other real estate owned, repossessed assets, held to maturity debt securities, loans held for sale and impaired loans, which are included as loans held for investment. For the three months ended March 31, 2024, the Company had additions to other real estate owned of $969 thousand of which $845 thousand was outstanding as of March 31, 2024. For the three months ended March 31, 2024, the Company had additions to impaired loans of $13.4 million, of which $13.4 million was outstanding as of March 31, 2024. The remaining financial assets and liabilities measured at fair value on a non-recurring basis that were recorded in 2024 and remained outstanding at March 31, 2024 were not significant. The following tables present carrying and fair value information of financial instruments as of the dates indicated:
|  | As of March 31, 2024 |
|  | Carrying |  |  | Estimated Fair Value |
|  | Amount |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | (Dollars in thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from banks |  | $ | 1,086,444 |  |  | $ | 1,086,444 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,086,444 |
Federal funds sold |  |  | 250 |  |  |  | 250 |  |  |  | — |  |  |  | — |  |  |  | 250 |
Held to maturity securities |  |  | 11,985,838 |  |  |  | — |  |  |  | 10,478,359 |  |  |  | — |  |  |  | 10,478,359 |
Loans held for sale |  |  | 6,380 |  |  |  | — |  |  |  | 6,380 |  |  |  | — |  |  |  | 6,380 |
Loans held for investment, net of allowance |  |  | 20,063,724 |  |  |  | — |  |  |  | — |  |  |  | 18,465,513 |  |  |  | 18,465,513 |
Loans held for investment - Warehouse Purchase Program |  |  | 864,924 |  |  |  | — |  |  |  | 864,924 |  |  |  | — |  |  |  | 864,924 |
Other real estate owned |  |  | 2,204 |  |  |  | — |  |  |  | 2,204 |  |  |  | — |  |  |  | 2,204 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noninterest-bearing |  | $ | 9,526,535 |  |  | $ | — |  |  | $ | 9,526,535 |  |  | $ | — |  |  | $ | 9,526,535 |
Interest-bearing |  |  | 17,648,983 |  |  |  | — |  |  |  | 17,611,669 |  |  |  | — |  |  |  | 17,611,669 |
Other borrowings |  |  | 3,900,000 |  |  |  | — |  |  |  | 3,876,545 |  |  |  | — |  |  |  | 3,876,545 |
Securities sold under repurchase agreements |  |  | 261,671 |  |  |  | — |  |  |  | 261,621 |  |  |  | — |  |  |  | 261,621 |
|  | As of December 31, 2023 |
|  | Carrying |  |  | Estimated Fair Value |
|  | Amount |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | (Dollars in thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and due from banks |  | $ | 458,153 |  |  | $ | 458,153 |  |  | $ | — |  |  | $ | — |  |  | $ | 458,153 |
Federal funds sold |  |  | 260 |  |  |  | 260 |  |  |  | — |  |  |  | — |  |  |  | 260 |
Held to maturity securities |  |  | 12,365,308 |  |  |  | — |  |  |  | 10,984,598 |  |  |  | — |  |  |  | 10,984,598 |
Loans held for sale |  |  | 5,734 |  |  |  | — |  |  |  | 5,734 |  |  |  | — |  |  |  | 5,734 |
Loans held for investment, net of allowance |  |  | 20,020,197 |  |  |  | — |  |  |  | — |  |  |  | 18,321,054 |  |  |  | 18,321,054 |
Loans held for investment - Warehouse Purchase Program |  |  | 822,245 |  |  |  | — |  |  |  | 822,245 |  |  |  | — |  |  |  | 822,245 |
Other real estate owned |  |  | 1,708 |  |  |  | — |  |  |  | 1,708 |  |  |  | — |  |  |  | 1,708 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noninterest-bearing |  | $ | 9,776,572 |  |  | $ | — |  |  | $ | 9,776,572 |  |  | $ | — |  |  | $ | 9,776,572 |
Interest-bearing |  |  | 17,403,237 |  |  |  | — |  |  |  | 17,371,523 |  |  |  | — |  |  |  | 17,371,523 |
Other borrowings |  |  | 3,725,000 |  |  |  | — |  |  |  | 3,725,000 |  |  |  | — |  |  |  | 3,725,000 |
Securities sold under repurchase agreements |  |  | 309,277 |  |  |  | — |  |  |  | 309,245 |  |  |  | — |  |  |  | 309,245 |
The following is a description of the fair value estimates, methods and assumptions that are used by the Company in estimating the fair values of financial instruments. Loans held for sale— Loans held for sale are carried at the lower of cost or estimated fair value. Fair value for consumer mortgages held for sale is based on commitments on hand from investors or prevailing market prices. As such, the Company classifies loans held for sale subjected to nonrecurring fair value adjustments as Level 2. Loans held for investment— The Company does not record loans at fair value on a recurring basis. As such, valuation techniques discussed herein for loans are primarily for estimating fair value disclosures. The Company’s discounted cash flow calculation to determine fair value considers internal and market-based information such as prepayment risk, cost of funds and liquidity. From time to time, the Company records nonrecurring fair value adjustments to impaired loans to reflect (1) partial write-downs that are based on the observable market price or current appraised value of the collateral, or (2) the full charge-off of the loan carrying value. Where appraisals are not available, estimated cash flows are discounted using a rate commensurate with the credit risk associated with those cash flows. Assumptions regarding credit risk, cash flows and discount rates are judgmentally determined using available market information and specific borrower information. The Company classifies the estimated fair value of loans held for investment as Level 3. Other real estate owned— Other real estate owned is primarily foreclosed properties securing residential loans and commercial real estate loans. Foreclosed assets are adjusted to fair value less estimated costs to sell upon transfer of the loans to other real estate owned. Subsequently, these assets are carried at the lower of carrying value or fair value less estimated costs to sell. Other real estate carried at fair value based on an observable market price or a current appraised value is classified by the Company as Level 2. When management determines that the fair value of other real estate requires additional adjustments, either as a result of a non-current appraisal or when there is no observable market price, the Company classifies the other real estate as Level 3. The fair value estimates presented herein are based on information available to management at March 31, 2024. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since those dates and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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