XML 41 R29.htm IDEA: XBRL DOCUMENT
v3.20.4

Fair Value of Assets and Liabilities | 12 Months Ended
--- | ---
Dec. 31, 2020
Fair Value Disclosures [Abstract] |
Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities Fair value is defined as 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. There is a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are as follows: Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 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 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 Transfers in and out of Level 1 (quoted prices in active markets), Level 2 (significant other observable inputs) and Level 3 (significant unobservable inputs) are recognized on the actual transfer date. There were no transfers between fair value hierarchy levels during the years ended December 31, 2020, 2019, and 2018. Recurring Measurements The following is a description of the inputs and valuation methodologies used for assets and liabilities measured at fair value on a recurring basis, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended December 31, 2020. Debt securities, available-for-sale. The fair value for available-for-sale debt securities is estimated by obtaining quoted market prices for identical assets, where available. If such prices are not available, fair value is based on independent asset pricing services and models, the inputs of which are market-based or independently sourced market parameters, including but not limited to, yield curves, interest rates, volatilities, market spreads, prepayments, defaults, recoveries, cumulative loss projections, and cash flows. Such securities are classified in Level 2 of the valuation hierarchy. Where Level 1 or Level 2 inputs are not available, such securities are classified as Level 3 within the hierarchy. Fair value determinations of available-for-sale debt securities are the responsibility of the Company’s corporate accounting and treasury departments. The Company obtains fair value estimates from independent third party vendors on a monthly basis. The vendors’ pricing system methodologies, procedures and system controls are reviewed to ensure they are appropriately designed and operating effectively. The Company reviews the vendors’ inputs for fair value estimates and the recommended assignments of levels within the fair value hierarchy. The review includes the extent to which markets for debt securities are determined to have limited or no activity, or are judged to be active markets. The Company reviews the extent to which observable and unobservable inputs are used as well as the appropriateness of the underlying assumptions about risk that a market participant would use in active markets, with adjustments for limited or inactive markets. In considering the inputs to the fair value estimates, the Company places less reliance on quotes that are judged to not reflect orderly transactions, or are non-binding indications. In assessing credit risk, the Company reviews payment performance, collateral adequacy, third party research and analyses, credit rating histories and issuers’ financial statements. For those markets determined to be inactive or limited, the valuation techniques used are models for which management has verified that discount rates are appropriately adjusted to reflect illiquidity and credit risk. Loans held for sale, at fair value. Loans held for sale measured at fair value, for which an active secondary market and readily available market prices exist, are initially valued at the transaction price and are subsequently valued by using quoted prices for similar assets, adjusted for specific attributes of that loan or other observable market data, such as outstanding commitments from third party investors. Loans held for sale measured at fair value are classified within Level 2. Included in gain on sale of loans were net losses of $5,368,000, net gains of $661,000 and net gains of $155,000 for the years ended December 31, 2020, 2019 and 2018, respectively, from the changes in fair value of loans held for sale measured at fair value. Electing to measure loans held for sale at fair value reduces certain timing differences and better matches changes in fair value of these assets with changes in the value of the derivative instruments used to economically hedge them without the burden of complying with the requirements for hedge accounting. Loan interest rate lock commitments. F air value estimates for loan interest rate lock commitments were based upon the estimated sales price, origination fees, direct costs, interest rate changes, etc. and were obtained from an independent third party. The components of the valuation were observable or could be corroborated by observable market data and, therefore, were classified within Level 2 of the valuation hierarchy. Forward commitments to sell TBA securities. Fo rward commitments to sell TBA securities are used to economically hedge the interest rate risk associated with certain loan commitments. The fair value estimates for the TBA commitments were based upon the estimated sale of the TBA hedge obtained from an independent third party. The components of the valuation were observable or could be corroborated by observable market data and, therefore, were classified within Level 2 of the valuation hierarchy. Interest rate cap derivative financial instrum ents. F air value estimates for interest rate cap derivative financial instruments were based upon the discounted cash flows of known payments plus the option value of each caplet which incorporates market rate forecasts and implied market volatilities. The components of the valuation were observable or could be corroborated by observable market data and, therefore, were classified within Level 2 of the valuation hierarchy. The Company also obtained and compared the reasonableness of the pricing from independent third party valuations. The following tables disclose the fair value measurement of assets and liabilities measured at fair value on a recurring basis:
|  |  | Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands) | Fair Value December 31, 2020 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Debt securities, available-for-sale |  |  |  |  |  |  |
U.S. government and federal agency | $ | 38,588 |  |  | — |  |  | 38,588 |  |  | — |
U.S. government sponsored enterprises | 9,781 |  |  | — |  |  | 9,781 |  |  | — |
State and local governments | 1,416,683 |  |  | — |  |  | 1,416,683 |  |  | — |
Corporate bonds | 349,098 |  |  | — |  |  | 349,098 |  |  | — |
Residential mortgage-backed securities | 2,289,090 |  |  | — |  |  | 2,289,090 |  |  | — |
Commercial mortgage-backed securities | 1,234,574 |  |  | — |  |  | 1,234,574 |  |  | — |
Loans held for sale, at fair value | 166,572 |  |  | — |  |  | 166,572 |  |  | — |
Interest rate caps | 201 |  |  | — |  |  | 201 |  |  | — |
Interest rate locks | 8,605 |  |  | — |  |  | 8,605 |  |  | — |
Total assets measured at fair value on a recurring basis | $ | 5,513,192 |  |  | — |  |  | 5,513,192 |  |  | — |
TBA hedge | $ | 2,056 |  |  | — |  |  | 2,056 |  |  | — |
Total liabilities measured at fair value on a recurring basis | $ | 2,056 |  |  | — |  |  | 2,056 |  |  | — |
|  |  | Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands) | Fair Value December 31, 2019 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Debt securities, available-for-sale |  |  |  |  |  |  |
U.S. government and federal agency | $ | 20,044 |  |  | — |  |  | 20,044 |  |  | — |
U.S. government sponsored enterprises | 43,677 |  |  | — |  |  | 43,677 |  |  | — |
State and local governments | 702,398 |  |  | — |  |  | 702,398 |  |  | — |
Corporate bonds | 157,602 |  |  | — |  |  | 157,602 |  |  | — |
Residential mortgage-backed securities | 738,724 |  |  | — |  |  | 738,724 |  |  | — |
Commercial mortgage-backed securities | 912,807 |  |  | — |  |  | 912,807 |  |  | — |
Loans held for sale, at fair value | 69,194 |  |  | — |  |  | 69,194 |  |  | — |
Interest rate locks | 1,852 |  |  | — |  |  | 1,852 |  |  | — |
Total assets measured at fair value on a recurring basis | $ | 2,646,298 |  |  | — |  |  | 2,646,298 |  |  | — |
TBA hedge | $ | 236 |  |  | — |  |  | 236 |  |  | — |
Total liabilities measured at fair value on a recurring basis | $ | 236 |  |  | — |  |  | 236 |  |  | — |
Non-recurring Measurements The following is a description of the inputs and valuation methodologies used for assets recorded at fair value on a non-recurring basis, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended December 31, 2020. Other real estate owned. OREO is initially recorded at fair value less estimated cost to sell, establishing a new cost basis. OREO is subsequently accounted for at lower of cost or fair value less estimated cost to sell. Estimated fair value of OREO is based on appraisals or evaluations (new or updated). OREO is classified within Level 3 of the fair value hierarchy. Collateral-dependent loans, net of ACL. Fair value estimates of collateral-dependent loans that are individually reviewed are based on the fair value of the collateral, less estimated cost to sell. Collateral-dependent individually reviewed loans are classified within Level 3 of the fair value hierarchy. The Company’s credit department reviews appraisals for OREO and collateral-dependent loans, giving consideration to the highest and best use of the collateral. The appraisal or evaluation (new or updated) is considered the starting point for determining fair value. The valuation techniques used in preparing appraisals or evaluations (new or updated) include the cost approach, income approach, sales comparison approach, or a combination of the preceding valuation techniques. The key inputs used to determine the fair value of the collateral-dependent loans and OREO include selling costs, discounted cash flow rate or capitalization rate, and adjustment to comparables. Valuations and significant inputs obtained by independent sources are reviewed by the Company for accuracy and reasonableness. The Company also considers other factors and events in the environment that may affect the fair value. The appraisals or evaluations (new or updated) are reviewed at least quarterly and more frequently based on current market conditions, including deterioration in a borrower’s financial condition and when property values may be subject to significant volatility. After review and acceptance of the collateral appraisal or evaluation (new or updated), adjustments to the impaired loan or OREO may occur. The Company generally obtains appraisals or evaluations (new or updated) annually. The following tables disclose the fair value measurement of assets with a recorded change during the period resulting from re-measuring the assets at fair value on a non-recurring basis:
|  |  | Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands) | Fair Value December 31, 2020 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Other real estate owned | $ | 564 |  |  | — |  |  | — |  |  | 564 |
Collateral-dependent impaired loans, net of ACL | 26,749 |  |  | — |  |  | — |  |  | 26,749 |
Total assets measured at fair value on a non-recurring basis | $ | 27,313 |  |  | — |  |  | — |  |  | 27,313 |
|  |  | Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands) | Fair Value December 31, 2019 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Other real estate owned | $ | 1,983 |  |  | — |  |  | — |  |  | 1,983 |
Collateral-dependent impaired loans, net of ACL | 23 |  |  | — |  |  | — |  |  | 23 |
Total assets measured at fair value on a non-recurring basis | $ | 2,006 |  |  | — |  |  | — |  |  | 2,006 |
Non-recurring Measurements Using Significant Unobservable Inputs (Level 3) The following tables present additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:
| Fair Value |  | Quantitative Information about Level 3 Fair Value Measurements
(Dollars in thousands) | December 31, 2020 |  | Valuation Technique |  | Unobservable Input |  | Range (Weighted- Average) 1
Other real estate owned | $ | 564 |  |  | Sales comparison approach |  | Selling costs |  | 8.0% - 10.0% (9.0%)
Collateral-dependent impaired loans, net of ACL | $ | 144 |  |  | Cost approach |  | Selling costs |  | 10.0% - 10.0% (10.0%)
| 25,309 |  |  | Sales comparison approach |  | Selling costs |  | 10.0% - 10.0% (0.1%)
|  |  |  |  | Adjustment to comparables |  | 0.0% - 100.0% (11.1%)
| 1,296 |  |  | Combined approach |  | Selling costs |  | 10.0% - 10.0% (10.0%)
|  |  |  |  | Discount rate |  | 8.0% - 8.0% (8.0%)
| $ | 26,749 |  |  |  |  |  |  |
| Fair Value |  | Quantitative Information about Level 3 Fair Value Measurements
(Dollars in thousands) | December 31, 2019 |  | Valuation Technique |  | Unobservable Input |  | Range (Weighted- Average) 1
Other real estate owned | $ | 1,983 |  |  | Sales comparison approach |  | Selling costs |  | 6.0% - 10.0% (7.3%)
Collateral-dependent impaired loans, net of ACL | $ | 9 |  |  | Cost approach |  | Selling costs |  | 10.0% - 10.0% (10.0%)
| 14 |  |  | Sales comparison approach |  | Adjustment to comparables |  | 0.0% - 0.0% (0.0%)
| $ | 23 |  |  |  |  |  |  |
______________________________ 1 The range for selling cost inputs represents reductions to the fair value of the assets. Fair Value of Financial Instruments The following tables present the carrying amounts, estimated fair values and the level within the fair value hierarchy of the Company’s financial instruments not carried at fair value. Receivables and payables due in one year or less, equity securities without readily determinable fair values and deposits with no defined or contractual maturities are excluded. There have been no significant changes in the valuation techniques during the period ended December 31, 2020. Cash and cash equivalents: fair value is estimated at book value. Debt securities, held-to-maturity: fair value for held-to-maturity debt securities is estimated in the same manner as available-for sale debt securities, which is described above. Loans receivable, net of ACL: The loans were fair valued on an individual basis, with consideration given to the loans' underlying characteristics, including account types, remaining terms and balance, interest rates, past delinquencies, current market rates, etc. The model utilizes a discounted cash flow approach to estimate the fair value of the loans using various assumptions such as prepayment speeds, projected default probabilities, losses given defaults, etc. The discounted cash flow approach models the credit losses directly in the projected cash flows. The model applies various assumptions regarding credit, interest, and prepayment risks for the loans based on loan types, payment types and fixed or variable classifications. Time Deposits: fair value of term deposits is estimated by discounting the future cash flows using rates of similar deposits with similar maturities. The market rates used were obtained from an independent third party based on current rates offered by the Company’s regional competitors. Federal Home Loan Bank advances: fair value of non-callable FHLB advances is estimated by discounting the future cash flows using rates of similar advances with similar maturities. Such rates were obtained from current rates offered by FHLB. Securities sold under agreements to repurchase and other borrowed funds: fair value of term repurchase agreements and other term borrowings is estimated based on current repurchase rates and borrowing rates currently available to the Company for repurchases and borrowings with similar terms and maturities. The estimated fair value for overnight repurchase agreements and other borrowings is book value. Subordinated debentures: fair value of the subordinated debt is estimated by discounting the estimated future cash flows using current estimated market rates obtained from an independent third party. Off-balance sheet financial instruments: unused lines of credit and letters of credit represent the principal categories of off-balance sheet financial instruments. The fair value of commitments is based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of unused lines of credit and letters of credit is not material; therefore, such commitments are not included in the following tables.
|  |  | Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands) | Carrying Amount December 31, 2020 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Financial assets |  |  |  |  |  |  |
Cash and cash equivalents | $ | 633,142 |  |  | 633,142 |  |  | — |  |  | — |
Debt securities, held-to-maturity | 189,836 |  |  | — |  |  | 203,216 |  |  | — |
Loans receivable, net of ACL | 10,964,453 |  |  | — |  |  | — |  |  | 11,233,002 |
Total financial assets | $ | 11,787,431 |  |  | 633,142 |  |  | 203,216 |  |  | 11,233,002 |
Financial liabilities |  |  |  |  |  |  |
Term deposits | $ | 978,779 |  |  | — |  |  | 983,491 |  |  | — |
Repurchase agreements and other borrowed funds | 1,037,651 |  |  | — |  |  | 1,037,651 |  |  | — |
Subordinated debentures | 139,959 |  |  | — |  |  | 123,944 |  |  | — |
Total financial liabilities | $ | 2,156,389 |  |  | — |  |  | 2,145,086 |  |  | — |
|  |  | Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands) | Carrying Amount December 31, 2019 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Financial assets |  |  |  |  |  |  |
Cash and cash equivalents | $ | 330,961 |  |  | 330,961 |  |  | — |  |  | — |
Debt securities, held-to-maturity | 224,611 |  |  | — |  |  | 234,396 |  |  | — |
Loans receivable, net of ACL | 9,388,320 |  |  | — |  |  | — |  |  | 9,438,121 |
Total financial assets | $ | 9,943,892 |  |  | 330,961 |  |  | 234,396 |  |  | 9,438,121 |
Financial liabilities |  |  |  |  |  |  |
Term deposits | $ | 1,011,798 |  |  | — |  |  | 1,017,505 |  |  | — |
FHLB advances | 38,611 |  |  | — |  |  | 38,787 |  |  | — |
Repurchase agreements and other borrowed funds | 598,644 |  |  | — |  |  | 598,644 |  |  | — |
Subordinated debentures | 139,914 |  |  | — |  |  | 124,094 |  |  | — |
Total financial liabilities | $ | 1,788,967 |  |  | — |  |  | 1,779,030 |  |  | — |

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration