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FAIR VALUE MEASUREMENT (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurement Methodologies

The following table summarizes the fair value measurement methodologies, including significant inputs and assumptions and classification of the Company's assets and liabilities valued at fair value on a recurring basis.

Asset/Liability class

Valuation methodology, inputs and assumptions

Classification

Investment securities

Trading securities

Fair Value is based on quoted prices in an active market.

Level 1 recurring fair value measurement.

Investment securities AFS

Observable market prices of identical or similar securities are used where available.

Level 2 recurring fair value measurement.

If market prices are not readily available, value is based on discounted cash flows using the following significant inputs: •      Expected prepayment speeds  •      Estimated credit losses  •      Market liquidity adjustments

Level 3 recurring fair value measurement.

LHFS

Single family loans, excluding loans transferred from held for investment

Fair value is based on observable market data, including: •       Quoted market prices, where available  •       Dealer quotes for similar loans  •       Forward sale commitments

Level 2 recurring fair value measurement.

When not derived from observable market inputs, fair value is based on discounted cash flows, which considers the following inputs: •       Benchmark yield curve   •       Estimated discount spread to the benchmark yield curve  •       Expected prepayment speeds

Estimated fair value classified as Level 3.

Mortgage servicing rights

Single family MSRs

For information on how the Company measures the fair value of its single family MSRs, including key economic assumptions and the sensitivity of fair value to changes in those assumptions, see Note 6, Mortgage Banking Operations.

Level 3 recurring fair value measurement.

Derivatives

Futures and Options

Fair value is based on closing exchange prices.

Level 1 recurring fair value measurement.

Forward sale commitments Interest rate swaps

Fair value is based on quoted prices for identical or similar instruments, when available. When quoted prices are not available, fair value is based on internally developed modeling techniques, which require the use of multiple observable market inputs including:               •       Forward interest rates              •       Interest rate volatilities

Level 2 recurring fair value measurement.

IRLC

The fair value considers several factors including: •       Fair value of the underlying loan based on quoted prices in the secondary market, when available.  •       Value of servicing •       Fall-out factor

Level 3 recurring fair value measurement.

Schedule of Fair Value Hierarchy Measurement

The following tables presents the levels of the fair value hierarchy for the Company's assets and liabilities measured at fair value on a recurring basis: 

			At September 30, 2023
(in thousands)			Fair Value						Level 1						Level 2						Level 3
Assets:
Trading securities - U.S. Treasury securities			$	21,591					$	21,591					$	—					$	—
Investment securities AFS
Mortgage backed securities:
Residential			182,969						—						181,174						1,795
Commercial			47,563						—						47,563						—
Collateralized mortgage obligations:
Residential			479,556						—						479,556						—
Commercial			58,752						—						58,752						—
Municipal bonds			378,298						—						378,298						—
Corporate debt securities			38,968						—						38,968						—
U.S. Treasury securities			19,445						—						19,445						—
Agency debentures			65,103						—						65,103						—
Single family LHFS			23,945						—						23,945						—
Single family LHFI			1,225						—						—						1,225
Single family mortgage servicing rights			76,470						—						—						76,470
Derivatives
Forward sale commitments			479						—						479						—
Options			7						7						—						—
Interest rate lock commitments			118						—						—						118
Interest rate swaps			14,916						—						14,916						—
Total assets			$	1,409,405					$	21,598					$	1,308,199					$	79,608
Liabilities:
Derivatives
Futures			$	2					$	2					$	—					$	—
Forward sale commitments			74						—						74						—
Interest rate lock commitments			193						—						—						193
Interest rate swaps			14,916						—						14,916						—
Total liabilities			$	15,185					$	2					$	14,990					$	193

			At December 31, 2022
(in thousands)			Fair Value						Level 1						Level 2						Level 3
Assets:
Trading securities - U.S. Treasury securities			$	18,997					$	18,997					$	—					$	—
Investment securities AFS
Mortgage backed securities:
Residential			197,262						—						195,321						1,941
Commercial			56,049						—						56,049						—
Collateralized mortgage obligations:
Residential			553,039						—						553,039						—
Commercial			70,519						—						70,519						—
Municipal bonds			411,548						—						411,548						—
Corporate debt securities			42,945						—						42,877						68
U.S. Treasury securities			19,934						—						19,934						—
Agency debentures			27,478						—						27,478						—
Single family LHFS			14,075						—						14,075						—
Single family LHFI			5,868						—						—						5,868
Single family mortgage servicing rights			76,617						—						—						76,617
Derivatives
Futures			18						18						—						—
Options			218						218						—						—
Forward sale commitments			293						—						293						—
Interest rate lock commitments			141						—						—						141
Interest rate swaps			13,093						—						13,093						—
Total assets			$	1,508,094					$	19,233					$	1,404,226					$	84,635
Liabilities:
Derivatives
Forward sale commitments			$	151					$	—					$	151					$	—
Interest rate lock commitments			36						—						—						36
Interest rate swaps			13,093						—						13,093						—
Total liabilities			$	13,280					$	—					$	13,244					$	36

Schedule of Inputs Used to Measure Fair Value

The following information presents significant Level 3 unobservable inputs used to measure fair value of certain assets:

(dollars in thousands)			Fair Value						Valuation Technique						Significant Unobservable Input						Low						High						Weighted Average
September 30, 2023
Investment securities AFS			$	1,795					Income approach						Implied spread to benchmark interest rate curve						2.00%						2.00%						2.00%
Single family LHFI			1,225						Income approach						Implied spread to benchmark interest rate curve						3.19%						5.64%						3.99%
Interest rate lock commitments, net			(75)						Income approach						Fall-out factor						0.40%						17.28%						8.36%
															Value of servicing						0.38%						1.11%						0.74%
December 31, 2022
Investment securities AFS			$	2,009					Income approach						Implied spread to benchmark interest rate curve						2.00%						2.00%						2.00%
Single family LHFI			5,868						Income approach						Implied spread to benchmark interest rate curve						2.87%						5.15%						4.14%
Interest rate lock commitments, net			105						Income approach						Fall-out factor						0.10%						17.50%						6.43%
															Value of servicing						0.54%						1.11%						0.95%

Schedule of Fair Value Changes and Activity for Level 3

The following table presents fair value changes and activity for certain Level 3 assets for the periods indicated:

(in thousands)						Beginning balance						Additions						Transfers						Payoffs/Sales						Change in mark to market (1)						Ending balance
Quarter Ended September 30, 2023
Investment securities AFS						$	1,913					$	—					$	—					$	(48)					$	(70)					$	1,795
Single family LHFI						1,269						—						—						—						(44)						1,225
Quarter Ended September 30, 2022
Investment securities AFS						$	2,160					$	—					$	—					$	(48)					$	(79)					$	2,033
Single family LHFI						6,508						—						—						—						(658)						5,850
Nine Months Ended September 30, 2023
Investment securities AFS						$	2,009					$	—					$	—					$	(144)					$	(70)					$	1,795
Single family LHFI						5,868						—						—						(4,607)						(36)						1,225
Nine Months Ended September 30, 2022
Investment securities AFS						$	2,482					$	—					$	—					$	(145)					$	(304)					$	2,033
Single family LHFI						7,287						—						—						—						(1,437)						5,850

(1) Changes in fair value for single LHFI are recorded in other noninterest income on the consolidated income statements.

The following table presents fair value changes and activity for Level 3 interest rate lock commitments:

			Quarter Ended September 30,												Nine Months Ended September 30,
(in thousands)			2023						2022						2023						2022
Beginning balance, net			$	79					$	322					$	105					$	2,484
Total realized/unrealized gains (losses)			371						70						1,484						(769)
Settlements			(525)						(752)						(1,664)						(2,075)
Ending balance, net			$	(75)					$	(360)					$	(75)					$	(360)

Schedule of Assets that had Changes in their Recorded Fair Value

The following table presents assets classified as Level 3 that had changes in their recorded fair value for the periods indicated and what we still held at the end of the respective reporting period:

(in thousands)			Fair Value																								Total Gains (Losses)
At or for the Quarter Ended September 30, 2023
LHFI (1)			$	3,774																							$	(579)
At or for the Nine Months Ended September 30, 2023
LHFI (1)			$	3,774																							$	(854)

(1) Represents the carrying value of loans for which adjustments are based on the fair value of the collateral.

Schedule of the Fair Value Hierarchy

The following presents the carrying value, estimated fair value and the levels of the fair value hierarchy for the Company's financial instruments other than assets and liabilities measured at fair value on a recurring basis: 

			At September 30, 2023
(in thousands)			Carrying Value						Fair Value						Level 1						Level 2						Level 3
Assets:
Cash and cash equivalents			$	226,704					$	226,704					$	226,704					$	—					$	—
Investment securities HTM			2,389						2,293						—						2,293						—
LHFI			7,399,276						6,858,955						—						—						6,858,955
LHFS – multifamily and other			9,934						9,959						—						9,959						—
Mortgage servicing rights – multifamily and SBA			31,141						36,271						—						—						36,271
Federal Home Loan Bank stock			59,330						59,330						—						59,330						—
Other assets - GNMA EBO loans			5,558						5,558						—						—						5,558
Liabilities:
Certificates of deposit			$	2,947,378					$	2,929,803					$	—					$	2,929,803					$	—
Borrowings			1,873,000						1,856,840												1,856,840
Long-term debt			224,671						150,333						—						150,333						—

			At December 31, 2022
(in thousands)			Carrying Value						Fair Value						Level 1						Level 2						Level 3
Assets:
Cash and cash equivalents			$	72,828					$	72,828					$	72,828					$	—					$	—
Investment securities HTM			2,441						2,385						—						2,385						—
LHFI			7,378,952						6,988,363						—						—						6,988,363
LHFS – multifamily and other			3,252						3,291						—						3,291						—
Mortgage servicing rights – multifamily and SBA			35,256						39,792						—						—						39,792
Federal Home Loan Bank stock			49,305						49,305						—						49,305						—
Other assets-GNMA EBO loans			6,918						6,918						—						—						6,918
Liabilities:
Certificates of deposit			$	2,943,331					$	2,910,301					$	—					$	2,910,301					$	—
Borrowings			1,016,000						1,014,973						—						1,014,973						—
Long-term debt			224,404						202,338						—						202,338						—

Loans Held For Sale Accounted for Under the Fair Value Option

The following table presents the difference between the aggregate fair value and the aggregate unpaid principal balance of loans held for sale accounted for under the fair value option:

			At September 30, 2023																		At December 31, 2022
(in thousands)			Fair Value						Aggregate Unpaid Principal Balance						Fair Value Less Aggregated Unpaid Principal Balance						Fair Value						Aggregate Unpaid Principal Balance						Fair Value Less Aggregated Unpaid Principal Balance
Single family LHFS			$	23,945					$	24,026					$	(81)					$	14,075					$	13,914					$	161

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