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Fair Value Information
 12 Months Ended
Dec. 31, 2024
Fair Value Disclosures [Abstract]  
Fair Value Information

17. FAIR VALUE INFORMATION

Fair Value Hierarchy

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The following disclosure provides the fair value information for financial assets and liabilities as of December 31, 2024. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels (Level 1, Level 2 and Level 3).

•
Level 1 — Quoted prices in active markets for identical assets or liabilities in active markets that are accessible at the measurement date.
•
Level 2 — Observable inputs other than Level 1, including quoted prices for similar assets and liabilities in active markets, quoted prices in less active markets, or other observable inputs or model-derived valuations that can be corroborated by observable market data, either directly or indirectly, for substantially the full term of the financial instrument.
•
Level 3 — Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable. These valuation methodologies generally include pricing models, discounted cash flow models, or a determination of fair value that requires significant management judgment or estimation.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The tables below present the balances of assets and liabilities measured at fair value on a recurring basis for the dates presented.

 

 

 

Carrying Value at December 31, 2024

 

 

Quoted Prices in Active Markets for Identical Assets (Level 1)

 

 

Significant Other Observable Inputs (Level 2)

 

 

Significant Unobservable Inputs (Level 3)

 

 

 

(Dollars in thousands)

 

Description of assets

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities - AFS:

 

 

 

 

 

 

 

 

 

 

 

 

Government agency/GSE

 

$

34,255

 

 

$

—

 

 

$

34,255

 

 

$

—

 

Mortgage-backed securities

 

 

2,134,534

 

 

 

—

 

 

 

2,134,534

 

 

 

—

 

CMO/REMIC

 

 

351,522

 

 

 

—

 

 

 

351,522

 

 

 

—

 

Municipal bonds

 

 

20,377

 

 

 

—

 

 

 

20,377

 

 

 

—

 

Other securities

 

 

1,427

 

 

 

—

 

 

 

1,427

 

 

 

—

 

Total investment securities - AFS

 

 

2,542,115

 

 

 

—

 

 

 

2,542,115

 

 

 

—

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

    Interest rate swaps

 

 

30

 

 

 

—

 

 

 

30

 

 

 

—

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

    Fair value hedges: interest rate swaps

 

 

7,222

 

 

 

—

 

 

 

7,222

 

 

 

—

 

   Cash flow hedges: interest rate swaps

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total assets

 

$

2,549,367

 

 

$

—

 

 

$

2,549,367

 

 

$

—

 

Description of liability

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

    Interest rate swaps

 

$

30

 

 

$

—

 

 

$

30

 

 

$

—

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

    Fair value hedges: interest rate swaps

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

   Cash flow hedges: interest rate swaps

 

 

517

 

 

 

—

 

 

 

517

 

 

 

—

 

Total liabilities

 

$

547

 

 

$

—

 

 

$

547

 

 

$

—

 

 

 

 

 

Carrying Value at December 31, 2023

 

 

Quoted Prices in Active Markets for Identical Assets (Level 1)

 

 

Significant Other Observable Inputs (Level 2)

 

 

Significant Unobservable Inputs (Level 3)

 

 

 

(Dollars in thousands)

 

Description of assets

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities - AFS:

 

 

 

 

 

 

 

 

 

 

 

 

Government agency/GSE

 

$

32,253

 

 

$

—

 

 

$

32,253

 

 

$

—

 

Mortgage-backed securities

 

 

2,507,679

 

 

 

—

 

 

 

2,507,679

 

 

 

—

 

CMO/REMIC

 

 

389,362

 

 

 

—

 

 

 

389,362

 

 

 

—

 

Municipal bonds

 

 

25,635

 

 

 

—

 

 

 

25,635

 

 

 

—

 

Other securities

 

 

1,196

 

 

 

—

 

 

 

1,196

 

 

 

—

 

Total investment securities - AFS

 

 

2,956,125

 

 

 

—

 

 

 

2,956,125

 

 

 

—

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

    Interest rate swaps

 

 

112

 

 

 

—

 

 

 

112

 

 

 

—

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

    Interest rate swaps

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total assets

 

$

2,956,237

 

 

$

—

 

 

$

2,956,237

 

 

$

—

 

Description of liability

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

    Interest rate swaps

 

$

112

 

 

$

—

 

 

$

112

 

 

$

—

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

    Interest rate swaps

 

 

6,938

 

 

 

—

 

 

 

6,938

 

 

 

—

 

Total liabilities

 

$

7,050

 

 

$

—

 

 

$

7,050

 

 

$

—

 

 

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

We may be required to remeasure certain assets at fair value on a non-recurring basis in accordance with GAAP. These adjustments to fair value usually result from application of lower of cost or fair value accounting or write-downs of individual assets.

For assets measured at fair value on a non-recurring basis that were held on the balance sheet at December 31, 2024 and 2023, respectively, the following tables provide the level of valuation assumptions used to determine each adjustment and the carrying value of the related assets that had losses during the period. The fair values were determined using inputs based on observable market data or based on discounted cash flow criteria.

 

 

 

Carrying Value at December 31, 2024

 

 

Quoted Prices in Active Markets for Identical Assets (Level 1)

 

 

Significant Other Observable Inputs (Level 2)

 

 

Significant Unobservable Inputs (Level 3)

 

 

Total Losses For the Year Ended December 31, 2024

 

 

 

(Dollars in thousands)

 

Description of assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

28,728

 

 

$

—

 

 

$

—

 

 

$

28,728

 

 

$

11

 

Construction

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

SBA

 

 

1,532

 

 

 

—

 

 

 

—

 

 

 

1,532

 

 

 

49

 

SBA - PPP

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Commercial and industrial

 

 

3,144

 

 

 

—

 

 

 

—

 

 

 

3,144

 

 

 

220

 

Dairy & livestock and
agribusiness

 

 

860

 

 

 

—

 

 

 

—

 

 

 

860

 

 

 

9

 

Municipal lease finance
receivables

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

SFR mortgage

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Consumer and other loans

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other real estate owned

 

 

10,429

 

 

 

—

 

 

 

—

 

 

 

10,429

 

 

 

2,296

 

Total assets

 

$

44,693

 

 

$

—

 

 

$

—

 

 

$

44,693

 

 

$

2,585

 

 

 

Carrying Value at December 31, 2023

 

 

Quoted Prices in Active Markets for Identical Assets (Level 1)

 

 

Significant Other Observable Inputs (Level 2)

 

 

Significant Unobservable Inputs (Level 3)

 

 

Total Losses For the Year Ended December 31, 2023

 

 

(Dollars in thousands)

 

Description of assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

18,678

 

 

$

—

 

 

$

—

 

 

$

18,678

 

 

$

2,128

 

Construction

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

SBA

 

 

995

 

 

 

—

 

 

 

—

 

 

 

995

 

 

 

57

 

SBA - PPP

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Commercial and industrial

 

 

6,092

 

 

 

—

 

 

 

—

 

 

 

6,092

 

 

 

3,510

 

Dairy & livestock and
agribusiness

 

 

4,700

 

 

 

—

 

 

 

—

 

 

 

4,700

 

 

 

27

 

Municipal lease finance
receivables

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

SFR mortgage

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Consumer and other loans

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other real estate owned

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total assets

 

$

30,465

 

 

$

—

 

 

$

—

 

 

$

30,465

 

 

$

5,722

 

 

Fair Value of Financial Instruments

The following disclosure presents estimated fair value of our financial instruments. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to develop the estimates of fair value. Accordingly, the estimates presented below are not necessarily indicative of the amounts the Company may realize in a current market exchange as of December 31, 2024 and 2023, respectively. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

 

 

December 31, 2024

 

 

Carrying

 

 

Estimated Fair Value

 

 

Amount

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

(Dollars in thousands)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total cash and cash equivalents

$

204,698

 

 

$

204,698

 

 

$

—

 

 

$

—

 

 

$

204,698

 

Interest-earning balances due from
   depository institutions

 

480

 

 

 

—

 

 

 

480

 

 

 

—

 

 

 

480

 

Investment securities available-for-sale

 

2,542,115

 

 

 

—

 

 

 

2,542,115

 

 

 

—

 

 

 

2,542,115

 

Investment securities held-to-maturity

 

2,379,668

 

 

 

—

 

 

 

1,954,345

 

 

 

—

 

 

 

1,954,345

 

Total loans, net of allowance for credit
   losses

 

8,456,310

 

 

 

—

 

 

 

—

 

 

 

8,149,801

 

 

 

8,149,801

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Interest rate swaps

 

30

 

 

 

—

 

 

 

30

 

 

 

—

 

 

 

30

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Fair value hedges: interest rate swaps

 

7,222

 

 

 

—

 

 

 

7,222

 

 

 

—

 

 

 

7,222

 

    Cash flow hedges: interest rate swaps

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing

$

4,911,285

 

 

$

—

 

 

$

4,908,070

 

 

$

—

 

 

$

4,908,070

 

Borrowings

 

761,887

 

 

 

—

 

 

 

716,566

 

 

 

—

 

 

 

716,566

 

Junior subordinated debentures

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Interest rate swaps

 

30

 

 

 

—

 

 

 

30

 

 

 

—

 

 

 

30

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Fair value hedges: interest rate swaps

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

    Cash flow hedges: interest rate swaps

 

517

 

 

 

—

 

 

 

517

 

 

 

—

 

 

 

517

 

 

 

 

December 31, 2023

 

 

Carrying

 

 

Estimated Fair Value

 

 

Amount

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

(Dollars in thousands)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total cash and cash equivalents

 

$

281,285

 

 

$

281,285

 

 

$

—

 

 

$

—

 

 

$

281,285

 

Interest-earning balances due from
   depository institutions

 

 

8,216

 

 

 

—

 

 

 

8,216

 

 

 

—

 

 

 

8,216

 

Investment securities available-for-sale

 

 

2,956,125

 

 

 

—

 

 

 

2,956,125

 

 

 

—

 

 

 

2,956,125

 

Investment securities held-to-maturity

 

 

2,464,610

 

 

 

—

 

 

 

2,082,881

 

 

 

—

 

 

 

2,082,881

 

Total loans, net of allowance for credit
   losses

 

 

8,818,068

 

 

 

—

 

 

 

—

 

 

 

8,503,518

 

 

 

8,503,518

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Interest rate swaps

 

 

112

 

 

 

—

 

 

 

112

 

 

 

—

 

 

 

112

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Interest rate swaps

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing

 

$

4,227,467

 

 

$

—

 

 

$

4,222,773

 

 

$

—

 

 

$

4,222,773

 

Borrowings

 

 

2,341,642

 

 

 

—

 

 

 

2,283,631

 

 

 

—

 

 

 

2,283,631

 

Junior subordinated debentures

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Derivatives not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Interest rate swaps

 

 

112

 

 

 

—

 

 

 

112

 

 

 

—

 

 

 

112

 

Derivatives designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Interest rate swaps

 

 

6,938

 

 

 

—

 

 

 

6,938

 

 

 

—

 

 

 

6,938

 

The following is a description of the valuation methodologies used to measure our Level 2 and Level 3 assets and liabilities recorded at fair value (under ASC Topic 820, “Fair Value Measurement”) and for estimating fair value for financial instruments not recorded at fair value (under ASC Topic 825).

Interest-earning balances due from depository institutions. The carrying amount is assumed to be the fair value given the short-term nature of these deposits.

Investment securities available-for-sale. Securities available-for-sale are measured and carried at fair value on a recurring basis. In determining the fair value of securities available-for-sale, we obtain a report from a nationally recognized broker-dealer detailing the fair value of each investment security we hold as of the reporting date. The broker-dealer used observable market information to value our securities, with the primary source being a nationally recognized pricing service. We review the market prices provided by the broker-dealer for our securities for reasonableness based on our understanding of the marketplace and we consider any credit issues related to the securities. As we have not made any adjustments to the market quotes provided to us and they are based on observable market data, they have been categorized as Level 2 within the fair value hierarchy.

Investment securities held-to-maturity. Securities held-to-maturity at carried at amortized cost. In determining the fair value of securities held-to-maturity, we use the same methodology as for securities available-for-sale and they have been categorized as Level 2 in the fair value hierarchy.

Total loans, net of allowance for credit losses. As loans and leases are not measured at fair value, the following discussion relates to estimating the fair value disclosures under ASC Topic 825. Loan fair values represent an exit price based upon the income approach. The loans are valued on an individual basis, with consideration given to the loans' underlying characteristics, including account types, remaining terms (in months), annual interest rates or coupons, interest types, past delinquencies, timing of principal and interest payments, current market rates, loan to value ratios, loss exposures, and remaining balances. Our model utilizes a discounted cash flow calculation to estimate the fair value of the loans using assumptions for the coupon rates, remaining maturities, prepayment speeds, projected default probabilities, loses given defaults, and estimates of prevailing discount rates. 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. We typically classify loans as Level 3 in the fair value hierarchy.

Derivative assets and liabilities. Derivatives are carried at fair value on a recurring basis and primarily relate to forward contracts which we enter into to manage interest rate risk. Our derivatives are principally traded in over-the-counter markets where quoted market prices are not readily available. Instead, the fair value is estimated using market observable inputs such as current forward contract rates, interest rate yield curves, volatilities and basis spreads. We also consider counter-party credit risk in valuing our derivatives. We typically classify our derivative assets and liabilities as Level 2 in the fair value hierarchy.

Interest-bearing deposits. Interest-bearing deposits are carried at historical cost. The fair value of deposits with no stated maturity date is equal to the amount payable on demand as of the balance sheet date and considered Level 2. The fair value of time deposits is based on the discounted value of contractual cash flows and considered Level 2. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. No value has been separately assigned to the Company's long-term relationships with its deposit customers, such as a core deposit intangible.

Borrowings. Borrowings may include FHLB advances and other fixed-rate term borrowings. Borrowings are carried at amortized cost. The fair value of fixed-rate borrowings is estimated by discounting scheduled cash flows through the maturity date or call date, if applicable, using estimated market discount rates that reflect current rates offered for borrowings with similar remaining maturities and characteristics and are considered Level 2 in the fair value hierarchy.

The fair value estimates presented herein are based on relevant market information and information about the financial instruments available to management as of December 31, 2024 and 2023. Changes in assumptions could significantly affect the estimates. 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 that date, and therefore, current estimates of fair value may differ significantly from the amounts presented above.