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Fair Value Election | 6 Months Ended
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Jun. 30, 2024
Fair Value Election [Abstract] |
Fair Value Disclosures [Text Block] | FAIR VALUE MEASUREMENTS The Company uses fair value to measure certain assets and liabilities on a recurring basis, primarily securities available-for-sale, derivatives, and certain debt liabilities. For assets measured at the lower of cost or fair value, the fair value measurement criteria may or may not be met during a reporting period and such measurements are therefore considered “nonrecurring” for purposes of disclosing our fair value measurements. Fair value is used on a nonrecurring basis to adjust carrying values for individually evaluated loans and leases and other real estate owned and also to record impairment on certain assets, such as goodwill, CDI, and other long-lived assets. For information regarding the valuation methodologies used to measure our assets recorded at fair value (under ASC Topic 820), and for estimating fair value for financial instruments not recorded at fair value (under ASC Topic 825, as amended by ASU 2016-01 and ASU 2018-03), see Note 1. Nature of Operations and Summary of Significant Accounting Policies and Note 15. Fair Value Measurements to the Consolidated Financial Statements of the Company's Form 10-K. The Company also holds SBIC investments measured at fair value using the NAV per share practical expedient that are not required to be classified in the fair value hierarchy. At June 30, 2024, the fair value of these investments was $110.0 million. The following tables present information on the assets and liabilities measured and recorded at fair value on a recurring basis as of the dates indicated:
| Fair Value Measurements as of
| June 30, 2024
Measured on a Recurring Basis | Total |  | Level 1 |  | Level 2 |  | Level 3
| (In thousands)
Securities available-for-sale: |  |  |  |  |  |  |
Agency residential MBS | $ | 1,101,861 |  |  | $ | — |  |  | $ | 1,101,861 |  |  | $ | — |
Agency commercial MBS | 241,343 |  |  | — |  |  | 241,343 |  |  | — |
Agency residential CMOs | 278,260 |  |  | — |  |  | 278,260 |  |  | — |
Municipal securities | 33,057 |  |  | — |  |  | 33,057 |  |  | — |
Corporate debt securities | 281,962 |  |  | — |  |  | 267,843 |  |  | 14,119 |
Private label residential CMOs | 150,286 |  |  | — |  |  | 150,286 |  |  | — |
Collateralized loan obligations | 109,354 |  |  | — |  |  | 109,354 |  |  | — |
Private label commercial MBS | 18,076 |  |  | — |  |  | 18,076 |  |  | — |
Asset-backed securities | 17,444 |  |  | — |  |  | 17,444 |  |  | — |
SBA securities | 12,388 |  |  | — |  |  | 12,388 |  |  | — |
Total securities available-for-sale | $ | 2,244,031 |  |  | $ | — |  |  | $ | 2,229,912 |  |  | $ | 14,119 |
Equity investments with readily determinable fair values | $ | 1 |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |
Derivatives (1): |  |  |  |  |  |  |
Equity warrants | 3,557 |  |  | — |  |  | — |  |  | 3,557 |
Interest rate and economic contracts | 10,727 |  |  | — |  |  | 10,727 |  |  | — |
Derivative liabilities | 7,609 |  |  | — |  |  | 7,609 |  |  | — |
Credit-linked notes | 124,434 |  |  | — |  |  | — |  |  | 124,434 |
| Fair Value Measurements as of
| December 31, 2023
Measured on a Recurring Basis | Total |  | Level 1 |  | Level 2 |  | Level 3
| (In thousands)
Securities available-for-sale: |  |  |  |  |  |  |
Agency residential MBS | $ | 1,187,609 |  |  | $ | — |  |  | $ | 1,187,609 |  |  | $ | — |
U.S. Treasury securities | 4,968 |  |  | 4,968 |  |  | — |  |  | — |
Agency commercial MBS | 253,306 |  |  | — |  |  | 253,306 |  |  | — |
Agency residential CMOs | 284,334 |  |  | — |  |  | 284,334 |  |  | — |
Municipal securities | 28,083 |  |  | — |  |  | 28,083 |  |  | — |
Corporate debt securities | 267,232 |  |  | — |  |  | 226,983 |  |  | 40,249 |
Private label residential CMOs | 158,412 |  |  | — |  |  | 158,412 |  |  | — |
Collateralized loan obligations | 108,416 |  |  | — |  |  | 108,416 |  |  | — |
Private label commercial MBS | 20,813 |  |  | — |  |  | 20,813 |  |  | — |
Asset-backed securities | 19,952 |  |  | — |  |  | 19,952 |  |  | — |
SBA securities | 13,739 |  |  | — |  |  | 13,739 |  |  | — |
Total securities available-for-sale | $ | 2,346,864 |  |  | $ | 4,968 |  |  | $ | 2,301,647 |  |  | $ | 40,249 |
Equity investments with readily determinable fair values | $ | 1 |  |  | $ | 1 |  |  | $ | — |  |  | $ | — |
Derivatives (1): |  |  |  |  |  |  |
Equity warrants | 3,689 |  |  | — |  |  | — |  |  | 3,689 |
Interest rate and economic contracts | 8,309 |  |  | — |  |  | 8,309 |  |  | — |
Derivative liabilities | 10,549 |  |  | — |  |  | 10,549 |  |  | — |
Credit-linked notes | 123,116 |  |  | — |  |  | — |  |  | 123,116 |
____________________ (1) For information regarding derivative instruments, see Note 10. Derivatives. During the six months ended June 30, 2024, there was a $2,000 transfer from Level 3 equity warrants to Level 1 equity investments with readily determinable fair values measured on a recurring basis. There was also a $33.9 million transfer of corporate debt securities from Level 3 to Level 2 during the six months ended June 30, 2024 and an $8.8 million transfer of corporate debt securities from Level 2 to Level 3 during the same period. The following table presents information about quantitative inputs and assumptions used to determine the fair values provided by our third-party pricing service for our Level 3 corporate debt securities available-for-sale measured at fair value on a recurring basis as of the date indicated:
| June 30, 2024
| Corporate Debt Securities
| Input or |  | Weighted
| Range |  | Average
Unobservable Inputs | of Inputs |  | Input (1)
Spread to 10 Year Treasury | 4.4% - 9.1% |  | 6.2%
Discount rates | 8.8% - 13.5% |  | 10.6%
____________________ (1) Unobservable inputs for corporate debt securities were weighted by the relative fair values of the instruments. The following table presents information about quantitative inputs and assumptions used in the modified Black-Scholes option pricing model to determine the fair value for our Level 3 equity warrants measured at fair value on a recurring basis as of the date indicated:
| June 30, 2024
| Equity Warrants
|  |  | Weighted
| Range |  | Average
Unobservable Inputs | of Inputs |  | Input (1)
Volatility | 16.1% - 171.0% |  | 25.3%
Risk-free interest rate | 4.3% - 5.5% |  | 4.6%
Remaining life assumption (in years) | 0.08 - 5.00 |  | 3.27
____________________ (1) Unobservable inputs for equity warrants were weighted by the relative fair values of the instruments. The following table summarizes activity for our Level 3 corporate debt securities available-for-sale, equity warrants, and credit-linked notes measured at fair value on a recurring basis for the period indicated:
| Corporate |  | Equity |  | Credit-Linked
| Debt Securities |  | Warrants |  | Notes
| (In thousands)
Balance, December 31, 2023 | $ | 40,249 |  |  | $ | 3,689 |  |  | $ | 123,116 |
Total included in earnings | — |  |  | (146) |  |  | 2,775 |
Total included in other comprehensive income | (1,021) |  |  | — |  |  | 615 |
Issuances | — |  |  | 296 |  |  | — |
Principal payments | — |  |  | — |  |  | (2,072) |
Transfer from Level 2 | 8,750 |  |  | — |  |  | — |
Transfer to Level 2 | (33,859) |  |  | — |  |  | — |
Exercises and settlements | — |  |  | (280) |  |  | — |
Transfers to Level 1 (equity investments with readily |  |  |  |  |
determinable fair values) | — |  |  | (2) |  |  | — |
Balance, June 30, 2024 | $ | 14,119 |  |  | $ | 3,557 |  |  | $ | 124,434 |
Unrealized net gains (losses) for the period included in other |  |  |  |  |
comprehensive income for securities held at quarter-end | $ | (3,131) |  |  |  |  |
The following tables present assets measured at fair value on a non-recurring basis as of the dates indicated:
| Fair Value Measurement as of
| June 30, 2024
Measured on a Non-Recurring Basis | Total |  | Level 1 |  | Level 2 |  | Level 3
| (In thousands)
Individually evaluated loans and leases | $ | 29,027 |  |  | $ | — |  |  | $ | 23,373 |  |  | $ | 5,654 |
OREO | 2,800 |  |  | — |  |  | 2,800 |  |  | — |
Total non-recurring | $ | 31,827 |  |  | $ | — |  |  | $ | 26,173 |  |  | $ | 5,654 |
| Fair Value Measurement as of
| December 31, 2023
Measured on a Non-Recurring Basis | Total |  | Level 1 |  | Level 2 |  | Level 3
| (In thousands)
Individually evaluated loans and leases | $ | 6,402 |  |  | $ | — |  |  | $ | 4,051 |  |  | $ | 2,351 |
OREO | 3,422 |  |  | — |  |  | 3,422 |  |  | — |
Total non-recurring | $ | 9,824 |  |  | $ | — |  |  | $ | 7,473 |  |  | $ | 2,351 |
The following table presents losses recognized on assets measured on a nonrecurring basis for the periods indicated:
| Three Months Ended |  | Six Months Ended
Losses on Assets | June 30, |  | June 30,
Measured on a Non-Recurring Basis | 2024 |  | 2023 |  | 2024 |  | 2023
| (In thousands)
Individually evaluated loans and leases | $ | 2,680 |  |  | $ | 925 |  |  | $ | 11,232 |  |  | $ | 4,946 |
OREO | 340 |  |  | 158 |  |  | 579 |  |  | 158 |
Total losses | $ | 3,020 |  |  | $ | 1,083 |  |  | $ | 11,811 |  |  | $ | 5,104 |
The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a nonrecurring basis as of the date indicated:
|  | June 30, 2024
|  |  |  | Valuation |  | Unobservable |  | Input or |  | Weighted
Asset |  | Fair Value |  | Technique |  | Inputs |  | Range |  | Average
|  | (In thousands)
Individually evaluated |  |  |  |  |  |  |  |  |  |
loans and leases |  | 5,654 |  | Third-party appraisals |  | No discounts |  |  |  |
Total non-recurring Level 3 |  | $ | 5,654 |  |  |  |  |  |  |  |
The following tables present carrying amounts and estimated fair values of certain financial instruments as of the dates indicated:
| June 30, 2024
| Carrying |  | Estimated Fair Value
| Amount |  | Total |  | Level 1 |  | Level 2 |  | Level 3
| (In thousands)
Financial Assets: |  |  |  |  |  |  |  |  |
Cash and due from banks | $ | 203,467 |  |  | $ | 203,467 |  |  | $ | 203,467 |  |  | $ | — |  |  | $ | — |
Interest-earning deposits in financial institutions | 2,495,343 |  |  | 2,495,343 |  |  | 2,495,343 |  |  | — |  |  | — |
Securities available-for-sale | 2,244,031 |  |  | 2,244,031 |  |  | — |  |  | 2,229,912 |  |  | 14,119 |
Securities held-to-maturity | 2,296,708 |  |  | 2,145,929 |  |  | 171,929 |  |  | 1,970,633 |  |  | 3,367 |
Investment in FRB and FHLB stock | 132,380 |  |  | 132,380 |  |  | — |  |  | 132,380 |  |  | — |
Loans held for sale | 1,935,455 |  |  | 1,936,118 |  |  | — |  |  | 1,936,118 |  |  | — |
Loans and leases held for investment, net | 22,981,147 |  |  | 21,809,106 |  |  | — |  |  | 23,373 |  |  | 21,785,733 |
Equity investments with readily determinable fair values | 1 |  |  | 1 |  |  | 1 |  |  | — |  |  | — |
Equity warrants | 3,557 |  |  | 3,557 |  |  | — |  |  | — |  |  | 3,557 |
Interest rate and economic contracts | 10,727 |  |  | 10,727 |  |  | — |  |  | 10,727 |  |  | — |
Servicing rights | 20,783 |  |  | 21,988 |  |  | — |  |  | — |  |  | 21,988 |
Financial Liabilities: |  |  |  |  |  |  |  |  |
Demand, checking, money market, and savings deposits | 22,012,326 |  |  | 22,012,326 |  |  | — |  |  | 22,012,326 |  |  | — |
Time deposits | 6,792,124 |  |  | 6,847,891 |  |  | — |  |  | 6,847,891 |  |  | — |
Borrowings | 1,440,875 |  |  | 1,441,407 |  |  | — |  |  | 1,316,973 |  |  | 124,434 |
Subordinated debt | 939,287 |  |  | 873,446 |  |  | — |  |  | 873,446 |  |  | — |
Derivative liabilities | 7,609 |  |  | 7,609 |  |  | — |  |  | 7,609 |  |  | — |
| December 31, 2023
| Carrying |  | Estimated Fair Value
| Amount |  | Total |  | Level 1 |  | Level 2 |  | Level 3
| (In thousands)
Financial Assets: |  |  |  |  |  |  |  |  |
Cash and due from banks | $ | 202,427 |  |  | $ | 202,427 |  |  | $ | 202,427 |  |  | $ | — |  |  | $ | — |
Interest-earning deposits in financial institutions | 5,175,149 |  |  | 5,175,149 |  |  | 5,175,149 |  |  | — |  |  | — |
Securities available-for-sale | 2,346,864 |  |  | 2,346,864 |  |  | 4,968 |  |  | 2,301,647 |  |  | 40,249 |
Securities held-to-maturity | 2,287,291 |  |  | 2,168,316 |  |  | 175,579 |  |  | 1,976,015 |  |  | 16,722 |
Investment in FRB and FHLB stock | 126,346 |  |  | 126,346 |  |  | — |  |  | 126,346 |  |  | — |
Loans held for sale | 122,757 |  |  | 126,646 |  |  | — |  |  | 126,646 |  |  | — |
Loans and leases held for investment, net | 25,208,000 |  |  | 23,551,725 |  |  | — |  |  | 4,051 |  |  | 23,547,674 |
Equity investments with readily determinable fair values | 1 |  |  | 1 |  |  | 1 |  |  | — |  |  | — |
Equity warrants | 3,689 |  |  | 3,689 |  |  | — |  |  | — |  |  | 3,689 |
Interest rate and economic contracts | 8,309 |  |  | 8,309 |  |  | — |  |  | 8,309 |  |  | — |
Servicing rights | 22,174 |  |  | 22,174 |  |  | — |  |  | — |  |  | 22,174 |
Financial Liabilities: |  |  |  |  |  |  |  |  |
Demand, checking, money market, and savings deposits | 23,768,896 |  |  | 23,768,896 |  |  | — |  |  | 23,768,896 |  |  | — |
Time deposits | 6,632,873 |  |  | 6,732,246 |  |  | — |  |  | 6,732,246 |  |  | — |
Borrowings | 2,911,322 |  |  | 2,908,527 |  |  | — |  |  | 2,785,411 |  |  | 123,116 |
Subordinated debt | 936,599 |  |  | 851,625 |  |  | — |  |  | 851,625 |  |  | — |
Derivative liabilities | 10,549 |  |  | 10,549 |  |  | — |  |  | 10,549 |  |  | — |
Limitations Fair value estimates are made at a specific point in time and are based on relevant market information and information about the financial instrument. These estimates do not reflect income taxes or any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a portion of the Company’s financial instruments, fair value estimates are based on what management believes to be reasonable judgments regarding expected future cash flows, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimated fair values are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Since the fair values have been estimated as of June 30, 2024, the amounts that will actually be realized or paid at settlement or maturity of the instruments could be significantly different.
Fair Value, Option | The following table presents the changes in fair value of the credit-linked notes for which the fair value option has been elected for the periods indicated:
| Three Months Ended |  | Six Months Ended
| June 30, |  | June 30,
Credit-Linked Notes | 2024 |  | 2023 |  | 2024 |  | 2023
| (In thousands)
Changes in fair value - losses (gains) included in earnings | $ | 2,427 |  |  | $ | 472 |  |  | $ | 2,775 |  |  | $ | (1,526) |
Changes in fair value - other comprehensive (income) loss | $ | (636) |  |  | $ | (4,057) |  |  | $ | 615 |  |  | $ | (4,057) |
The following table provides information about the credit-linked notes carried at fair value as of the dates indicated:
| June 30, |  | December 31,
Credit-Linked Notes | 2024 |  | 2023
| (In thousands)
Carrying value reported on the consolidated balance sheets | $ | 124,434 |  |  | $ | 123,116 |
Aggregate unpaid principal balance (less than) in excess of fair value | $ | (1,911) |  |  | $ | 1,479 |

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- Definition Fair Value Election + References No definition available. + Details
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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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- Definition The entire disclosure for a company's election to apply the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) the reasons for electing a fair value option for each eligible item or group of similar eligible items; (b) if the fair value option is elected for some but not all eligible items within a group of similar eligible items: (i) a description of those similar items and the reasons for partial election and (ii) information of how the group of similar items relates to individual balance sheet line items; (c) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected: (i) information of how each line item in the statement of financial position relates to major categories of assets and liabilities presented in accordance with other fair value disclosures and (ii) the aggregate carrying amount of ineligible items included in each line item in the balance sheet, if any; (d) the difference between the aggregate fair value and the aggregate unpaid principal balance (assuming contractual principal amounts and fair value option elected) of: (i) loans and long-term receivables (other than securities otherwise reported at fair value) and (ii) long-term debt instruments; (e) for loans held as assets for which the fair value option has been elected: (i) the aggregate fair value of loans that are 90 days or more past due, (ii) if the policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status, and (iii) the difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both; (f) for investments that would have been accounted for under the equity method if the entity had not chosen to apply the fair value option, the information required for such investments, if material either individually or in the aggregate; (2) for items included in the income statement: (a) the amounts of gains and losses from fair value changes included in earnings and in which line in the income statement those gains and losses are reported whether or not combined with gains and losses from items required to be accounted for at fair value; (b) a description of how interest and dividends are measured and where they are reported in the income statement; (c) for loans and other receivables held as assets: (i) the estimated amount of gains or losses included in earnings attributable to changes in instrument-specific credit risk and (ii) how the gains or losses attributable to changes in instrument-specific credit risk were determined; (d) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk: (i) the estimated amount of gains and losses from fair value changes included in earnings that are attributable to changes in the instrument-specific credit risk, (ii) qualitative information about the reasons for those changes, and (iii) how the gains and losses attributable to changes in instrument-specific credit risk were determined; and (3) certain other disclosures as required or determined to be provided. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 825 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//825/tableOfContent Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (a) -SubTopic 10 -Topic 825 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482907/825-10-50-32 + Details
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