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FAIR VALUE MEASUREMENTS | 9 Months Ended
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Sep. 30, 2024
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities that are carried at fair value. Recurring Fair Value Measurements The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value.
| September 30, 2024
| Level 1 |  | Level 2 |  | Level 3 |  | Total
(In thousands) | Inputs |  | Inputs |  | Inputs |  | Fair Value
Trading securities | $ | — |  |  | $ | — |  |  | $ | 5,560 |  |  | $ | 5,560 |
Securities available for sale: |  |  |  |  |  |  |
U.S Treasuries | 6,907 |  |  | — |  |  | — |  |  | 6,907 |
Municipal bonds and obligations | — |  |  | 62,931 |  |  | — |  |  | 62,931 |
Agency collateralized mortgage obligations | — |  |  | 252,432 |  |  | — |  |  | 252,432 |
Agency residential mortgage-backed securities | — |  |  | 232,931 |  |  | — |  |  | 232,931 |
Agency commercial mortgage-backed securities | — |  |  | 70,566 |  |  | — |  |  | 70,566 |
Corporate bonds | — |  |  | 31,425 |  |  | 3,892 |  |  | 35,317 |
Other bonds and obligations | — |  |  | 656 |  |  | — |  |  | 656 |
Equity securities | 13,278 |  |  | — |  |  | — |  |  | 13,278 |
Loans held for investment at fair value | — |  |  | — |  |  | 294 |  |  | 294 |
Loans held for sale | — |  |  | 6,003 |  |  | — |  |  | 6,003 |
Derivative assets | — |  |  | 44,790 |  |  | 217 |  |  | 45,007 |
Capitalized servicing rights | — |  |  | — |  |  | 1,386 |  |  | 1,386 |
Derivative liabilities | — |  |  | 63,678 |  |  | — |  |  | 63,678 |
| December 31, 2023
| Level 1 |  | Level 2 |  | Level 3 |  | Total
(In thousands) | Inputs |  | Inputs |  | Inputs |  | Fair Value
Trading securities | $ | — |  |  | $ | — |  |  | $ | 6,142 |  |  | $ | 6,142 |
Securities available for sale: |  |  |  |  |  |  |
U.S Treasuries | 7,981 |  |  | — |  |  | — |  |  | 7,981 |
Municipal bonds and obligations | — |  |  | 63,853 |  |  | — |  |  | 63,853 |
Agency collateralized mortgage obligations | — |  |  | 347,874 |  |  | — |  |  | 347,874 |
Agency residential mortgage-backed securities | — |  |  | 417,480 |  |  | — |  |  | 417,480 |
Agency commercial mortgage-backed securities | — |  |  | 145,326 |  |  | — |  |  | 145,326 |
Corporate bonds | — |  |  | 35,192 |  |  | 3,923 |  |  | 39,115 |
Equity securities | 13,029 |  |  | — |  |  | — |  |  | 13,029 |
Loans held for investment at fair value | — |  |  | — |  |  | 374 |  |  | 374 |
Loans held for sale | — |  |  | 2,237 |  |  | — |  |  | 2,237 |
Derivative assets | — |  |  | 45,613 |  |  | 55 |  |  | 45,668 |
Capitalized servicing rights | — |  |  | — |  |  | 1,526 |  |  | 1,526 |
Derivative liabilities | — |  |  | 75,957 |  |  | — |  |  | 75,957 |
There were no transfers between levels during the three months ended September 30, 2024. Trading Securities at Fair Value. The Company holds one security designated as a trading security. It is a tax-advantaged economic development bond issued to the Company by a local nonprofit which provides wellness and health programs. The fair value of this security is determined based on a discounted cash flow methodology. Certain inputs to the fair value calculation are unobservable and there is little to no market activity in the security; therefore, the security meets the definition of a Level 3 security. The discount rate used in the valuation of the security is sensitive to movements in the 3-month SOFR rate. Securities Available for Sale and Equity Securities. Equity securities classified as Level 1 consist of publicly-traded equity securities for which the fair values can be obtained through quoted market prices in active exchange markets. Equity securities classified as Level 2 consist of securities with infrequent trades in active exchange markets, and pricing is primarily sourced from third party pricing services. AFS securities classified as Level 1 consist of U.S. Treasury securities. AFS securities classified as Level 2 include most of the Company’s debt securities. The pricing on Level 2 and Level 3 was primarily sourced from third party pricing services, overseen by management, and is based on models that consider standard input factors such as dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and condition, among other things. Level 3 pricing includes inputs unobservable to market participants. Loans Held for Investment. The Company’s held for investment loan portfolio includes loans originated by Company and loans acquired through business combinations. The Company intends to hold these assets until maturity as a part of its business operations. For one acquired portfolio subset, the Company previously accounted for these purchased-credit impaired loans as a pool under ASC 310, as they were determined to have common risk characteristics. These loans were recorded at fair value on acquisition date and subsequently evaluated for impairment collectively. Upon adoption of ASC 326, the Company elected the fair value option on this portfolio, recognizing an $11.2 million fair value write-down charged to retained earnings, net of deferred tax impact, as of January 1, 2020. The fair value of this loan portfolio is determined based on a discounted cash flow methodology. Certain inputs to the fair value calculation are unobservable; therefore, the loans meet the definition of Level 3 assets. The discount rate used in the valuation is consistent with assets that have significant credit deterioration. The cash flow assumptions include payment schedules for loans with current payment histories and estimated collateral value for delinquent loans. All of these loans were nonperforming as of September 30, 2024.
|  |  |  |  |  | Aggregate Fair Value
September 30, 2024 |  | Aggregate |  | Aggregate |  | Less Aggregate
(In thousands) |  | Fair Value |  | Unpaid Principal |  | Unpaid Principal
Loans held for investment at fair value |  | $ | 294 |  |  | $ | 6,555 |  |  | $ | (6,261) |
|  |  |  |  |  | Aggregate Fair Value
December 31, 2023 |  | Aggregate |  | Aggregate |  | Less Aggregate
(In thousands) |  | Fair Value |  | Unpaid Principal |  | Unpaid Principal
Loans held for investment at fair value |  | $ | 374 |  |  | $ | 8,809 |  |  | $ | (8,435) |
Loans Held for Sale. The Company elected the fair value option for all loans held for sale (HFS) originated for sale on or after May 1, 2012. Loans HFS are classified as Level 2 as the fair value is based on input factors such as quoted prices for similar loans in active markets.
|  |  |  |  |  | Aggregate Fair Value
September 30, 2024 |  | Aggregate |  | Aggregate |  | Less Aggregate
(In thousands) |  | Fair Value |  | Unpaid Principal |  | Unpaid Principal
Loans held for sale |  | $ | 6,003 |  |  | $ | 5,918 |  |  | $ | 85 |
|  |  |  |  |  | Aggregate Fair Value
December 31, 2023 |  | Aggregate |  | Aggregate |  | Less Aggregate
(In thousands) |  | Fair Value |  | Unpaid Principal |  | Unpaid Principal
Loans held for sale |  | $ | 2,237 |  |  | $ | 2,205 |  |  | $ | 32 |
The changes in fair value of loans held for sale for the three and nine months ended September 30, 2024, were gains of $29 thousand and $53 thousand, respectively. During the three and nine months ended September 30, 2024, originations of loans held for sale totaled $51.6 million and $96.3 million, respectively. During the three and nine months ended September 30, 2024, sales of loans originated for sale totaled $50.5 million and $91.8 million, respectively. The changes in fair value of loans held for sale for the three and nine months ended September 30, 2023, were losses of $94 thousand and gains of $15 thousand, respectively. During the three and nine months ended September 30, 2023, originations of loans held for sale totaled $26.8 million and $56.2 million, respectively. During the three and nine months ended September 30, 2023, sales of loans originated for sale totaled $33.1 million and $54.8 million, respectively. Interest Rate Swaps. The valuation of the Company’s interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings. Although the Company has determined that the majority of the inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of September 30, 2024, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. Commitments to Lend. The Company enters into commitments to lend for residential mortgage loans intended for sale, which commit the Company to lend funds to a potential borrower at a specific interest rate and within a specified period of time. The estimated fair value of commitments to originate residential mortgage loans for sale is based on quoted prices for similar loans in active markets. However, this value is adjusted by a factor which considers the likelihood that the loan in a lock position will ultimately close, and by the non-refundable costs of originating the loan. The closing ratio is derived from the Bank’s internal data and is adjusted using significant management judgment. The costs to originate are primarily based on the Company’s internal commission rates that are not observable. As such, these commitments are classified as Level 3 measurements. Forward Sale Commitments. The Company utilizes forward sale commitments as economic hedges against potential changes in the values of the commitments to lend and loans originated for sale. To Be Announced (“TBA”) mortgage-backed securities forward commitment sales are used as the hedging instrument, are classified as Level 1, and consist of publicly-traded debt securities for which identical fair values can be obtained through quoted market prices in active exchange markets. The fair values of the Company’s best efforts and mandatory delivery loan sale commitments are determined similarly to the commitments to lend using quoted prices in the market place that are observable. However, costs to originate and closing ratios included in the calculation are internally generated and are based on management’s judgment and prior experience, which are considered factors that are not observable. As such, best efforts and mandatory forward commitments are classified as Level 3 measurements. Capitalized Servicing Rights. The Company accounts for certain capitalized servicing rights at fair value in its Consolidated Financial Statements, as the Company is permitted to elect the fair value option for each specific instrument. A loan servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans exceed adequate compensation for performing the servicing. The fair value of servicing rights is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy. The table below presents the changes in Level 3 assets and liabilities that were measured at fair value on a recurring basis for the three and nine months ended September 30, 2024 and 2023.
| Assets (Liabilities)
|  |  | Securities |  | Loans |  |  |  |  |  | Capitalized
| Trading |  | Available |  | Held for |  | Commitments |  | Forward |  | Servicing
(In thousands) | Securities |  | for Sale |  | Investment |  | to Lend |  | Commitments |  | Rights
Three Months Ended September 30, 2024
June 30, 2024 | $ | 5,699 |  |  | $ | 3,902 |  |  | $ | 326 |  |  | $ | 101 |  |  | $ | 32 |  |  | $ | 1,566 |
Unrealized gain/(loss), net recognized in other non-interest income | 88 |  |  | — |  |  | (19) |  |  | 327 |  |  | 20 |  |  | (180) |
Unrealized (loss) included in accumulated other comprehensive income | — |  |  | (10) |  |  | — |  |  | — |  |  | — |  |  | — |
Paydown of asset | (227) |  |  | — |  |  | (13) |  |  | — |  |  | — |  |  | — |
Transfers to held for sale loans | — |  |  | — |  |  | — |  |  | (263) |  |  | — |  |  | — |
September 30, 2024 | $ | 5,560 |  |  | $ | 3,892 |  |  | $ | 294 |  |  | $ | 165 |  |  | $ | 52 |  |  | $ | 1,386 |
Nine Months Ended September 30, 2024
December 31, 2023 | $ | 6,142 |  |  | $ | 3,923 |  |  | $ | 374 |  |  | $ | 34 |  |  | $ | 21 |  |  | $ | 1,526 |
Unrealized gain, net recognized in other non-interest income | 92 |  |  | — |  |  | (16) |  |  | 925 |  |  | 31 |  |  | (140) |
Unrealized (loss) included in accumulated other comprehensive income | — |  |  | (31) |  |  | — |  |  | — |  |  | — |  |  | — |
Paydown of asset | (674) |  |  | — |  |  | (64) |  |  | — |  |  | — |  |  | — |
Transfers to held for sale loans | — |  |  | — |  |  | — |  |  | (794) |  |  | — |  |  | — |
September 30, 2024 | $ | 5,560 |  |  | $ | 3,892 |  |  | $ | 294 |  |  | $ | 165 |  |  | $ | 52 |  |  | $ | 1,386 |
Unrealized (loss)/gain relating to instruments still held at September 30, 2024 | $ | 32 |  |  | $ | (108) |  |  | $ | — |  |  | $ | 165 |  |  | $ | 52 |  |  | $ | — |
| Assets (Liabilities)
|  |  | Securities |  | Loans |  |  |  |  |  | Capitalized
| Trading |  | Available |  | Held for |  | Commitments |  | Forward |  | Servicing
(In thousands) | Securities |  | for Sale |  | Investment |  | to Lend |  | Commitments |  | Rights
Three Months Ended September 30, 2023
June 30, 2023 | $ | 6,405 |  |  | $ | 3,930 |  |  | $ | 401 |  |  | $ | 37 |  |  | $ | 63 |  |  | $ | 1,886 |
Unrealized (loss)/gain, net recognized in other non-interest income | (19) |  |  | — |  |  | 28 |  |  | 26 |  |  | (53) |  |  | (180) |
Unrealized gain included in accumulated other comprehensive income | — |  |  | 30 |  |  | — |  |  | — |  |  | — |  |  | — |
Paydown of asset | (215) |  |  | — |  |  | (21) |  |  | — |  |  | — |  |  | — |
Transfers to held for sale loans | — |  |  | — |  |  | — |  |  | (72) |  |  | — |  |  | — |
September 30, 2023 | $ | 6,171 |  |  | $ | 3,960 |  |  | $ | 408 |  |  | $ | (9) |  |  | $ | 10 |  |  | $ | 1,706 |
Nine Months Ended September 30, 2023
December 31, 2022 | $ | 6,708 |  |  | $ | 4,000 |  |  | $ | 605 |  |  | $ | 17 |  |  | $ | 8 |  |  | $ | 1,846 |
Unrealized gain/(loss), net recognized in other non-interest income | 104 |  |  | — |  |  | (119) |  |  | 146 |  |  | 2 |  |  | (140) |
Unrealized (loss) included in accumulated other comprehensive income | — |  |  | (40) |  |  | — |  |  | — |  |  | — |  |  | — |
Paydown of asset | (641) |  |  | — |  |  | (78) |  |  | — |  |  | — |  |  | — |
Transfers to held for sale loans | — |  |  | — |  |  | — |  |  | (172) |  |  | — |  |  | — |
September 30, 2023 | $ | 6,171 |  |  | $ | 3,960 |  |  | $ | 408 |  |  | $ | (9) |  |  | $ | 10 |  |  | $ | 1,706 |
Unrealized (loss)/gain relating to instruments still held at September 30, 2023 | $ | (251) |  |  | $ | (40) |  |  | $ | — |  |  | $ | (9) |  |  | $ | 10 |  |  | $ | — |
Quantitative information about the significant unobservable inputs within Level 3 recurring assets and liabilities is as follows:
|  | Fair Value |  |  |  |  |  | Significant Unobservable Input
(In thousands) |  | September 30, 2024 |  | Valuation Techniques |  | Unobservable Inputs |  | Value
Assets (Liabilities) |  |  |  |  |  |  |  |
Trading Securities |  | $ | 5,560 |  |  | Discounted Cash Flow |  | Discount Rate |  | 3.24 | %
AFS Securities |  | 3,892 |  |  | Indication from Market Maker |  | Price |  | 97.29%
Loans held for investment |  | 294 |  |  | Discounted Cash Flow |  | Discount Rate |  | 25.00 | %
|  |  |  |  |  | Collateral Value |  | $0.0 - $17.5
Commitments to lend |  | 165 |  |  | Historical Trend |  | Closing Ratio |  | 85.71 | %
|  |  |  | Pricing Model |  | Origination Costs, per loan |  | $ | 3 |
Forward commitments |  | 52 |  |  | Historical Trend |  | Closing Ratio |  | 85.71 | %
|  |  |  | Pricing Model |  | Origination Costs, per loan |  | $ | 3 |
Capitalized servicing rights |  | 1,386 |  |  | Discounted cash flow |  | Constant Prepayment Rate (CPR) |  | 7.26 | %
|  |  |  |  |  | Discount Rate |  | 10.09 | %
Total |  | $ | 11,349 |  |  |  |  |  |  |
|  | Fair Value |  |  |  |  |  | Significant Unobservable Input
(In thousands) |  | December 31, 2023 |  | Valuation Techniques |  | Unobservable Inputs |  | Value
Assets (Liabilities) |  |  |  |  |  |  |  |
Trading Securities |  | $ | 6,142 |  |  | Discounted Cash Flow |  | Discount Rate |  | 4.19 | %
AFS Securities |  | 3,923 |  |  | Indication from Market Maker |  | Price |  | 98.07 | %
Loans held for investment |  | 374 |  |  | Discounted Cash Flow |  | Discount Rate |  | 25.00 | %
|  |  |  |  |  | Collateral Value |  | $0.0- $18.3
Commitments to lend |  | 34 |  |  | Historical Trend |  | Closing Ratio |  | 84.29 | %
|  |  |  | Pricing Model |  | Origination Costs, per loan |  | $ | 3 |
Forward commitments |  | 21 |  |  | Historical Trend |  | Closing Ratio |  | 84.29 | %
|  |  |  | Pricing Model |  | Origination Costs, per loan |  | $ | 3 |
Capitalized servicing rights |  | 1,526 |  |  | Discounted Cash Flow |  | Constant Prepayment Rate (CPR) |  | 7.63 | %
|  |  |  |  |  | Discount Rate |  | 11.08 | %
Total |  | $ | 12,020 |  |  |  |  |  |  |
Non-Recurring Fair Value Measurements The Company is required, on a non-recurring basis, to adjust the carrying value or provide valuation allowances for certain assets using fair value measurements in accordance with GAAP. The following is a summary of applicable non-recurring fair value measurements. There are no liabilities measured at fair value on a non-recurring basis.
|  | September 30, 2024 |  | Fair Value Measurement Date |  | December 31, 2023 |  |  |  |  |  | Fair Value Measurement Date
|  | Level 3 |  | Level 3 |  | Level 3 |  |  |  |  |  | Level 3
(In thousands) |  | Inputs |  | Inputs |  | Inputs |  |  |  |  |  | Inputs
Assets |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated |  | $ | 1,872 |  |  | September 2024 |  | $ | 4,395 |  |  |  |  |  |  | December 2023
Loans held for sale |  | 44,631 |  |  | September 2024 |  | — |  |  |  |  |  |  | December 2023
Capitalized servicing rights |  | 9,817 |  |  | September 2024 |  | 10,569 |  |  |  |  |  |  | December 2023
Total |  | $ | 56,320 |  |  |  |  | $ | 14,964 |  |  |  |  |  |  |
Quantitative information about the significant unobservable inputs within Level 3 non-recurring assets is as follows:
|  | Fair Value |  |  |  |  |  |
(In thousands) |  | September 30, 2024 |  | Valuation Techniques |  | Unobservable Inputs |  | Range (Weighted Average) (1)
Assets |  |  |  |  |  |  |  |
Individually evaluated |  | $ | 1,872 |  |  | Fair Value of Collateral |  | Discounted Cash Flow - Loss Severity |  | (100.00)% to (0.07)% ((66.92)%)
|  |  |  |  |  | Appraised Value |  | $0 to $182 ($154)
Loans held for sale |  | 44,631 |  |  | Fair Value of Collateral |  | Market Price |  | $44,631
Capitalized servicing rights |  | 9,817 |  |  | Discounted Cash Flow |  | Constant Prepayment Rate (CPR) |  | 4.74% to 27.03% (13.46%)
|  |  |  |  |  | Discount Rate |  | 10.47% to 13.58% (12.18%)
Total |  | $ | 56,320 |  |  |  |  |  |  |
(1) Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individuals properties.
|  | Fair Value |  |  |  |  |  |
(In thousands) |  | December 31, 2023 |  | Valuation Techniques |  | Unobservable Inputs |  | Range (Weighted Average) (1)
Assets |  |  |  |  |  |  |  |
Individually evaluated |  | $ | 4,395 |  |  | Fair Value of Collateral |  | Discounted Cash Flow - loss severity |  | (100.00)% to (0.08)% ((67.00)%)
|  |  |  |  |  | Appraised Value |  | $0 to $3,389 ($2,774)
Capitalized servicing rights |  | 10,569 |  |  | Discounted Cash Flow |  | Constant Prepayment Rate (CPR) |  | 5.43% to 17.15% (12.31%)
|  |  |  |  |  | Discount Rate |  | 10.09% to 16.59% (13.82%)
Total |  | $ | 14,964 |  |  |  |  |  |  |
(1) Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individuals properties. There were no Level 1 or Level 2 nonrecurring fair value measurements for the periods ended September 30, 2024 and December 31, 2023. Individually evaluated loans. Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records non-recurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Non-recurring adjustments can also include certain impairment amounts for collateral-dependent loans calculated when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace. However, the choice of observable data is subject to significant judgment, and there are often adjustments based on judgment in order to make observable data comparable and to consider the impact of time, the condition of properties, interest rates, and other market factors on current values. Additionally, commercial real estate appraisals frequently involve discounting of projected cash flows, which relies inherently on unobservable data. Therefore, nonrecurring fair value measurement adjustments that relate to real estate collateral have generally been classified as Level 3. Estimates of fair value for other collateral that supports commercial loans are generally based on assumptions not observable in the marketplace and therefore such valuations have been classified as Level 3. Loans Transferred to Held for Sale. Once a decision has been made to sell loans not previously classified as held for sale, these loans are transferred into the held for sale category and carried at the lower of cost or fair value. Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace. The choice of observable data is subject to significant judgment, and there are often adjustments based on judgment in order to make observable data comparable and to consider the impact of time, the condition of properties, interest rates, and other market factors on current values. Nonrecurring fair value measurement adjustments that relate to real estate collateral have generally been classified as Level 3. Estimates of fair value for other collateral that supports commercial loans are generally based on assumptions not observable in the marketplace and therefore such valuations have been classified as Level 3. Capitalized loan servicing rights. A loan servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans exceed adequate compensation for performing the servicing. The fair value of servicing rights is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Adjustments are only recorded when the discounted cash flows derived from the valuation model are less than the carrying value of the asset. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy. Summary of Estimated Fair Values of Financial Instruments The following tables summarize the estimated fair values (represents exit price), and related carrying amounts, of the Company’s financial instruments. Certain financial instruments and all non-financial instruments are excluded. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.
|  | September 30, 2024
|  | Carrying |  | Fair |  |  |  |  |  |
(In thousands) |  | Amount |  | Value |  | Level 1 |  | Level 2 |  | Level 3
Financial Assets |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 569,967 |  |  | $ | 569,967 |  |  | $ | 569,967 |  |  | $ | — |  |  | $ | — |
Trading securities |  | 5,560 |  |  | 5,560 |  |  | — |  |  | — |  |  | 5,560 |
Equity securities |  | 13,278 |  |  | 13,278 |  |  | 13,278 |  |  | — |  |  | — |
Securities available for sale |  | 661,740 |  |  | 661,740 |  |  | 6,907 |  |  | 650,941 |  |  | 3,892 |
Securities held to maturity |  | 512,277 |  |  | 451,194 |  |  | — |  |  | 449,986 |  |  | 1,208 |
Federal Home Loan Bank stock |  | 30,685 |  |  | N/A |  | N/A |  | N/A |  | N/A
Net loans |  | 9,100,275 |  |  | 9,024,531 |  |  | — |  |  | — |  |  | 9,024,531 |
Loans held for sale |  | 50,634 |  |  | 50,634 |  |  | — |  |  | 6,003 |  |  | 44,631 |
Accrued interest receivable |  | 49,804 |  |  | 49,804 |  |  | — |  |  | 49,804 |  |  | — |
Derivative assets |  | 45,007 |  |  | 45,007 |  |  | — |  |  | 44,790 |  |  | 217 |
Assets held for sale |  | 6,930 |  |  | 6,930 |  |  | — |  |  | 6,930 |  |  | — |
Financial Liabilities |  |  |  |  |  |  |  |  |  |
Total deposits |  | $ | 9,577,489 |  |  | $ | 9,572,152 |  |  | $ | — |  |  | $ | 9,572,152 |  |  | $ | — |
Short-term debt |  | 353,500 |  |  | 353,982 |  |  | — |  |  | 353,982 |  |  | — |
Long-term Federal Home Loan Bank advances and other |  | 232,042 |  |  | 230,387 |  |  | — |  |  | 230,387 |  |  | — |
Subordinated borrowings |  | 121,549 |  |  | 106,519 |  |  | — |  |  | 106,519 |  |  | — |
Accrued interest payable |  | 11,937 |  |  | 11,937 |  |  | — |  |  | 11,937 |  |  | — |
Derivative liabilities |  | 63,678 |  |  | 63,678 |  |  | — |  |  | 63,678 |  |  | — |
Liabilities held for sale |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
|  | December 31, 2023
|  | Carrying |  | Fair |  |  |  |  |  |
(In thousands) |  | Amount |  | Value |  | Level 1 |  | Level 2 |  | Level 3
Financial Assets |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 1,203,244 |  |  | $ | 1,203,244 |  |  | $ | 1,203,244 |  |  | $ | — |  |  | $ | — |
Trading securities |  | 6,142 |  |  | 6,142 |  |  | — |  |  | — |  |  | 6,142 |
Equity securities |  | 13,029 |  |  | 13,029 |  |  | 13,029 |  |  | — |  |  | — |
Securities available for sale and other |  | 1,022,285 |  |  | 1,022,285 |  |  | 7,981 |  |  | 1,010,381 |  |  | 3,923 |
Securities held to maturity |  | 543,351 |  |  | 476,228 |  |  | — |  |  | 474,742 |  |  | 1,486 |
Federal Home Loan Bank stock |  | 22,689 |  |  | N/A |  | N/A |  | N/A |  | N/A
Net loans |  | 8,934,329 |  |  | 8,768,108 |  |  | — |  |  | — |  |  | 8,768,108 |
Loans held for sale |  | 2,237 |  |  | 2,237 |  |  | — |  |  | 2,237 |  |  | — |
Accrued interest receivable |  | 53,096 |  |  | 53,096 |  |  | — |  |  | 53,096 |  |  | — |
Derivative assets |  | 45,668 |  |  | 45,668 |  |  | — |  |  | 45,613 |  |  | 55 |
Financial Liabilities |  |  |  |  |  |  |  |  |  |
Total deposits |  | $ | 10,633,384 |  |  | $ | 10,615,655 |  |  | $ | — |  |  | $ | 10,615,655 |  |  | $ | — |
Short-term debt |  | 260,000 |  |  | 260,035 |  |  | — |  |  | 260,035 |  |  | — |
Long-term Federal Home Loan Bank advances |  | 125,223 |  |  | 123,747 |  |  | — |  |  | 123,747 |  |  | — |
Subordinated borrowings |  | 121,363 |  |  | 98,138 |  |  | — |  |  | 98,138 |  |  | — |
Accrued interest payable |  | 13,766 |  |  | 13,766 |  |  | — |  |  | 13,766 |  |  | — |
Derivative liabilities |  | 75,957 |  |  | 75,957 |  |  | — |  |  | 75,957 |  |  | — |

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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/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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