XML 39 R27.htm IDEA: XBRL DOCUMENT
v3.20.2

FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended
--- | ---
Jun. 30, 2020
Fair Value Disclosures [Abstract] |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUES OF FINANCIAL INSTRUMENTS Accounting Standards Codification ("ASC") 820, Fair Value Measurements defines fair value, establishes a framework for measuring the fair value of assets and liabilities using a hierarchy system and requires disclosures about fair value measurement. It clarifies that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. The fair value hierarchy is as follows: Level 1 Inputs - Valuation is based upon quoted prices for identical instruments traded in active markets that the Company has the ability to access at measurement date. Level 2 Inputs - Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which significant assumptions are observable in the market. Level 3 Inputs - Valuation is generated from model-based techniques that use significant assumptions not observable in the market and are used only to the extent that observable inputs are not available. These unobservable assumptions reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. There were no transfers between levels of the fair value hierarchy at June 30, 2020 or September 30, 2019. Debt Securities Available for Sale and Held to Maturity. Debt securities available for sale are recorded at fair value on a recurring basis and debt securities held to maturity are carried at amortized cost. The fair values of debt securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs), or valuation based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which significant assumptions are observable in the market (Level 2 inputs). The Company considers these valuations supplied by a third-party provider, which utilizes several sources for valuing fixed-income securities. These sources include Interactive Data Corporation, Reuters, Standard and Poor’s, Bloomberg Financial Markets, Street Software Technology and the third-party provider’s own matrix and desk pricing. The Company, no less than annually, reviews the third-party provider’s methods and source’s methodology for reasonableness and to ensure an understanding of inputs utilized in determining fair value. Sources utilized by the third-party provider include but are not limited to pricing models that vary based on asset class and include available trade, bid, and other market information. This methodology includes but is not limited to broker quotes, proprietary models, descriptive terms and conditions databases, as well as extensive quality control programs. Monthly, the Company receives and compares prices provided by multiple securities dealers and pricing providers to validate the accuracy and reasonableness of prices received from the third-party provider; and our Investment Committee reviews mark-to-market changes in the securities portfolio for reasonableness. Equity Securities. Marketable equity securities and certain non-marketable equity securities are recorded at fair value on a recurring basis. The fair values of marketable equity securities are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs). The following tables summarize the fair values of debt securities available for sale and equity securities as they are measured at fair value on a recurring basis:
| Fair Value At June 30, 2020 |  |  |  |  |  |
(Dollars in Thousands) | Total |  | Level 1 |  | Level 2 |  | Level 3
Debt securities AFS |  |  |  |  |  |  |
SBA securities | $ | 170,267 |  |  | $ | — |  |  | $ | 170,267 |  |  | $ | — |
Obligations of states and political subdivisions | 843 |  |  | — |  |  | 843 |  |  | — |
Non-bank qualified obligations of states and political subdivisions | 331,324 |  |  | — |  |  | 331,324 |  |  | — |
Asset-backed securities | 323,145 |  |  | — |  |  | 323,145 |  |  | — |
Mortgage-backed securities | 338,250 |  |  | — |  |  | 338,250 |  |  | — |
Total debt securities AFS | $ | 1,163,829 |  |  | $ | — |  |  | $ | 1,163,829 |  |  | $ | — |
Common equities and mutual funds(1) | $ | 3,012 |  |  | $ | 3,012 |  |  | $ | — |  |  | $ | — |
Non-marketable equity securities(2) | $ | 2,741 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
(1) Equity securities at fair value are included within other assets on the consolidated statement of financial condition at June 30, 2020 and September 30, 2019. (2) Consists of certain non-marketable equity securities that are measured at fair value using net asset value ("NAV") per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.
| Fair Value At September 30, 2019 |  |  |  |  |  |
(Dollars in Thousands) | Total |  | Level 1 |  | Level 2 |  | Level 3
Debt securities AFS |  |  |  |  |  |  |
SBA securities | $ | 185,982 |  |  | $ | — |  |  | $ | 185,982 |  |  | $ | — |
Obligations of states and political subdivisions | 874 |  |  | — |  |  | 874 |  |  | — |
Non-bank qualified obligations of states and political subdivisions | 400,557 |  |  | — |  |  | 400,557 |  |  | — |
Asset-backed securities | 302,534 |  |  | — |  |  | 302,534 |  |  | — |
Mortgage-backed securities | 382,546 |  |  | — |  |  | 382,546 |  |  | — |
Total debt securities AFS | $ | 1,272,493 |  |  | $ | — |  |  | $ | 1,272,493 |  |  | $ | — |
Common equities and mutual funds(1) | $ | 2,606 |  |  | $ | 2,606 |  |  | $ | — |  |  | $ | — |
Non-marketable equity securities(2) | $ | 1,669 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
(1) Equity securities at fair value are included within other assets on the consolidated statement of financial condition at June 30, 2020 and September 30, 2019. (2) Consists of certain non-marketable equity securities that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy. Foreclosed Real Estate and Repossessed Assets. Real estate properties and repossessed assets are initially recorded at the fair value less selling costs at the date of foreclosure, establishing a new cost basis. The carrying amount represents the lower of the new cost basis or the fair value less selling costs of foreclosed assets that were measured at fair value subsequent to their initial classification as foreclosed assets. Loans and Leases. The Company does not record loans and leases at fair value on a recurring basis. However, if a loan or lease is considered impaired, an allowance for loan and lease losses is established. Once a loan or lease is identified as individually impaired, management measures impairment in accordance with ASC 310, Receivables. See Note 5. Loans and Leases, Net for further information. The following table summarizes the assets of the Company that are measured at fair value in the Condensed Consolidated Statements of Financial Condition on a non-recurring basis:
| Fair Value At June 30, 2020 |  |  |  |  |  |
(Dollars in Thousands) | Total |  | Level 1 |  | Level 2 |  | Level 3
Impaired loans and leases, net |  |  |  |  |  |  |
Commercial finance | $ | 14,493 |  |  | $ | — |  |  | $ | — |  |  | $ | 14,493 |
Total National Lending | 14,493 |  |  | — |  |  | — |  |  | 14,493 |
Commercial real estate and operating | 20 |  |  | — |  |  | — |  |  | 20 |
Total Community Banking | 20 |  |  | — |  |  | — |  |  | 20 |
Total impaired loans and leases, net | 14,513 |  |  | — |  |  | — |  |  | 14,513 |
Foreclosed assets, net | 6,784 |  |  | — |  |  | — |  |  | 6,784 |
Total | $ | 21,297 |  |  | $ | — |  |  | $ | — |  |  | $ | 21,297 |
| Fair Value At September 30, 2019 |  |  |  |  |  |
(Dollars in Thousands) | Total |  | Level 1 |  | Level 2 |  | Level 3
Impaired loans and leases, net |  |  |  |  |  |  |
Commercial finance | $ | 8,707 |  |  | $ | — |  |  | $ | — |  |  | $ | 8,707 |
Total National Lending | 8,707 |  |  | — |  |  | — |  |  | 8,707 |
Total impaired loans and leases, net | 8,707 |  |  | — |  |  | — |  |  | 8,707 |
Foreclosed assets, net | 29,494 |  |  | — |  |  | — |  |  | 29,494 |
Total | $ | 38,201 |  |  | $ | — |  |  | $ | — |  |  | $ | 38,201 |
| Quantitative Information About Level 3 Fair Value Measurements |  |  |  |  |  |  |  |
(Dollars in Thousands) | Fair Value at June 30, 2020 |  | Fair Value at September 30, 2019 |  | Valuation Technique |  | Unobservable Input |  | Range of Inputs
Impaired loans and leases, net | $ | 14,513 |  |  | 8,707 |  |  | Market approach |  | Appraised values(1) |  | 4% - 10%
Foreclosed assets, net | $ | 6,784 |  |  | 29,494 |  |  | Market approach |  | Appraised values(1) |  | 4% - 30%
(1) The Company generally relies on external appraisers to develop this information. Management reduced the appraised value by estimating selling costs and other inputs in a range of 4% to 30%. The following tables disclose the Company’s estimated fair value amounts of its financial instruments at the dates set forth below. It is management’s belief that the fair values presented below are reasonable based on the valuation techniques and data available to the Company at June 30, 2020 and September 30, 2019, as more fully described below. The operations of the Company are managed from a going concern basis and not a liquidation basis. As a result, the ultimate value realized for the financial instruments presented could be substantially different when actually recognized over time through the normal course of operations. Additionally, a substantial portion of the Company’s inherent value is the Bank’s capitalization and franchise value. Neither of these components have been given consideration in the presentation of fair values below. The following tables present the carrying amount and estimated fair value of the financial instruments held by the Company:
| June 30, 2020 |  |  |  |  |  |  |  |
(Dollars in Thousands) | Carrying Amount |  | Estimated Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Financial assets |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 3,108,141 |  |  | $ | 3,108,141 |  |  | $ | 3,108,141 |  |  | $ | — |  |  | $ | — |
Debt securities available for sale | 1,163,829 |  |  | 1,163,829 |  |  | — |  |  | 1,163,829 |  |  | — |
Debt securities held to maturity | 104,587 |  |  | 103,832 |  |  | — |  |  | 103,832 |  |  | — |
Common equities and mutual funds(1) | 3,012 |  |  | 3,012 |  |  | 3,012 |  |  | — |  |  | — |
Non-marketable equity securities(1)(2) | 13,741 |  |  | 13,741 |  |  | — |  |  | 11,000 |  |  | — |
Loans held for sale | 79,905 |  |  | 79,905 |  |  | — |  |  | 79,905 |  |  | — |
Loans and leases receivable | 3,496,709 |  |  | 3,488,875 |  |  | — |  |  | — |  |  | 3,488,875 |
Federal Reserve Bank and Federal Home Loan Bank stocks | 31,836 |  |  | 31,836 |  |  | — |  |  | 31,836 |  |  | — |
Accrued interest receivable | 17,545 |  |  | 17,545 |  |  | 17,545 |  |  | — |  |  | — |
Financial liabilities |  |  |  |  |  |  |  |  |
Deposits | 7,590,325 |  |  | 7,592,382 |  |  | 7,037,218 |  |  | 555,164 |  |  | — |
Federal Home Loan Bank advances | 110,000 |  |  | 111,877 |  |  | — |  |  | 111,877 |  |  | — |
Other short- and long-term borrowings | 99,781 |  |  | 100,342 |  |  | — |  |  | 100,342 |  |  | — |
Accrued interest payable | 4,332 |  |  | 4,332 |  |  | 4,332 |  |  | — |  |  | — |
(1) Equity securities at fair value are included within other assets on the consolidated statement of financial condition at June 30, 2020 and September 30, 2019. (2) Includes certain non-marketable equity securities that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.
| September 30, 2019 |  |  |  |  |  |  |  |
(Dollars in Thousands) | Carrying Amount |  | Estimated Fair Value |  | Level 1 |  | Level 2 |  | Level 3
Financial assets |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 126,545 |  |  | $ | 126,545 |  |  | $ | 126,545 |  |  | $ | — |  |  | $ | — |
Debt securities available for sale | 1,272,493 |  |  | 1,272,493 |  |  | — |  |  | 1,272,493 |  |  | — |
Debt securities held to maturity | 134,764 |  |  | 133,470 |  |  | — |  |  | 133,470 |  |  | — |
Common equities and mutual funds(1) | 2,606 |  |  | 2,606 |  |  | 2,606 |  |  | — |  |  | — |
Non-marketable equity securities(1)(2) | 8,169 |  |  | 8,169 |  |  | — |  |  | 6,500 |  |  | — |
Loans held for sale | 148,777 |  |  | 148,777 |  |  | — |  |  | 148,777 |  |  | — |
Loans and leases receivable | 3,651,413 |  |  | 3,622,597 |  |  | — |  |  | — |  |  | 3,622,597 |
Federal Home Loan Bank stock | 30,916 |  |  | 30,916 |  |  | — |  |  | 30,916 |  |  | — |
Accrued interest receivable | 20,400 |  |  | 20,400 |  |  | 20,400 |  |  | — |  |  | — |
Financial liabilities |  |  |  |  |  |  |  |  |
Deposits | 4,337,005 |  |  | 4,338,510 |  |  | 2,920,516 |  |  | 1,417,994 |  |  | — |
Overnight federal funds purchased | 642,000 |  |  | 642,000 |  |  | 642,000 |  |  | — |  |  | — |
Federal Home Loan Bank advances | 110,000 |  |  | 110,691 |  |  | — |  |  | 110,691 |  |  | — |
Other short- and long-term borrowings | 109,857 |  |  | 113,876 |  |  | — |  |  | 113,876 |  |  | — |
Accrued interest payable | 9,414 |  |  | 9,414 |  |  | 9,414 |  |  | — |  |  | — |
(1) Equity securities at fair value are included within other assets on the consolidated statement of financial condition at June 30, 2020 and September 30, 2019. (2) Includes certain non-marketable equity securities that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy. The following sets forth the methods and assumptions used in determining the fair value estimates for the Company’s financial instruments at June 30, 2020 and September 30, 2019. CASH AND CASH EQUIVALENTS The carrying amount of cash and short-term investments is assumed to approximate the fair value. DEBT SECURITIES AVAILABLE FOR SALE AND EQUITY SECURITIES Debt securities available for sale and equity securities are recorded at fair value on a recurring basis. Fair values for these investment securities are based on obtaining quoted prices on nationally recognized securities exchanges, or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities. Non-marketable equity securities are measured at fair value using NAV per share (or its equivalent) as a practical expedient. LOANS HELD FOR SALE The carrying amount of loans held for sale is assumed to approximate the fair value. LOANS AND LEASES, NET The fair values of loans and leases were estimated using an exit price methodology. The exit price estimation of fair value is based on the present value of expected cash flows, which are based on the contractual terms of the loans, adjusted for prepayments and a discount rate based on the relative risk of the cash flows. Other considerations include the loan type, remaining life of the loan and credit risk. FEDERAL RESERVE BANK AND FEDERAL HOME LOAN BANK STOCKS The fair value of FRB and FHLB stock is assumed to approximate book value since the Company is only able to redeem this stock at par value. ACCRUED INTEREST RECEIVABLE The carrying amount of accrued interest receivable is assumed to approximate the fair value. DEPOSITS The carrying values of noninterest-bearing checking deposits, interest-bearing checking deposits, savings, money markets, and wholesale non-maturing deposits are assumed to approximate fair value since deposits are immediately withdrawable without penalty. The fair value of time certificate deposits and wholesale certificate of deposits are estimated using a discounted cash flows calculation that applies the FHLB Des Moines curve to aggregated expected maturities of time deposits. In accordance with Subtopic 825-10, Financial Instruments, no value has been assigned to the Company’s long-term relationships with its deposit customers (core value of deposits intangible) as such intangibles are not financial instruments as defined under Subtopic 825-10. OVERNIGHT FEDERAL FUNDS PURCHASED The carrying amount of federal funds purchased is assumed to approximate the fair value. FEDERAL HOME LOAN BANK ADVANCES The fair value of such advances was estimated by discounting the expected future cash flows using current interest rates for advances with similar terms and remaining maturities. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE, SUBORDINATED DEBENTURES AND OTHER BORROWINGS The fair value of these instruments was estimated by discounting the expected future cash flows using derived interest rates approximating market over the contractual maturity of such borrowings. ACCRUED INTEREST PAYABLE The carrying amount of accrued interest payable is assumed to approximate the fair value. LIMITATIONS Fair value estimates are made at a specific point in time and are based on relevant market information about the financial instrument. Additionally, fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business, customer relationships and the value of assets and liabilities that are not considered financial instruments. These estimates do not reflect any premium or discount that could result from offering the Company’s entire holdings of a particular financial instrument for sale at one time. Furthermore, since no market exists for certain of the Company’s financial instruments, fair value estimates may be based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with a high level of precision. Changes in assumptions as well as tax considerations could significantly affect the estimates. Accordingly, based on the limitations described above, the aggregate fair value estimates are not intended to represent the underlying value of the Company, on either a going concern or a liquidation basis.

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