XML 38 R26.htm IDEA: XBRL DOCUMENT v3.20.4
FAIR VALUE OF FINANCIAL INSTRUMENTS
 3 Months Ended
Dec. 31, 2020
Fair Value Disclosures [Abstract]  
FAIR VALUE OF FINANCIAL INSTRUMENTS FAIR VALUES OF FINANCIAL INSTRUMENTS
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.

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 value of debt securities available for sale, categorized primarily as Level 2, is recorded using prices obtained from independent asset pricing services that are based on observable transactions, but not quoted markets. Management reviews the prices obtained from independent asset pricing servicing for unusual fluctuations and comparison to current market trading activity.

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 December 31, 2020
(Dollars in Thousands)TotalLevel 1Level 2Level 3
Debt securities AFS    
SBA securities$162,009 $— $162,009 $— 
Obligations of states and political subdivisions2,840 — 2,840 — 
Non-bank qualified obligations of states and political subdivisions309,638 — 309,638 — 
Asset-backed securities322,876 — 322,876 — 
Mortgage-backed securities430,761 — 430,761 — 
Total debt securities AFS$1,228,124 $— $1,228,124 $— 
Common equities and mutual funds(1)
$3,148 $3,148 $— $— 
Non-marketable equity securities(2)
$3,896 $— $— $— 
(1) Equity securities at fair value are included within other assets on the Condensed Consolidated Statements of Financial Condition at December 31, 2020 and September 30, 2020.
(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, 2020
(Dollars in Thousands)TotalLevel 1Level 2Level 3
Debt securities AFS    
SBA securities$164,955 $— $164,955 $— 
Obligations of states and political subdivisions841 — 841 — 
Non-bank qualified obligations of states and political subdivisions323,774 — 323,774 — 
Asset-backed securities324,925 — 324,925 — 
Mortgage-backed securities453,607 — 453,607 — 
Total debt securities AFS$1,268,102 $— $1,268,102 $— 
Common equities and mutual funds(1)
$2,969 $2,969 $— $— 
Non-marketable equity securities(2)
$2,784 $— $— $— 
(1) Equity securities at fair value are included within other assets on the Condensed Consolidated Statements of Financial Condition at December 31, 2020 and September 30, 2020.
(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 individually evaluated for risk of credit loss and repayment is expected to be solely provided by the values of the underlying collateral, the Company measures fair value on a nonrecurring basis. Fair value is determined by the fair value of the underlying collateral less estimated costs to sell. The fair value of the collateral is determined based on internal estimates and/or assessments provided by third-party appraisers and the valuation relies on discount rates ranging from 4% to 90%.
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 December 31, 2020
(Dollars in Thousands)TotalLevel 1Level 2Level 3
Impaired loans and leases, net    
Commercial finance$4,080 $— $— $4,080 
Total National Lending4,080 — — 4,080 
Commercial real estate and operating9,029 — — 9,029 
Total Community Banking9,029 — — 9,029 
     Total impaired loans and leases, net13,109 — — 13,109 
Foreclosed assets, net7,186 — — 7,186 
Total$20,295 $— $— $20,295 

 Fair Value At September 30, 2020
(Dollars in Thousands)TotalLevel 1Level 2Level 3
Impaired loans and leases, net    
Commercial finance$9,240 $— $— $9,240 
Total National Lending9,240 — — 9,240 
Commercial real estate and operating20 — — 20 
Total Community Banking20 — — 20 
     Total impaired loans and leases, net9,260 — — 9,260 
Foreclosed assets, net9,957 — — 9,957 
Total$19,217 $— $— $19,217 

 Quantitative Information About Level 3 Fair Value Measurements
(Dollars in Thousands)
Fair Value at
December 31, 2020
Fair Value at
September 30, 2020
Valuation
Technique		Unobservable InputRange of Inputs
Impaired loans and leases, net$13,109 9,260 Market approach
Appraised values(1)
4% - 90%
Foreclosed assets, net$7,186 9,957 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 90%.

Management discloses the estimated fair value of financial instruments, including assets and liabilities on and off the Condensed Consolidated Statements of Financial Condition, for which it is practicable to estimate fair value. These fair value estimates were made at December 31, 2020 and September 30, 2020 based on relevant market information and information about financial instruments. Fair value estimates are intended to represent the price at which an asset could be sold or a liability could be settled. However, since there is no active market for certain financial instruments of the Company, the estimates of fair value are subjective in nature, involve uncertainties, and include matters of significant judgment. Changes in assumptions as well as tax considerations could significantly affect the estimated values. Accordingly, 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.
The following tables present the carrying amount and estimated fair value of the financial instruments held by the Company:
 December 31, 2020
(Dollars in Thousands)Carrying
Amount		Estimated
Fair Value		Level 1Level 2Level 3
Financial assets
Cash and cash equivalents$1,586,451 $1,586,451 $1,586,451 $— $— 
Debt securities available for sale1,228,124 1,228,124 — 1,228,124 — 
Debt securities held to maturity81,328 82,927 — 82,927 — 
Common equities and mutual funds(1)
3,148 3,148 3,148 — — 
Non-marketable equity securities(1)(2)
17,646 17,646 — 13,750 — 
Loans held for sale133,659 133,659 — 133,659 — 
Loans and leases receivable3,439,564 3,426,720 — — 3,426,720 
Federal Reserve Bank and Federal Home Loan Bank stocks27,138 27,138 — 27,138 — 
Accrued interest receivable17,133 17,133 17,133 — — 
Financial liabilities
Deposits6,207,791 6,208,167 6,040,903 167,265 — 
Other short- and long-term borrowings96,760 98,873 — 98,873 — 
Accrued interest payable2,068 2,068 2,068 — — 
(1) Equity securities at fair value are included within other assets on the Condensed Consolidated Statements of Financial Condition at December 31, 2020 and September 30, 2020.
(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, 2020
(Dollars in Thousands)Carrying
Amount		Estimated
Fair Value		Level 1Level 2Level 3
Financial assets
Cash and cash equivalents$427,367 $427,367 $427,367 $— $— 
Debt securities available for sale1,268,102 1,268,102 — 1,268,102 — 
Debt securities held to maturity92,610 93,745 — 93,745 — 
Common equities and mutual funds(1)
2,969 2,969 2,969 — — 
Non-marketable equity securities(1)(2)
14,784 14,784 — 12,000 — 
Loans held for sale183,577 183,577 — 183,577 — 
Loans and leases receivable3,314,140 3,307,037 — — 3,307,037 
Federal Reserve Bank and Federal Home Loan Bank stocks27,138 27,138 — 27,138 — 
Accrued interest receivable16,628 16,628 16,628 — — 
Financial liabilities
Deposits4,979,200 4,980,073 4,705,028 275,045 — 
Overnight federal funds purchased— — — — — 
Federal Home Loan Bank advances— — — — — 
Other short- and long-term borrowings98,224 100,185 — 100,185 — 
Accrued interest payable1,923 1,923 1,923 — — 
(1) Equity securities at fair value are included within other assets on the Condensed Consolidated Statements of Financial Condition at December 31, 2020 and September 30, 2020.
(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.