XML 42 R29.htm IDEA: XBRL DOCUMENT
v3.24.0.1

Fair Value Measurements | 12 Months Ended
--- | ---
Dec. 31, 2023
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements 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. A description of the valuation methodologies used for the assets measured at fair value on a recurring basis, as well as the general classification of such assets pursuant to the fair value hierarchy, is set forth below. Available-for-sale securities - Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities would include highly liquid exchange traded equities and mutual funds. If quoted market prices are not available, then fair values are estimated by using pricing models or quoted prices of securities with similar characteristics. Level 2 securities include U.S. treasury and agency securities, mortgage-related agency securities, mortgage-related private label securities, obligations of states and political subdivisions and asset backed and other securities. Loans held-for-sale - Mortgage loans originated and intended for sale in the secondary market are classified as mortgage loans held-for-sale and recorded at fair value. The changes in fair value of mortgage loans held-for-sale are measured and recorded as a component of income from mortgage banking services, net, in our consolidated statements of income and comprehensive income. Since estimated fair value is based on sale, exchange, or dealer market prices, these assets are classified within Level 2 of the valuation hierarchy. Mortgage servicing rights - We estimate the fair value of our MSRs using a process that combines the use of a discounted cash flow model and analysis of current market data to arrive at an estimate of fair value. The cash flow assumptions and prepayment assumptions used in the model are based on various factors, with the key assumptions being mortgage prepayment speeds, discount rates, and cost to service. These assumptions are generated and applied based on collateral stratifications including product type, remittance type, geography, delinquency, and coupon dispersion. These assumptions require the use of judgment by management and can have a significant impact on the fair value of the MSRs. We use a third-party consulting firm to assist us with the valuation of MSRs. Because of the nature of the valuation inputs, we classify these valuations as Level 3 in the fair value disclosures. For further details on our level 3 inputs related to MSRs, see Note 5 - Mortgage Servicing Rights. Derivative financial instruments: Banking Activities - Interest rate swaps are valued based on quoted prices for similar assets in an active market with inputs that are observable. These instruments are a component of prepaid expenses and other assets and accrued expenses and other liabilities. The initial and subsequent changes in fair value of the interest rate swaps and the economic hedge derivatives are a component of other noninterest income. Mortgage Banking Activities - The estimated fair value of forward mortgage sales of mortgage-backed securities and forward sale commitments are based on exchange prices or the dealer market price and are recorded as a component of prepaid expenses and other assets, mortgage loans held-for-sale, and/or accrued expenses and other liabilities on the consolidated balance sheet. The initial and subsequent changes in value on forward sales of mortgage-based securities and forward sale commitments are a component of gain on mortgage loans held-for-sale. The estimated fair value of IRLCs is based on the fair value of the related mortgage loans which is based on observable market data for similar loan product type. We adjust the outstanding IRLCs with prospective borrowers based on an expectation that it will be exercised and the loan will be funded. The initial and subsequent changes in the value of IRLCs are a component of gain on mortgage loans held-for-sale. Derivative financial instruments are classified within Level 2 of the valuation hierarchy. The following table sets forth our assets and liabilities measured at fair value on a recurring basis as of December 31,:
| Level 1 |  | Level 2 |  | Level 3 |  |
| Quoted prices in active markets for identical assets |  | Significant other observable inputs |  | Significant unobservable inputs |  | Total Estimated Fair Value
2023 |  |  |  |  |  |  |
Available-for-sale securities | $ | 54,234 |  |  | $ | 462,523 |  |  | $ | — |  |  | $ | 516,757 |
Loans held-for-sale | — |  |  | 54,212 |  |  | — |  |  | 54,212 |
Mortgage servicing rights | — |  |  | — |  |  | 76,701 |  |  | 76,701 |
Derivative financial instruments - assets | — |  |  | 35,080 |  |  | — |  |  | 35,080 |
Derivative financial instruments - liabilities | — |  |  | (20,505) |  |  | — |  |  | (20,505) |
Total | $ | 54,234 |  |  | $ | 531,310 |  |  | $ | 76,701 |  |  | $ | 662,245 |
2022 |  |  |  |  |  |  |
Available-for-sale securities | $ | 56,649 |  |  | $ | 480,324 |  |  | $ | — |  |  | $ | 536,973 |
Loans held-for-sale | — |  |  | 57,323 |  |  | — |  |  | 57,323 |
Mortgage servicing rights | — |  |  | — |  |  | 74,097 |  |  | 74,097 |
Derivative financial instruments - assets | — |  |  | 40,287 |  |  | — |  |  | 40,287 |
Derivative financial instruments - liabilities | — |  |  | (24,527) |  |  | — |  |  | (24,527) |
Total | $ | 56,649 |  |  | $ | 553,407 |  |  | $ | 74,097 |  |  | $ | 684,153 |
There were not any transfers between Level 2 and Level 3 during the years ended December 31, 2023 and 2022. The following table presents a reconciliation for our Level 3 assets measured at fair value on a recurring basis as of and for the years ended December 31,:
| 2023 |  | 2022 |  | 2020
Balance, beginning of year | $ | 74,097 |  |  | $ | 47,392 |  |  | $ | 29,144 |
Total (losses) gains included in earnings | (6,649) |  |  | 12,418 |  |  | (5,606) |
Purchases, issuances, sales and settlements: |  |  |  |  |
Issuances | 9,253 |  |  | 14,287 |  |  | 23,854 |
Balance, end of year | $ | 76,701 |  |  | $ | 74,097 |  |  | $ | 47,392 |
Certain financial assets and financial liabilities are regularly measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Assets and liabilities measured at fair value on a nonrecurring basis include the following: Collateral dependent loans - Loan impairment is reported when full payment under the loan terms is not expected. Fair value is generally based on recent third-party appraisals which are updated on a periodic basis. Impaired loans are carried at the fair value of collateral if the loan is collateral dependent. A portion of the allowance for loan loss is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance. If these allocations cause the allowance for loan loss to require an increase, such increase is reported as a component of the provision for credit losses. Credit losses are charged against the allowance for credit losses when management believes the uncollectibility of a loan is confirmed. When loans are partially charged off, the resulting valuation would be considered Level 3, consisting of appraisals of underlying collateral. Other Real Estate Owned and Foreclosed Assets - Other real estate owned is valued at the time the property is acquired and initially recorded at fair value less costs to sell, establishing a new cost basis. Fair value is generally based on recent third-party real estate appraisals which are updated on a periodic basis. These appraisals may take a single valuation approach using the comparable sales method or use a combination of approaches including the income approach. Adjustments are routinely made by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. The following table sets forth our assets and liabilities that were measured at fair value on a non-recurring basis as of December 31,:
| Level 3
| 2023 |  | 2022
Collateral dependent loans: |  |  |
Commercial and industrial | $ | 2,756 |  |  | $ | 5,229 |
Commercial real estate | — |  |  | 607 |
Residential real estate | 1,448 |  |  | 802 |
Consumer | — |  |  | 3 |
Other | 2,289 |  |  | — |
Total collateral dependent loans | $ | 6,493 |  |  | $ | 6,641 |
Other real estate owned and foreclosed assets, net: |  |  |
Commercial real estate | $ | 3,133 |  |  | $ | 5,391 |
Residential real estate | 967 |  |  | 967 |
Total other real estate owned and foreclosed assets, net: | $ | 4,100 |  |  | $ | 6,358 |
The fair value of the financial assets in the table above utilize the market approach valuation technique, with discount adjustments for differences between comparable sales. Fair value of financial instruments not carried at fair value: The carrying amounts and estimated fair values of financial instruments not carried at fair value are as follows as of December 31,:
|  |  | Estimated Fair Value
| Carrying Value |  | Total |  | Level 1 |  | Level 2 |  | Level 3
2023 |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 479,362 |  |  | $ | 479,362 |  |  | $ | 479,362 |  |  | $ | — |  |  | $ | — |
Securities held-to-maturity | 36,983 |  |  | 32,181 |  |  | — |  |  | 32,181 |  |  | — |
Loans (excluding collateral dependent loans at fair value) | 6,260,603 |  |  | 6,121,749 |  |  | — |  |  | — |  |  | 6,121,749 |
Restricted equity securities | 38,072 |  |  | 38,072 |  |  | — |  |  | 38,072 |  |  | — |
Accrued interest receivable | 37,099 |  |  | 37,099 |  |  | — |  |  | 2,220 |  |  | 34,879 |
Liabilities: |  |  |  |  |  |  |  |  |
Deposits (excluding demand deposits) | $ | 4,309,057 |  |  | $ | 4,298,164 |  |  | $ | 2,503,451 |  |  | $ | 1,794,713 |  |  | $ | — |
Securities sold under agreements to repurchase | 24,693 |  |  | 24,693 |  |  | — |  |  | 24,693 |  |  | — |
FHLB advances | 389,468 |  |  | 389,468 |  |  | — |  |  | 389,468 |  |  | — |
Subordinated debt, net | 75,313 |  |  | 72,073 |  |  | — |  |  | 72,073 |  |  | — |
Accrued interest payable | 13,580 |  |  | 13,580 |  |  | — |  |  | 13,580 |  |  | — |
2022 |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 343,526 |  |  | $ | 343,526 |  |  | $ | 343,526 |  |  | $ | — |  |  | $ | — |
Securities held-to-maturity | 38,901 |  |  | 33,218 |  |  | — |  |  | 33,218 |  |  | — |
Loans (excluding impaired loans) | 5,871,274 |  |  | 5,756,197 |  |  | — |  |  | — |  |  | 5,756,197 |
Restricted equity securities | 50,215 |  |  | 50,215 |  |  | — |  |  | 50,215 |  |  | — |
Accrued interest receivable | 28,543 |  |  | 28,543 |  |  | — |  |  | 2,049 |  |  | 26,494 |
Liabilities: |  |  |  |  |  |  |  |  |
Deposits (excluding demand deposits) | $ | 3,732,215 |  |  | $ | 3,696,438 |  |  | $ | 2,810,193 |  |  | $ | 886,245 |  |  | $ | — |
Securities sold under agreements to repurchase | 36,721 |  |  | 36,721 |  |  | — |  |  | 36,721 |  |  | — |
FHLB advances | 643,885 |  |  | 643,885 |  |  | — |  |  | 643,885 |  |  | — |
Convertible notes payable, net | 5,355 |  |  | 5,329 |  |  | — |  |  | 5,329 |  |  | — |
Subordinated debt, net | 74,880 |  |  | 71,618 |  |  | — |  |  | 71,618 |  |  | — |
Accrued interest payable | 5,798 |  |  | 5,798 |  |  | — |  |  | 5,798 |  |  | — |

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 -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
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration