Fair Value Measurements

3 Months Ended

Mar. 31, 2024

Under applicable accounting guidance, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an 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.

We determine the fair values of our financial instruments based on the fair value hierarchy established under applicable accounting guidance, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs used to measure fair value.

For more information regarding the fair value hierarchy and how we measure fair value, see Note 2–Summary of Significant Accounting Policies to the Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2023.

As of March 31, 2024 and December 31, 2023, our assets carried at fair value on a recurring basis were as follows:


	Level 1		Level 2		Level 3		Total Fair Value
March 31, 2024	(In thousands)
Assets
Investment securities:
Corporate bonds	$	—	$	9,667	$	—	$	9,667

Agency bond securities	—		198,527		—		198,527
Agency mortgage-backed securities	—		1,947,474		—		1,947,474
Municipal bonds	—		23,304		—		23,304

Loans held for sale	—		—		4,404		4,404
Total assets	$	—	$	2,178,972	$	4,404	$	2,183,376

December 31, 2023
Assets
Investment securities:
Corporate bonds	$	—	$	9,626	$	—	$	9,626


Agency bond securities	—		200,230		—		200,230
Agency mortgage-backed securities	—		2,003,510		—		2,003,510
Municipal bonds	—		23,635		—		23,635

Loans held for sale	—		—		4,735		4,735
Total assets	$	—	$	2,237,001	$	4,735	$	2,241,736

We based the fair value of our fixed income securities held as of March 31, 2024 and December 31, 2023 on quoted prices in active markets for similar assets. We had no transfers between Level 1, Level 2 or Level 3 assets or liabilities during the three months ended March 31, 2024 or 2023.

A reconciliation of changes in fair value for Level 3 assets or liabilities are not considered material to these consolidated financial statements and therefore are not presented for any of the periods presented.

- 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.

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