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Fair Value (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Summary of Financial Assets Measured at Fair Value on Recurring Basis

The following tables present the balances of financial assets measured at fair value on a recurring basis as of the dates stated.

		September 30, 2023
(Dollars in thousands)		Total				Level 1				Level 2				Level 3
Securities available for sale
State and municipals		$	41,277			$	—			$	41,277			$	—
U.S. Treasury and agencies			59,412				—				59,412				—
Mortgage backed securities			180,733				—				173,372				7,361
Corporate bonds			32,508				—				28,709				3,799
Total securities available for sale		$	313,930			$	—			$	302,770			$	11,160
Other assets
MSR assets		$	29,139			$	—			$	—			$	29,139
Rabbi trust assets			515				515				—				—
Mortgage derivative asset			449				—				449				—
Interest rate swap asset			142				—				142				—
Other liabilities
Interest rate swap liability		$	142			$	—			$	142			$	—

		December 31, 2022
(Dollars in thousands)		Total				Level 1				Level 2				Level 3
Securities available for sale
State and municipals		$	50,993			$	—			$	50,993			$	—
U.S. Treasury and agencies			67,162				—				67,162				—
Mortgage backed securities			196,336				—				188,719				7,617
Corporate bonds			39,850				—				35,561				4,289
Total securities available for sale		$	354,341			$	—			$	342,435			$	11,906
Other assets
MSR assets		$	28,991			$	—			$	—			$	28,991
Rabbi trust assets			584				584				—				—
Mortgage derivative asset			112				—				112				—
Interest rate swap asset			95				—				95				—
Other liabilities
Mortgage derivative liability		$	24			$	—			$	24			$	—
Interest rate swap liability			95				—				95				—

Summary of changes incorporate bonds and mortgage backed securities using level 3 inputs

The following table presents the change in corporate bonds and mortgage backed securities using Level 3 inputs for the periods stated.

(Dollars in thousands)		Corporate Bonds				Mortgage Backed Securities
Balance as of December 31, 2022		$	4,289			$	7,617
Transfers from Level 3 to Level 2			(500	)			—
Fair value adjustments			10				(256	)
Balance as of September 30, 2023		$	3,799			$	7,361

Summary of Change in MSR Assets

The following table presents the change in MSR assets as of the dates and for the periods stated.

(Dollars in thousands)		MSR Assets
Balance as of December 31, 2022		$	28,991
Additions			874
Fair value adjustments			(726	)
Balance as of September 30, 2023		$	29,139

Certain financial assets are measured at fair value on a nonrecurring basis in accordance with GAAP. The following describes the valuation techniques used by the Company to measure certain financial assets recorded at fair value on a nonrecurring basis in the financial statements.

Summary of Assets Measured at Fair Value

The following tables summarize assets that were measured at fair value on a nonrecurring basis as of the dates stated.

		September 30, 2023
(Dollars in thousands)		Total				Level 1				Level 2				Level 3
Other equity investments		$	22,061			$	—			$	22,061			$	—
Collateral-dependent loans			68,612				—				—				68,612
Loans held for sale			69,640				—				69,640				—

		December 31, 2022
(Dollars in thousands)		Total				Level 1				Level 2				Level 3
Other equity investments		$	23,776			$	—			$	23,776			$	—
Impaired loans - Pre-ASC 326			54,906				—				—				54,906
Loans held for sale			69,534				—				69,534				—
OREO			195				—				—				195

Summary of Quantitative Information about Level 3 Fair Value Measurements

The following tables present quantitative information about Level 3 fair value measurements as of the dates stated.

(Dollars in thousands)		Balance as of September 30, 2023				Unobservable Input		Range
Collateral-dependent loans
Discounted appraised value technique			68,612			Selling Costs		7% - 10%

(Dollars in thousands)		Balance as of December 31, 2022				Unobservable Input		Range
Impaired loans - Pre-ASC 326
Discounted appraised value technique			54,761			Selling Costs		7% - 10%
Discounted cash flows technique			145			Discount Rate		4% - 11%
OREO
Discounted appraised value technique			195			Selling Costs			7	%

Summary of Estimated Fair Values and Related Carrying Amounts and Valuation Level of Financial Instruments

The following tables present the estimated fair values, related carrying amounts, and valuation level of the financial instruments as of the dates stated.

		September 30, 2023
										Fair Value Measurements
(Dollars in thousands)		Carrying Value				Fair Value				Level 1				Level 2				Level 3
Financial Assets
Cash and due from banks		$	238,573			$	238,573			$	238,573			$	—			$	—
Federal funds sold			2,584				2,584				2,584				—				—
Securities available for sale			313,930				313,930				—				302,770				11,160
Restricted equity investments			16,006				16,006				—				16,006				—
Other equity investments			22,061				22,061				—				22,061				—
Other investments			28,453				28,453				—				—				28,453
PPP loans receivable, net			6,414				6,414				—				—				6,414
Loans held for investment, net			2,390,325				2,303,005				—				—				2,303,005
Accrued interest receivable			16,387				16,387				—				16,387				—
Bank owned life insurance			48,136				48,136				—				48,136				—
MSR assets			29,139				29,139				—				—				29,139
Financial Liabilities							—												—
Noninterest-bearing demand deposits		$	572,969			$	572,969			$	572,969			$	—			$	—
Interest-bearing demand and money market deposits			1,350,601				1,350,601				—				1,350,601				—
Savings deposits			124,321				124,321				—				124,321				—
Time deposits			728,260				721,265				—				—				721,265
FHLB borrowings			150,000				156,282				—				156,282				—
FRB borrowings			65,000				65,000				—				65,000				—
Subordinated notes, net			39,871				37,335				—				—				37,335

		December 31, 2022
										Fair Value Measurements
(Dollars in thousands)		Carrying Value				Fair Value				Level 1				Level 2				Level 3
Financial Assets
Cash and due from banks		$	77,274			$	77,274			$	77,274			$	—			$	—
Federal funds sold			1,426				1,426				1,426				—				—
Securities available for sale			354,341				354,341				—				342,435				11,906
Restricted equity investments			21,257				21,257				—				21,257				—
Other equity investments			23,776				23,776				—				23,776				—
Other investments			24,672				24,672				—				—				24,672
PPP loans receivable, net			11,967				11,967				—				—				11,967
Loans held for investment, net			2,368,352				2,321,042				—				—				2,321,042
Accrued interest receivable			11,569				11,569				—				11,569				—
Bank owned life insurance			47,245				47,245				—				47,245				—
MSR assets			28,991				28,991				—				—				28,991
Financial Liabilities
Noninterest-bearing demand deposits		$	640,101			$	640,101			$	640,101			$	—			$	—
Interest-bearing demand and money market deposits			1,318,799				1,318,799				—				1,318,799				—
Savings deposits			151,646				151,646				—				151,646				—
Time deposits			391,961				352,294				—				—				352,294
FHLB borrowings			311,700				311,700				—				311,700				—
FRB borrowings			51				51				—				51				—
Subordinated notes, net			39,920				37,689				—				—				37,689

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Tabular disclosure of input and valuation technique used to measure fair value and change in valuation approach and technique used to measure similar asset in prior period by class of asset or liability on non-recurring basis.

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Tabular disclosure of assets measured at fair value measured on a recurring or nonrecurring basis. Includes, but is not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2.

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Tabular disclosure of assets, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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Tabular disclosure of activity in the balance of servicing assets subsequently measured at amortized cost. Includes, but is not limited to, beginning and ending balances, additions, disposals, and amortization.

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