Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of recorded amount of assets and liabilities measured at fair value on a recurring basis

The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 and 2021:


(dollars in thousands)	Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Total (Fair Value)
December 31, 2022
Assets:
Investment securities available-for-sale:
U.S. treasury bonds	$	—	$	46,326	$	—	$	46,326
U.S. agency securities	—		669,728		—		669,728
Residential mortgage-backed securities	—		820,502		—		820,502
Corporate mortgage-backed securities	—		50,214		—		50,214
Municipal bonds	—		10,088		—		10,088
Corporate bonds	—		1,808		—		1,808
Loans held for sale	—		6,734		—		6,734
Interest rate caps	—		31,039		—		31,039
Mortgage banking derivatives	—		—		93		93
Total assets measured at fair value on a recurring basis as of December 31, 2022	$	—	$	1,636,439	$	93	$	1,636,532
Liabilities:
Interest rate swap derivatives	$	—	$	—	$	—	$	—
Credit risk participation agreements	—		2		—		2
Interest rate caps	—		30,065		—		30,065
Total liabilities measured at fair value on a recurring basis as of December 31, 2022	$	—	$	30,067	$	—	$	30,067

December 31, 2021
Assets:
Investment securities available-for-sale:
U.S. treasury bonds	$	—	$	49,458	$	—	$	49,458
U.S. agency securities	—		622,387		—		622,387
Residential mortgage-backed securities	—		1,677,673		—		1,677,673
Municipal bonds	—		145,431		—		145,431
Corporate bonds	—		118,459		10,000		128,459
Loans held for sale	—		47,218		—		47,218
Interest rate caps	—		5,197		—		5,197
Mortgage banking derivatives	—		—		636		636
Total assets measured at fair value on a recurring basis as of December 31, 2021	$	—	$	2,665,823	$	10,636	$	2,676,459
Liabilities:
Interest rate swap derivatives	$	—	$	—	$	—	$	—
Credit risk participation agreements	—		47		—		47
Interest rate caps	—		5,147		—		5,147
Total liabilities measured at fair value on a recurring basis as of December 31, 2021	$	—	$	5,194	$	—	$	5,194

Schedule of aggregate fair value and the aggregate unpaid principal balance for loans held for sale measured at fair value

The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance for loans held for sale measured at fair value as of December 31, 2022 and 2021.


	December 31, 2022
(dollars in thousands)	Fair Value		Aggregate Unpaid Principal Balance		Difference
Loans held for sale	$	6,734	$	6,775	$	(41)


	December 31, 2021
(dollars in thousands)	Fair Value		Aggregate Unpaid Principal Balance		Difference
Loans held for sale	$	47,218	$	46,623	$	595

Schedule of the reconciliation of activity for assets and liabilities measured at fair value based on Significant Other Unobservable Inputs (Level 3)

The following is a reconciliation of activity for assets and liabilities measured at fair value based on Significant Other Unobservable Inputs (Level 3):


(dollars in thousands)	Investment Securities		Mortgage Banking Derivatives		Total
Assets:
Beginning balance at January 1, 2022	$	10,000	$	636	$	10,636
Realized loss included in earnings	—		(543)		(543)
Reclassified to investment securities held-to-maturity	(10,000)		—		(10,000)
Principal redemption	—		—		—
Ending balance at December 31, 2022	$	—	$	93	$	93


(dollars in thousands)	Investment Securities		Mortgage Banking Derivatives		Total
Assets:
Beginning balance at January 1, 2021	$	1,500	$	5,213	$	6,713
Realized loss included in earnings	—		(4,577)		(4,577)
Reclass Level 2 to 3	10,000		—		10,000
Principal redemption	(1,500)		—		(1,500)
Ending balance at December 31, 2021	$	10,000	$	636	$	10,636

Liabilities:
Beginning balance at January 1, 2021	$	—	$	—	$	—
Realized gain included in earnings	—		—		—
Ending balance at December 31, 2021	$	—	$	—	$	—

Schedule of assets measured at fair value on recurring or nonrecurring basis

Level 3 assets measured at fair value on a recurring or nonrecurring basis as of December 31, 2022 and 2021, the significant unobservable inputs used in the fair value measurements were as follows:


			December 31, 2022					December 31, 2021
(dollars in thousands)	Valuation Technique	Description	Range	Weighted Average (1)		Fair Value		Weighted Average (1)		Fair Value
Mortgage banking derivatives	Pricing Model	Pull Through Rate	84% - 100%	83.80	%	$	93	86.40	%	$	636

(1) Unobservable inputs for mortgage banking derivatives were weighted by loan amount.

Schedule of assets measured at fair value on nonrecurring basis

Assets measured at fair value on a nonrecurring basis are included in the table below: There were no liabilities measured at fair value on a non-recurring basis at December 31, 2022 and 2021.


(dollars in thousands)	Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Total (Fair Value)
December 31, 2022
Individually assessed loans:
Commercial	$	—	$	—	$	1,790	$	1,790
Income producing - commercial real estate	—		—		3,131		3,131
Owner occupied - commercial real estate	—		—		19,187		19,187
Real estate mortgage - residential	—		—		1,404		1,404
Consumer	—		—		3		3
Other real estate owned	—		—		1,962		1,962
Total assets measured at fair value on a nonrecurring basis as of December 31, 2022	$	—	$	—	$	27,477	$	27,477


(dollars in thousands)	Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Total (Fair Value)
December 31, 2021
Individually assessed loans:
Commercial	$	—	$	—	$	8,121	$	8,121
Income producing - commercial real estate	—		—		17,415		17,415
Owner occupied - commercial real estate	—		—		42		42
Real estate mortgage - residential	—		—		1,779		1,779
Construction - commercial and residential	—		—		3,093		3,093
Home equity	—		—		366		366
PPP loans					1,365		1,365
Other real estate owned	—		—		1,635		1,635
Total assets measured at fair value on a nonrecurring basis as of December 31, 2021	$	—	$	—	$	33,816	$	33,816

Schedule of estimated fair values of financial instruments

Estimated fair values of the Company’s financial instruments at December 31, 2022 and 2021 are as follows:


					Fair Value Measurements
(dollars in thousands)	Carrying Value		Fair Value		Quoted Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
December 31, 2022
Assets
Cash and due from banks	$	12,655	$	12,655	$	12,655			$	—
Federal funds sold	33,927		33,927		—		33,927		—
Interest bearing deposits with other banks	265,272		265,272		—		265,272		—
Investment securities available-for-sale	1,598,666		1,598,666		—		1,598,666		—
Investment securities held-to-maturity	1,093,374		967,940		—		967,940		—
Federal Reserve and Federal Home Loan Bank stock	65,067		N/A		—		—		—
Loans held for sale	6,734		6,734		—		6,734		—
Loans	7,635,632		7,501,484		—				7,501,484
Bank owned life insurance	110,998		110,998		—		110,998		—
Annuity investment	13,869		13,869		—		13,869		—
Mortgage banking derivatives	93		93		—				93
Interest rate caps	31,039		31,039		—		31,039		—

Liabilities
Noninterest bearing deposits	3,150,751		3,150,751		—		3,150,751		—
Interest bearing deposits	4,778,932		4,778,932		—		4,778,932		—
Time deposits	783,499		790,418		—		790,418		—
Customer repurchase agreements	35,100		35,100		—		35,100		—
Borrowings	1,044,795		1,049,459		—		1,049,459		—

Credit risk participation agreements	2		2		—		2		—
Interest rate caps	30,065		30,065		—		30,065		—

December 31, 2021
Assets
Cash and due from banks	$	12,886	$	12,886	$	12,886	$	—	$	—
Federal funds sold	20,391		20,391		—		20,391		—
Interest bearing deposits with other banks	1,680,945		1,680,945		—		1,680,945		—
Investment securities available-for-sale	2,623,408		2,623,408		—		2,611,408		10,000
Federal Reserve and Federal Home Loan Bank stock	34,153		N/A		—		—		—
Loans held for sale	47,218		47,218		—		47,218		—
Loans	7,065,598		6,930,929		—		—		6,930,929
Mortgage banking derivatives	636		636		—		—		636
Interest rate swap derivatives	5,197		5,197		—		5,197		—

Liabilities
Noninterest bearing deposits	3,277,956		3,277,956		—		3,277,956		—
Interest bearing deposits	5,974,502		5,974,502		—		5,974,502		—
Time deposits	729,082		736,001		—		736,001		—
Customer repurchase agreements	23,918		23,918		—		23,918		—
Borrowings	369,670		374,326		—		374,326		—

Credit risk participation agreements,	47		47		—		47		—
Interest rate caps	5,147		5,147		—		5,147		—

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are 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. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details