ASC Topic 820, “Fair Value Measurement,” defines fair value, establishes a framework for measuring fair value including a three‑level valuation hierarchy, and expands disclosures about fair value measurements. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date reflecting assumptions that a market participant would use when pricing an asset or liability. The hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:

•Level 2: Observable inputs other than Level 1, including quoted prices for similar assets and liabilities in active markets, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data, either directly or indirectly, for substantially the full term of the financial instrument. This category generally includes agency residential CMOs, agency commercial and residential MBS, municipal securities, collateralized loan obligations, registered publicly rated private label CMOs, corporate debt securities, SBA securities, and asset-backed securitizations.

•Level 3: Inputs to a valuation methodology that are unobservable, supported by little or no market activity, and significant to the fair value measurement. These valuation methodologies generally include pricing models, discounted cash flow models, or a determination of fair value that requires significant management judgment or estimation. This category also includes observable inputs from a pricing service not corroborated by observable market data, and includes some of our corporate debt securities, and our equity warrants and credit-linked notes.

We use fair value to measure certain assets and liabilities on a recurring basis, primarily AFS securities and derivatives. For assets measured at the lower of cost or fair value, the fair value measurement criteria may or may not be met during a reporting period and such measurements are therefore considered “nonrecurring” for purposes of disclosing our fair value measurements. Fair value is used on a nonrecurring basis to adjust carrying values for individually evaluated loans and leases and OREO and also to record impairment on certain assets, such as goodwill, CDI, and other long-lived assets.

The Company also holds SBIC investments measured at fair value using the NAV per share practical expedient that are not required to be classified in the fair value hierarchy. At December 31, 2024, the fair value of these investments was $109.6 million.


	Fair Value Measurements as of
	December 31, 2024
Measured on a Recurring Basis	Total		Level 1		Level 2		Level 3
	(In thousands)
Securities available‑for‑sale:
Agency residential MBS	$	861,840	$	—	$	861,840	$	—

Agency commercial MBS	51,564		—		51,564		—
Agency residential CMOs	446,631		—		446,631		—
Municipal securities	594		—		594		—
Corporate debt securities	257,712		—		255,582		2,130
Private label residential CMOs	316,910		—		316,910		—
Collateralized loan obligations	279,416		—		279,416		—
Private label commercial MBS	12,372		—		12,372		—
Asset-backed securities	15,600		—		15,600		—
SBA securities	4,200		—		4,200		—
Total securities available-for-sale	$	2,246,839	$	—	$	2,244,709	$	2,130
Equity investments with readily determinable fair values	$	3	$	3	$	—	$	—
Derivatives (1):
Derivative assets:
Cash flow hedges	1,442		—		1,442		—
Interest rate and foreign exchange contracts	7,031		—		7,031		—
Equity warrants	3,763		—		—		3,763
Derivative liabilities:
Interest rate and foreign exchange contracts	7,562		—		7,562		—
Credit-linked notes	118,838		—		—		118,838

____________________


	Fair Value Measurements as of
	December 31, 2023
Measured on a Recurring Basis	Total		Level 1		Level 2		Level 3
	(In thousands)
Securities available‑for‑sale:
Agency residential MBS	$	1,187,609	$	—	$	1,187,609	$	—
Municipal securities	28,083		—		28,083		—
Agency commercial MBS	253,306		—		253,306		—
Agency residential CMOs	284,334		—		284,334		—
U.S. Treasury securities	4,968		4,968		—		—
Corporate debt securities	267,232		—		226,983		40,249
Private label commercial MBS	20,813		—		20,813		—
Collateralized loan obligations	108,416		—		108,416		—
Private label residential CMOs	158,412		—		158,412		—
Asset-backed securities	19,952		—		19,952		—
SBA securities	13,739		—		13,739		—
Total securities available-for-sale	$	2,346,864	$	4,968	$	2,301,647	$	40,249
Equity investments with readily determinable fair values	$	1	$	1	$	—	$	—
Derivatives (1):
Derivative assets:
Interest rate and foreign exchange contracts	8,309		—		8,309		—
Equity warrants	3,689		—		—		3,689
Derivative liabilities:
Cash flow hedges	4,090		—		4,090		—
Interest rate and foreign exchange contracts	6,459		—		6,459		—
Credit-linked notes	123,116		—		—		123,116

During the year ended December 31, 2024, there was a $21,000 transfer from Level 3 equity warrants to Level 1 equity investments with readily determinable fair values measured on a recurring basis. There was also an $38.1 million transfer of corporate debt securities from Level 3 to Level 2 during the year ended December 31, 2024.

The following table presents information about quantitative inputs and assumptions used to determine the fair values provided by our third-party pricing service for our Level 3 corporate debt securities available-for-sale measured at fair value on a recurring basis as of the date indicated:

The following table presents information about the quantitative inputs and assumptions used in the modified Black-Scholes option pricing model to determine the fair value for our Level 3 equity warrants measured at fair value on a recurring basis as of the date indicated:

The following table summarizes activity for our Level 3 corporate debt securities available-for-sale measured at fair value on a recurring basis for the years indicated:


	Year Ended December 31,
Level 3 Corporate Debt Securities	2024		2023
	(In thousands)
Balance, beginning of year	$	40,249	$	—

Total included in other comprehensive income	30		(11,501)




Transfer from Level 2	—		51,750
Transfer to Level 2	(38,149)		—


Balance, end of year	$	2,130	$	40,249

Unrealized net gains (losses) for the period included in other
comprehensive income for securities held at quarter-end	$	(870)	$	(11,501)


	Year Ended December 31,
Level 3 Equity Warrants	2024		2023		2022
	(In thousands)
Balance, beginning of year	$	3,689	$	4,048	$	3,555
Total included in earnings	408		(718)		2,490

Exercises and settlements (1)	(829)		(218)		(2,675)
Issuances	516		613		696
Transfers to Level 1 (equity investments with readily
determinable fair values)	(21)		(36)		(18)
Balance, end of year	$	3,763	$	3,689	$	4,048

(1) Includes the exercise of warrants that upon exercise become equity securities in public companies. These are often subject to lock-up restrictions that must be met before the equity security can be sold, during which time they are reported as equity investments with readily determinable fair values.


	Year Ended December 31,
Level 3 Credit-Linked Notes	2024		2023		2022
	(In thousands)
Balance, beginning of year	$	123,116	$	132,030	$	—
Total included in earnings	(1,411)		5,404		911
Total included in other comprehensive income	2,589		(7,794)		—


Issuances	—		—		132,815
Principal payments	(5,456)		(6,524)		(1,696)





Balance, end of year	$	118,838	$	123,116	$	132,030


	Fair Value Measurement as of
	December 31, 2024
Measured on a Non‑Recurring Basis	Total		Level 1		Level 2		Level 3
	(In thousands)
Individually evaluated loans and leases	$	58,948	$	—	$	45,962	$	12,986

OREO	3,372		—		3,372		—
Total non-recurring	$	62,320	$	—	$	49,334	$	12,986


	Fair Value Measurement as of
	December 31, 2023
Measured on a Non‑Recurring Basis	Total		Level 1		Level 2		Level 3
	(In thousands)
Individually evaluated loans and leases	$	6,402	$	—	$	4,051	$	2,351

OREO	3,422		—		3,422		—
Total non-recurring	$	9,824	$	—	$	7,473	$	2,351

The following table presents losses recognized on assets measured on a nonrecurring basis for the years indicated:


	Year Ended December 31,
Loss on Assets Measured on a Non‑Recurring Basis	2024		2023		2022
	(In thousands)
Individually evaluated loans and leases	$	35,699	$	4,403	$	6,532

OREO	983		1,307		29
Total net loss	$	36,682	$	5,710	$	6,561

December 31, 2024

Valuation

Unobservable

Input or

Weighted

Asset

Fair Value

Technique

Inputs

Range

Average

(Dollars in thousands)

Individually evaluated

loans and leases

5,815

Discounted cash flows

Discount rates

8.00% - 8.25%

8.03%

Individually evaluated

loans and leases

7,171

Third-party appraisals

No discounts

Total non-recurring Level 3

12,986

ASC Topic 825, “Financial Instruments,” requires disclosure of the estimated fair value of certain financial instruments and the methods and significant assumptions used to estimate such fair values. Additionally, certain financial instruments and all nonfinancial instruments are excluded from the applicable disclosure requirements.


	December 31, 2024
	Carrying		Estimated Fair Value
	Amount		Total		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets:
Cash and due from banks	$	192,006	$	192,006	$	192,006	$	—	$	—
Interest‑earning deposits in financial institutions	2,310,206		2,310,206		2,310,206		—		—
Securities available‑for‑sale	2,246,839		2,246,839		—		2,244,709		2,130
Securities held-to-maturity	2,306,149		2,156,694		173,283		1,976,265		7,146
Investment in FRB and FHLB stock	147,773		147,773		—		147,773		—
Loans held for sale	26,331		26,562		—		26,562		—
Loans and leases held for investment, net	23,542,303		22,412,073		—		45,962		22,366,111
Equity investments with readily determinable fair values	3		3		3		—		—
Equity warrants	3,763		3,763		—		—		3,763
Cash flow hedges	1,442		1,442		—		1,442		—
Interest rate and foreign exchange contracts	7,031		7,031		—		7,031		—
Servicing rights	19,623		21,040		—		—		21,040

Financial Liabilities:
Demand, checking, savings and money market deposits	22,625,485		22,625,485		—		22,625,485		—
Time deposits	4,566,424		4,556,575		—		4,556,575		—
Borrowings	1,391,814		1,382,742		—		1,263,904		118,838
Subordinated debt	941,923		901,532		—		901,532		—
Interest rate and foreign exchange contracts	7,562		7,562		—		7,562		—


	December 31, 2023
	Carrying		Estimated Fair Value
	Amount		Total		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets:
Cash and due from banks	$	202,427	$	202,427	$	202,427	$	—	$	—
Interest‑earning deposits in financial institutions	5,175,149		5,175,149		5,175,149		—		—
Securities available‑for‑sale	2,346,864		2,346,864		4,968		2,301,647		40,249
Securities held-to-maturity	2,287,291		2,168,316		175,579		1,976,015		16,722
Investment in FHLB stock	126,346		126,346		—		126,346		—
Loans held for sale	122,757		126,646		—		126,646		—
Loans and leases held for investment, net	25,208,000		23,551,725		—		4,051		23,547,674
Equity investments with readily determinable fair values	1		1		1		—		—
Equity warrants	3,689		3,689		—		—		3,689
Interest rate and foreign exchange contracts	8,309		8,309		—		8,309		—
Servicing rights	22,174		22,174		—		—		22,174

Financial Liabilities:
Demand, checking, savings and money market deposits	23,768,896		23,768,896		—		23,768,896		—
Time deposits	6,632,873		6,732,246		—		6,732,246		—
Borrowings	2,911,322		2,908,527		—		2,785,411		123,116
Subordinated debt	936,599		851,625		—		851,625		—
Cash flow hedges	4,090		4,090		—		4,090		—
Interest rate and foreign exchange contracts	6,459		6,459		—		6,459		—

The following is a description of the valuation methodologies used to measure our assets recorded at fair value (under ASC Topic 820, “Fair Value Measurement”) and for estimating fair value for financial instruments not recorded at fair value (under ASC Topic 825).

Securities available‑for‑sale. AFS securities are measured and carried at fair value on a recurring basis, net of the allowance for credit losses. Unrealized gains and losses on AFS securities are reported as a component of “Accumulated other comprehensive loss, net” in the consolidated balance sheets. See Note 4. Investment Securities for further information on unrealized gains and losses on AFS securities.

Fair value for securities categorized as Level 1, which are publicly traded securities, are based on readily available quoted prices. In determining the fair value of the securities categorized as Level 2, we obtain a report from a nationally recognized broker‑dealer detailing the fair value of each investment security we hold as of each reporting date. The broker‑dealer uses observable market information to value our securities, with the primary source being a nationally recognized pricing service. We review the market prices provided by the broker‑dealer for our securities for reasonableness based on our understanding of the marketplace and we consider any credit issues related to the securities. As we have not made any adjustments to the market quotes provided to us and they are based on observable market data, they have been categorized as Level 2 within the fair value hierarchy.

Our corporate debt securities (“the Level 3 AFS Securities”) were categorized as Level 3 due in part to the inactive market for such securities. There is a wide range of prices quoted for our Level 3 AFS Securities among independent third party pricing services, and this range reflects the significant judgment being exercised over the assumptions and variables that determine the pricing of such securities. We consider this subjectivity relating to our Level 3 AFS Securities to be a significant unobservable input. Had significant changes in default expectations, loss severity factors, or discount rates occurred all together or in isolation, it would have resulted in different fair value measurements at December 31, 2024.

Securities held-to-maturity. HTM securities are carried at amortized cost, net of the allowance for credit losses. Fair value for securities categorized as Level 1, which are publicly traded securities, are based on readily available quoted prices. In determining the fair value of the securities categorized as Level 2, we obtain a report from a nationally recognized broker‑dealer detailing the fair value of each investment security we hold as of each reporting date. The broker‑dealer uses observable market information to value our securities, with the primary source being a nationally recognized pricing service. We review the market prices provided by the broker‑dealer for our securities for reasonableness based on our understanding of the marketplace and we consider any credit issues related to the securities. As we have not made any adjustments to the market quotes provided to us and they are based on observable market data, they have been categorized as Level 2 within the fair value hierarchy.

FRB and FHLB stock. Investments in FRB and FHLB stock are recorded at cost and measured for impairment quarterly. Ownership of FRB and FHLB stock is restricted to member banks and the securities do not have a readily determinable market value. Purchases and sales of these securities are at par value with the issuer. The fair value of investments in FRB and FHLB stock is equal to the carrying amount.

Loans and leases. As loans and leases are not measured at fair value, the following discussion relates to estimating the fair value disclosures under ASC Topic 825. Fair values are measured using the exit price and are estimated for portfolios of loans and leases with similar characteristics. Loans are segregated by type and further segmented into fixed and adjustable rate, term and line of credit, as well as interest-only and non-interest-only. To determine the exit price of a loan or lease, the cash flows are estimated using a model which utilizes future cash flows to calculate their present value using a discounting yield curve with additional spread to account for marked to market adjustments and credit and illiquidity premiums. For similar, homogeneous loans, management may make adjustments to the discount rate arrived at using the previously described methodology based upon the pricing for recent loan pool purchases and/or rates on recent originations.

Individually evaluated loans and leases. Defaulted loans and leases with outstanding balances greater than $250,000 are reviewed individually for expected credit loss, if any, and are recorded at fair value on a non-recurring basis. These defaulted loans and leases are excluded from the loan pools used within the collective evaluation of estimated credit losses. The criteria for default may include any one of the following: (1) on nonaccrual status, (2) payment delinquency of 90 days or more, (3) partial charge-off recognized, or (4) risk rated doubtful or loss.

To the extent a defaulted loan or lease is collateral dependent, we measure expected credit loss based on the estimated fair value of the underlying collateral. The fair value of each loan’s collateral is generally based on estimated market prices from an independently prepared appraisal, which is then adjusted for the cost related to liquidating such collateral; such valuation inputs result in a nonrecurring fair value measurement that is categorized as a Level 2 measurement. The Level 2 measurement is based on appraisals obtained within the last 12 months and for which a charge‑off was recognized or a change in the specific valuation allowance was made during the year ended December 31, 2024.

When adjustments are made to an appraised value to reflect various factors such as the age of the appraisal or known changes in the market or the collateral, such valuation inputs are considered unobservable, and the fair value measurement is categorized as a Level 3 measurement. The individually evaluated loans and leases categorized as Level 3 also include unsecured loans and other secured loans whose fair values are based significantly on unobservable inputs such as the strength of a guarantor, including an SBA government guarantee, cash flows discounted at the effective loan rate, and management’s judgment.

The individually evaluated loan and lease balances shown above as measured on a non-recurring basis represent those defaulted loans and leases for which expected credit loss was recognized during the year ended December 31, 2024. The amounts shown as net losses include the expected credit loss recognized during the year ended December 31, 2024, for the loan and lease balances shown.

OREO. The fair value of OREO is generally based on the lower of estimated market prices from independently prepared current appraisals or negotiated sales prices with potential buyers, less estimated costs to sell; such valuation inputs result in a fair value measurement that is categorized as a Level 2 measurement on a nonrecurring basis. As a matter of policy, appraisals are required annually and may be updated more frequently as circumstances require in the opinion of management. The Level 2 measurement for OREO is based on appraisals obtained within the last 12 months and for which a write‑down was recognized during the year ended December 31, 2024.

When a current appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value as a result of known changes in the market or the collateral and there is no observable market price, such valuation inputs result in a fair value measurement that is categorized as a Level 3 measurement. To the extent a negotiated sales price or reduced listing price represents a significant discount to an observable market price, such valuation input would result in a fair value measurement that is also considered a Level 3 measurement. The OREO losses disclosed are write‑downs based on either a recent appraisal obtained after foreclosure or an accepted purchase offer by an independent third party received after foreclosure.

Equity warrants. Equity warrants with net settlement terms are received in connection with extending loan commitments to certain of our customers. We estimate the fair value of equity warrants using a Black-Scholes option pricing model to approximate fair market value. We typically classify our equity warrant derivatives in Level 3 of the fair value hierarchy.

Equity investments with readily determinable fair values. Our equity investments with readily determinable fair values include investments in public companies and publicly-traded mutual funds. Equity investments with readily determinable fair values are recorded at fair value with changes in fair value recorded in “Noninterest income - Other income.” Fair value measurements related to these investments are typically classified within Level 1 of the fair value hierarchy.

Deposits. Deposits are carried at historical cost. The fair values of deposits with no stated maturity, such as core deposits (defined as noninterest‑bearing demand, interest checking, money market, and savings accounts) and wholesale non-maturity deposits, are equal to the amount payable on demand as of the balance sheet date and considered Level 2. The fair value of time deposits is based on the discounted value of contractual cash flows and considered Level 2. The discount rate is estimated using the borrowing rates currently offered by FHLB for similar remaining maturities. No value has been separately assigned to the Company’s long‑term relationships with its deposit customers, such as a core deposit intangible.

Borrowings. Borrowings are carried at amortized cost. The fair value of fixed‑rate borrowings is estimated by discounting scheduled cash flows through the maturity dates or call dates, if applicable, using estimated market discount rates that reflect current rates offered for borrowings with similar remaining maturities and characteristics and are considered Level 2. Borrowings also include variable-rate credit-linked notes which are carried at fair value. Fair value is estimated by discounting the future expected cash flows by a rate which represents the interest rate spread at issuance adjusted to account for market movement between the issuance date and the valuation date. Since the future expected cash flows are determined based on the unique collateral and waterfall characteristics of our credit-linked notes, they are considered Level 3.

Derivative assets and liabilities. Derivatives are carried at fair value on a recurring basis and primarily relate to forward exchange contracts which we enter into to manage foreign exchange risk. Our derivatives are principally traded in over-the-counter markets where quoted market prices are not readily available. Instead, the fair value of derivatives is estimated using market observable inputs such as foreign exchange forward rates, interest rate yield curves, volatilities and basis spreads. We also consider counter-party credit risk in valuing our derivatives. We typically classify our foreign exchange derivatives in Level 2 of the fair value hierarchy.

Commitments to extend credit. The majority of our commitments to extend credit carry current market interest rates if converted to loans. Because these commitments are generally not assignable by either the borrower or us, they only have value to the borrower and us. The estimated fair value approximates the recorded deferred fee amounts and is excluded from the table above because it is not material.

Fair value estimates are made at a specific point in time and are based on relevant market information and information about the financial instrument. These estimates do not reflect income taxes or any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a portion of the Company’s financial instruments, fair value estimates are based on what management believes to be reasonable judgments regarding expected future cash flows, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimated fair values are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Since the fair values have been estimated as of December 31, 2024, the amounts that will actually be realized or paid at settlement or maturity of the instruments could be significantly different.