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FAIR VALUE (Tables)
12 Months Ended
Dec. 31, 2022
Fair Value Disclosures [Abstract]  
Schedule of fair value assets and liabilities measured on recurring basis
The following presents assets and liabilities measured on a recurring basis as of the dates noted (dollars in thousands):
December 31, 2022Quoted
Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Reported
Balance
Mortgage loans held for sale$— $8,839 $— $8,839 
Loans held for sale$1,965 $— $— $1,965 
Loans held at fair value$— $— $23,321 $23,321 
Forward commitments and FSC$— $46 $— $46 
Equity securities$627 $122 $— $749 
Guarantee asset$— $— $143 $143 
IRLC, net$— $— $229 $229 
Equity warrants$— $— $825 $825 
December 31, 2021Quoted
Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Reported
Balance
Investment securities available-for-sale:
U.S. Treasury debt$247 $— $— $247 
U.S. Government Agency— 3,522 — 3,522 
Corporate bonds— 6,212 2,113 8,325 
GNMA mortgage-backed securities - residential— 26,650 — 26,650 
FNMA mortgage-backed securities - residential— 14,443 — 14,443 
Government CMO and MBS— 878 — 878 
Corporate CMO and MBS— 1,497 — 1,497 
Total securities available-for-sale$247 $53,202 $2,113 $55,562 
Mortgage loans held for sale$— $30,620 $— $30,620 
Forward commitments and FSC$— $(65)$(9)$(74)
Equity securities$709 $489 $— $1,198 
Guarantee asset$— $— $237 $237 
IRLC, net$— $— $1,473 $1,473 
Equity warrants$— $— $160 $160 
Summary of assets and liability for level 3 instruments measured at fair value on recurring basis
The following presents a reconciliation for Level 3 instruments measured at fair value on a recurring basis as of the dates noted (dollars in thousands):
Year Ended December 31, 2022Corporate BondsLoans Held at Fair ValueFSCGuarantee AssetIRLCEquity Warrants
Beginning balance$2,113 $— $(9)$237 $1,473 $160 
Acquisitions4,000 35,616 — 3,213 344 
Originations— — — (5,048)— 
Gains (losses) in net income, net— (94)— (75)591 321 
Unrealized gains, net102 — — — — — 
Transfer to held-to-maturity(6,215)— — — — — 
Settlements— (12,201)— (20)— — 
Ending balance$— $23,321 $— $143 $229 $825 
Year Ended December 31, 2021Corporate BondsLoans Held at Fair ValueFSCGuarantee AssetIRLCEquity Warrants
Beginning balance$— $— $(89)$232 $9,841 $— 
Acquisitions2,113 — (182)— 19,526 160 
Originations— — — (25,804)— 
Gains (losses) in net income, net— — 262 32 (2,090)— 
Other settlements— — — (29)— — 
Ending balance$2,113 $— $(9)$237 $1,473 $160 
Schedule of information about the fair value carrying amount and unpaid principal outstanding of loans
The following provides more information about the fair value carrying amount and unpaid principal outstanding of loans accounted for under the fair value option as of the dates noted (dollars in thousands):
December 31, 2022
Total LoansNon Accruals90 Days or More Past Due
Fair Value Carrying AmountUnpaid Principal BalanceDifferenceFair Value Carrying AmountUnpaid Principal BalanceDifferenceFair Value Carrying AmountUnpaid Principal BalanceDifference
Mortgage loans held for sale$8,839 $8,750 $89 $— $— $— $— $— $— 
Loans held for sale1,965 1,984 (19)— — $— — — — 
Loans held for investment23,321 23,415 (94)139 140 (1)139 140 (1)
$34,125 $34,149 $(24)$139 $140 $(1)$139 $140 $(1)
December 31, 2021
Total LoansNon Accruals90 Days or More Past Due
Fair Value Carrying AmountUnpaid Principal BalanceDifferenceFair Value Carrying AmountUnpaid Principal BalanceDifferenceFair Value Carrying AmountUnpaid Principal BalanceDifference
Mortgage loans held for sale$30,620 $29,857 $763 $— $— $— $— $— $— 
Loans held for investment— — — — — — — — — 
$30,620 $29,857 $763 $— $— $— $— $— $— 
Schedule of changes in fair value of loans
The following presents the changes in fair value of loans accounted for under the fair value option as of the dates noted (dollars in thousands):
Year Ended December 31,
20222021
Mortgage loans held for sale$(673)$4,712 
Loans held for sale(20)— 
Loans held for investment(94)— 
$(787)$4,712 
The following summarizes the activity pertaining to loans accounted for under the fair value option as of the dates noted (dollars in thousands):
Year Ended
December 31,
Mortgage loans held for sale20222021
Balance at beginning of period$30,620 $161,843 
Loans originated439,682 1,425,713 
Loans acquired— 840 
Fair value changes(673)(4,712)
Sales(460,514)(1,548,405)
Settlements(276)(4,659)
Balance at end of period$8,839 $30,620 

Year Ended
December 31,
Loans held for sale20222021
Balance at beginning of period$— $— 
Loans transferred from held for investment1,985 — 
Fair value changes(20)— 
Balance at end of period$1,965 $— 
Year Ended
December 31,
Loans held for investment20222021
Balance at beginning of period— $— 
Loans acquired35,616 — 
Fair value changes(94)— 
Settlements(12,201)— 
Balance at end of period$23,321 $— 
Summary of assets measured at fair value on nonrecurring basis
The following presents assets measured on a nonrecurring basis as of the dates noted (dollars in thousands):
December 31, 2021Quoted
Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Reported
Balance
Impaired loans(1):
Commercial and Industrial$— $— $439 $439 
_____________________________
(1)One immaterial Consumer and Other loan was fully reserved for using a specific allowance as of December 31, 2021.
Summary of assets and liabilities measured at fair value on a recurring or nonrecurring, the significant unobservable inputs
The following presents quantitative information about Level 3 assets measured on a recurring and nonrecurring basis as of the dates noted (dollars in thousands):
Quantitative Information about Level 3 Fair Value Measurements as of December 31, 2022
Fair ValueValuation
Technique
Significant
Unobservable Input
Range
(Weighted Average)
Recurring fair value
Loans held for investment at fair value$23,321 Discounted cash flowDiscount rate
4% to 18% (8)%
Guarantee asset143 Discounted cash flowDiscount rate
Prepayment rate
5% (5%)
4% (4)%
IRLC, net229 Best execution modelPull through
73% to 100% (91)%
Equity Warrants825 Black-Scholes option pricing modelVolatility
Risk-free interest rate
Remaining life
31.2% to 44.7% (34.8)%
4.04% to 4.14% (4.05)%
0 to 4 years
Quantitative Information about Level 3 Fair Value Measurements as of December 31, 2021
Fair ValueValuation
Technique
Significant
Unobservable Input
Range
(Weighted Average)
Recurring fair value
Corporate Bonds$2,113 Discounted cash flowDiscount rate
7% (7)%
FSC(9)Internal pricing modelMarket Differential
(14) bps to
 (2) bps
((6) bps)
Guarantee asset237 Discounted cash flowDiscount rate
Prepayment rate
3% (3%)
18% (18%)
IRLC, net1,473 Best execution modelPull through
71% to 100% (88)%
Equity warrants160 Black-Scholes option pricing modelVolatility
Risk-free interest rate
Remaining life
24% to 37% (32)%
0.30% to 1.10% (0.97)%
0 to 4 years
Nonrecurring fair value
Impaired loans(1):
Commercial and Industrial439 Sales comparison, Market approach - guideline transaction methodManagement discount for asset/property type
17% - 45% (39%)
_____________________________
(1)One immaterial Consumer and Other loan was fully reserved for using a specific allowance as of December 31, 2021.
Schedule of carrying amounts and estimated fair value of financial instruments not carried at fair value
The following presents carrying amounts and estimated fair values for financial instruments not carried at fair value as of the dates noted (dollars in thousands):
Carrying
Amount
Fair Value Measurements Using:
December 31, 2022Level 1Level 2Level 3
Assets:
Cash and cash equivalents$196,512 $196,512 $— $— 
Held-to-maturity securities81,056 234 67,433 7,051 
Loans, net2,452,230 — — 2,379,406 
Accrued interest receivable10,445 362 10,078 
Liabilities:
Deposits2,405,229 2,181,139 — 228,868 
Borrowings:    
FHLB borrowings – fixed rate141,498 — 141,867 — 
Federal Reserve borrowings – fixed rate5,388 — 5,388 — 
Subordinated notes – fixed-to-floating rate52,132 — — 60,384 
Accrued interest payable1,125 — 587 538 
Carrying
Amount
Fair Value Measurements Using:
December 31, 2021Level 1Level 2Level 3
Assets:
Cash and cash equivalents$386,983 $386,983 $— $— 
Loans, net1,935,405 — — 1,919,625 
Accrued interest receivable7,151 203 6,946 
Liabilities:    
Deposits2,205,703 2,035,212 — 172,240 
Borrowings:    
FHLB borrowings – fixed rate15,000 — 14,990 — 
Federal Reserve borrowings – fixed rate23,629 — 23,629 — 
Subordinated notes – fixed-to-floating rate39,031 — — 40,325 
Accrued interest payable355 77 269