FAIR VALUE (Tables)

3 Months Ended

Mar. 31, 2024

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):

March 31, 2024	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Reported Balance
Financial Assets
Mortgage loans held for sale	$	—	$	10,470	$	—	$	10,470
Loans held at fair value	$	—	$	—	$	11,922	$	11,922
Equity securities	$	629	$	122	$	—	$	751
Guarantee asset	$	—	$	—	$	199	$	199
IRLC, net	$	—	$	—	$	813	$	813
Equity warrants	$	—	$	—	$	795	$	795
Swap derivative assets	$	—	$	1,199	$	—	$	1,199
Financial Liabilities
Forward commitments and FSC	$	—	$	23	$	—	$	23
Swap derivative liabilities	$	—	$	664	$	—	$	664

December 31, 2023	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Reported Balance
Financial Assets
Mortgage loans held for sale	$	—	$	7,254	$	—	$	7,254
Loans held at fair value	$	—	$	—	$	13,726	$	13,726
Equity securities	$	636	$	122	$	—	$	758
Guarantee asset	$	—	$	—	$	189	$	189
IRLC, net	$	—	$	—	$	345	$	345
Equity warrants	$	—	$	—	$	795	$	795
Swap derivative asset	$	—	$	763	$	—	$	763
Financial Liabilities
Forward commitments and FSC	$	—	$	351	$	—	$	351
Swap derivative liabilities	$	—	$	740	$	—	$	740

Schedule of loans measured at fair value under fair value option

The following tables provide 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):

	March 31, 2024
	Total Loans						Non Accruals						90 Days or More Past Due
	Fair Value Carrying Amount		Unpaid Principal Balance		Difference		Fair Value Carrying Amount		Unpaid Principal Balance		Difference		Fair Value Carrying Amount		Unpaid Principal Balance		Difference
Mortgage loans held for sale	$	10,470	$	10,243	$	227	$	—	$	—	$	—	$	—	$	—	$	—
Loans held for investment	11,922		12,276		(354)		178		182		(4)		178		182		(4)
	$	22,392	$	22,519	$	(127)	$	178	$	182	$	(4)	$	178	$	182	$	(4)

	December 31, 2023
	Total Loans						Non Accruals						90 Days or More Past Due
	Fair Value Carrying Amount		Unpaid Principal Balance		Difference		Fair Value Carrying Amount		Unpaid Principal Balance		Difference		Fair Value Carrying Amount		Unpaid Principal Balance		Difference
Mortgage loans held for sale	$	7,254	$	7,106	$	148	$	—	$	—	$	—	$	—	$	—	$	—
Loans held for investment	13,726		14,129		(403)		210		220		(10)		210		220		(10)
	$	20,980	$	21,235	$	(255)	$	210	$	220	$	(10)	$	210	$	220	$	(10)

Schedule of changes in fair value of loans

The following table presents the changes in fair value of loans accounted for under the fair value option as of the dates noted:

	Three Months Ended March 31,
(dollars in thousands)	2024		2023
Mortgage loans held for sale	$	79	$	68
Loans held for sale	—		(20)
Loans held for investment	50		(150)
	$	129	$	(102)

The following summarizes the activity pertaining to loans accounted for under the fair value option as of the dates noted (dollars in thousands):

	Three Months Ended March 31,
Mortgage loans held for sale	2024		2023
Balance at beginning of period	$	7,254	$	8,839
Loans originated	58,748		54,073
Fair value changes	79		68
Sales	(55,607)		(53,102)
Settlements	(4)		(5)
Balance at end of period	$	10,470	$	9,873

	Three Months Ended March 31,
Loans held for sale	2024		2023
Balance at beginning of period	$	—	$	1,965
Loans transferred from held for investment	2,729		39,221
Fair value changes	—		(20)
Sales	(2,729)		(40,761)
Settlements	—		(405)
Balance at end of period	$	—	$	—

	Three Months Ended March 31,
Loans held for investment, fair value option	2024		2023
Balance at beginning of period	$	13,726	$	23,321
Loans acquired	—		1,162
Fair value changes	50		(150)
Net charge-offs	(352)		(392)
Settlements	(1,502)		(3,134)
Balance at end of period	$	11,922	$	20,807

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):

March 31, 2024	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Reported Balance
Collateral dependent loans:
Consumer and Other	$	—	$	—	$	3,798	$	3,798
1-4 Family Residential	—		—		2,438		2,438
Commercial and Industrial	—		—		23,353		23,353
Owner Occupied CRE	—		—		3,980		3,980
Total	$	—	$	—	$	33,569	$	33,569

December 31, 2023	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Reported Balance
Collateral dependent loans:
Consumer and Other	$	—	$	—	$	7,500	$	7,500
1-4 Family Residential	—		—		2,438		2,438
Commercial and Industrial	—		—		25,738		25,738
Owner Occupied CRE	—		—		3,980		3,980
Total	$	—	$	—	$	39,656	$	39,656

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):

Three Months Ended March 31, 2024	Loans Held at Fair Value		Guarantee Asset		IRLC		Equity Warrants
Beginning balance	$	13,726	$	189	$	345	$	795
Acquisitions	—		—		813		—
Originations	—		13		(819)		—
Gains/(losses) in net income, net	50		5		474		—
Net charge-offs	(352)		—		—		—
Settlements	(1,502)		(8)		—		—
Ending balance	$	11,922	$	199	$	813	$	795

Three Months Ended March 31, 2023	Loans Held at Fair Value		Guarantee Asset		IRLC		Equity Warrants
Beginning balance	$	23,321	$	143	$	229	$	825
Acquisitions	1,162		—		886		—
Originations	—		5		(1,486)		—
Gains/(losses) in net income, net	(150)		92		1,094		—
Net charge-offs	(392)		—		—		—
Settlements	(3,134)		(5)		—		—
Ending balance	$	20,807	$	235	$	723	$	825

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:

	Quantitative Information about Level 3 Fair Value Measurements as of March 31, 2024
(dollars in thousands)	Fair Value		Valuation Technique	Significant Unobservable Input	Range (Weighted Average)
Recurring fair value
Loans held for investment at fair value	$	11,922	Discounted cash flow	Discount rate	8% to 8% (8%)
Guarantee asset	199		Discounted cash flow	Discount rate Prepayment rate	5% (5%) 5% (5%)
IRLC, net	813		Best execution model	Pull through	56% to 100% (87%)
Equity warrants	795		Black-Scholes option pricing model	Volatility Risk-free interest rate Remaining life	23.0% to 59.6% (30.4%) 4.70% (4.70%) 0 to 1.75 years
Nonrecurring fair value
Collateral dependent loans:
Consumer and Other	3,798		Sales Comparison-Market Value Approach	Market Rate Adjustments	50% (7%)
1-4 Family Residential	2,438		Sales Comparison-Market Value Approach	Market Rate Adjustments	7% to 50% (6%)
Commercial and Industrial	23,207		Sales Comparison-Market Value Approach	Market Rate Adjustments	7% to 50% (6%)
Commercial and Industrial	146		Sales comparison, Market approach - guideline transaction method	Loss given default	8% to 62% (42%)
Owner Occupied CRE	3,980		Sales Comparison-Market Value Approach	Market Rate Adjustments	50% (7%)

	Quantitative Information about Level 3 Fair Value Measurements as of December 31, 2023
(dollars in thousands)	Fair Value		Valuation Technique	Significant Unobservable Input	Range (Weighted Average)
Recurring fair value
Loans held for investment at fair value	$	13,726	Discounted cash flow	Discount rate	7% to 8% (8%)
Guarantee asset	189		Discounted cash flow	Discount rate Prepayment rate	5% (5%) 5% (5%)
IRLC, net	345		Best execution model	Pull through	48% to 100% (86%)
Equity warrants	795		Black-Scholes option pricing model	Volatility Risk-free interest rate Remaining life	20.1% to 23.0% (22.4%) 4.62% to 4.62% (4.62%) 2.00 to 2.03 years
Nonrecurring fair value
Collateral dependent loans:
Consumer and Other	7,500		Sales Comparison-Market Value Approach	Market rate adjustments	46% (8%)
1-4 Family Residential	2,438		Sales Comparison-Market Value Approach	Market rate adjustments	46% (8%)
Commercial and Industrial	24,791		Sales Comparison-Market Value Approach	Market rate adjustments	46% (8%)
Commercial and Industrial	148		Sales comparison, Market approach – guideline transaction method	Loss given default	14% to 62% (20%)
Commercial and Industrial	799		Sales Comparison-Market Value Approach	Market rate adjustments	21% (11%)
Owner Occupied CRE	3,980		Sales Comparison-Market Value Approach	Market rate adjustments	46% (8%)

Summary of carrying amounts and estimated fair values of financial instruments

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:
March 31, 2024			Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	257,889	$	257,889	$	—	$	—
Held-to-maturity securities, net of ACL	72,303		245		56,332		8,331
Loans, net(1)	2,438,972		—		—		2,340,551
Accrued interest receivable	11,919		11,919		—		—
Liabilities:
Term deposits(2)	442,834		362,564		—		80,249
Non-term deposits	2,089,136		2,089,136		—		—
Borrowings:
FHLB borrowings – fixed rate	56,314		—		56,340		—
Federal Reserve borrowings – fixed rate	13,170		3,171		9,940		—
Subordinated notes – fixed-to-floating rate	52,397		—		—		47,441
Accrued interest payable	2,415		2,415		—		—

	Carrying Amount		Fair Value Measurements Using:
December 31, 2023			Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	254,442	$	254,442	$	—	$	—
Held-to-maturity securities, net of ACL	74,102		242		58,231		8,144
Loans, net(1)	2,493,258		—		—		2,395,468
Accrued interest receivable	11,428		11,428		—		—
Liabilities:
Term deposits(2)	496,452		414,613		—		82,564
Non-term deposits	2,032,587		2,032,587		—		—
Borrowings:
FHLB borrowings – fixed rate	41,175		—		41,372		—
FHLB borrowings – floating rate	50,000		—		49,986		—
Federal Reserve borrowings – fixed rate	34,536		3,539		30,936		—
Subordinated notes – fixed-to-floating rate	52,340		—		—		48,228
Accrued interest payable	3,793		3,793		—		—

(1) Excludes loans accounted for under the fair value option of $11.9 million and $13.7 million as of March 31, 2024 and December 31, 2023, respectively, as these are carried at fair value.

(2) Term deposits due within one year totaling $362.6 million and $414.6 million as of March 31, 2024 and December 31, 2023, respectively, are classified under Level 1 fair value measurement.