Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Record Amount of Assets and Liabilities Measured at Fair Value on a Recurring Basis

The tables below present the recorded amount of assets and liabilities measured at fair value on a recurring basis.

December 31, 2019	Total		Level 1		Level 2		Level 3
Investment securities available-for-sale
US treasury securities	$	5,015	$	—	$	5,015	$	—
US government agencies		22,779		—		22,779		—
Mortgage-backed securities		503,297		—		503,297		—
Municipal bonds1		8,954		—		8,862		92
Servicing assets2		35,365		—		—		35,365
Mutual fund		2,206		—		2,206		—
Equity warrant assets3		570		—		—		570
Total assets at fair value	$	578,186	$	—	$	542,159	$	36,027

December 31, 2018	Total		Level 1		Level 2		Level 3
Investment securities available-for-sale
US treasury securities	$	4,966	$	—	$	4,966	$	—
US government agencies		30,944		—		30,944		—
Mortgage-backed securities		343,581		—		343,581		—
Municipal bond1		999		—		—		999
Servicing assets2		47,641		—		—		47,641
Mutual fund		2,099		—		2,099		—
Equity warrant assets3		527		—		—		527
Total assets at fair value	$	430,757	$	—	$	381,590	$	49,167

1 During the year ended December 31, 2019, the Company sold $900 thousand of a municipal bond to a third party and recorded a fair value adjustment loss of $8 thousand.  During the year ended December 31, 2018, the Company purchased a municipal bond with a value of $1.0 million and recorded a fair value adjustment loss of $1 thousand.

2 See Note 7 for a rollforward of recurring Level 3 fair values for servicing assets.

3 During the years ended December 31, 2019 and 2018, the Company recorded net losses on derivative instruments of $53 thousand and $24 thousand, respectively.

Recorded Amount of Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The tables below present the recorded amount of assets and liabilities measured at fair value on a non-recurring basis.

December 31, 2019	Total		Level 1		Level 2		Level 3
Impaired loans	$	3,909	$	—	$	—	$	3,909
Foreclosed assets		5,612		—		—		5,612
Equity security investment with a non-readily    determinable fair value		8,738		8,738		—		—
Total assets at fair value	$	18,259	$	8,738	$	—	$	9,521

December 31, 2018	Total		Level 1		Level 2		Level 3
Impaired loans	$	4,130	$	—	$	—	$	4,130
Foreclosed assets		1,094		—		—		1,094
Total assets at fair value	$	5,224	$	—	$	—	$	5,224

Analysis of Level 3 Valuation Techniques

For Level 3 assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2019 and December 31, 2018 the significant unobservable inputs used in the fair value measurements were as follows:

December 31, 2019

Level 3 Assets with Significant Unobservable Inputs	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range
Municipal bond	$	92	Discounted expected cash flows	Discount rate Prepayment speed	4.55% 5.00%
Impaired loans	$	3,909	Discounted appraisals	Appraisal adjustments (1)	10% to 57%
Foreclosed assets	$	5,612	Discounted appraisals	Appraisal adjustments (1)	10% to 37%
Equity warrant assets	$	570	Black-Scholes option pricing model	Volatility Risk-free interest rate Marketability discount Remaining life	21-75% 1.90% 20% 8 - 10 years

December 31, 2018

Level 3 Assets with Significant Unobservable Inputs	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range
Municipal bond	$	999	Discounted expected cash flows	Discount rate Prepayment speed	5.14% 5.00%
Impaired loans	$	4,130	Discounted appraisals	Appraisal adjustments (1)	8% to 48%
Foreclosed assets	$	1,094	Discounted appraisals	Appraisal adjustments (1)	9% to 37%
Equity warrant assets	$	527	Black-Scholes option pricing model	Volatility Risk-free interest rate Marketability discount Remaining life	20.40% 2.69% 20.00% 9 - 10 years

(1) Appraisals may be adjusted by management for customized discounting criteria, estimated sales costs, and proprietary qualitative adjustments.

Carrying Amount and Estimated Fair Value of Financial Instruments

The carrying amounts and estimated fair values of the Company’s financial instruments are as follows:

December 31, 2019	Carrying Amount		Quoted Price In Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Financial assets
Cash and due from banks	$	126,752	$	126,752	$	—	$	—	$	126,752
Federal funds sold		96,787		96,787		—		—		96,787
Certificates of deposit with other banks		7,250		7,568		—		—		7,568
Investment securities, available-for-sale		540,045		—		539,953		92		540,045
Loans held for sale		966,447		—		—		1,020,567		1,020,567
Loans and leases, net of allowance for loan    and lease losses		2,599,052		—		—		2,659,681		2,659,681
Servicing assets		35,365		—		—		35,365		35,365
Mutual fund		2,206		—		2,206		—		2,206
Equity warrant assets		570		—		—		570		570
Financial liabilities
Deposits		4,229,122		—		4,213,657		—		4,213,657
Borrowings		14		—		—		14		14

December 31, 2018	Carrying Amount		Quoted Price In Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Financial assets
Cash and due from banks	$	316,823	$	316,823	$	—	$	—	$	316,823
Certificates of deposit with other banks		7,250		7,442		—		—		7,442
Investment securities, available-for-sale		380,490		—		380,490		—		380,490
Loans held for sale		687,393		—		—		695,154		695,154
Loans and leases, net of allowance for loan    and lease losses		1,810,985		—		—		1,807,528		1,807,528
Servicing assets		47,641		—		—		47,641		47,641
Mutual fund		2,099		—		2,099		—		2,099
Equity warrant assets		527		—		—		527		527
Financial liabilities
Deposits		3,149,583		—		3,117,941		—		3,117,941
Borrowings		1,457		—		—		1,457		1,457