Fair Value Measurements (Tables)

12 Months Ended

Sep. 30, 2020

Summary of the fair value measurements of assets and liabilities

The following table presents the fair value measurements of assets and liabilities recognized in the accompanying consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at September 30, 2020 and 2019.


	Fair Value		Level 1		Level 2		Level 3
	(dollars in thousands)
As of September 30, 2020
U.S. Treasury securities	$	50,152	$	50,152	$	—	$	—
U.S. Agency securities	25,060		25,060		—		—
Mortgage-backed securities	1,642,780		—		1,642,780		—
States and political subdivision securities	55,580		—		51,783		3,797
Other	1,054		—		1,054		—
Total securities available for sale	$	1,774,626	$	75,212	$	1,695,617	$	3,797
Derivatives-assets	$	98,380	$	—	$	98,380	$	—
Derivatives-liabilities	98		—		98		—
Fair value loans	655,185		—		655,185		—
Loan servicing rights	1,303		—		—		1,303
As of September 30, 2019
U.S. Treasury securities	$	94,745	$	94,745	$	—	$	—
Mortgage-backed securities	1,620,903		—		1,620,903		—
States and political subdivision securities	66,523		—		62,403		4,120
Other	1,037		—		1,037		—
Total securities available for sale	$	1,783,208	$	94,745	$	1,684,343	$	4,120
Derivatives-assets	$	58,534	$	—	$	58,534	$	—
Derivatives-liabilities	13		—		13		—
Fair value loans	812,991		—		812,991		—
Loan servicing rights	2,255		—		—		2,255

Summary of the changes in Level 3 financial instruments

The following table presents the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the fiscal years ended September 30, 2020, 2019 and 2018.


	Fiscal Years Ended September 30,
	2020		2019		2018
	(dollars in thousands)
Other securities available for sale
Balance, beginning of period	$	4,120	$	970	$	1,069
Additions	—		3,350		149
Principal paydown	(323)		(200)		(248)

Balance, end of period	$	3,797	$	4,120	$	970

Loan servicing rights
Balance, beginning of period	$	2,255	$	3,087	$	4,074

Realized and unrealized loss ¹	(952)		(832)		(987)
Balance, end of period	$	1,303	$	2,255	$	3,087


1 Realized and unrealized (loss) related to loan servicing rights are reported as a component of mortgage banking income, net on the consolidated statements of income.

Summary of the fair value measurement of assets and liabilities measured at fair value on a nonrecurring basis

The following table presents the fair value measurement of assets and liabilities measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at September 30, 2020 and 2019.


	Fair Value		Level 1		Level 2		Level 3
	(dollars in thousands)
As of September 30, 2020
Other repossessed property	$	17,991	$	—	$	—	$	17,991
Impaired loans	669,968		—		—		669,968
Mortgage loans held for sale, at lower of cost or fair value	12,371		—		12,371		—
Property held for sale	600		—		—		600
As of September 30, 2019
Other repossessed property	$	34,721	$	—	$	—	$	34,721
Impaired loans	413,644		—		—		413,644
Mortgage loans held for sale, at lower of cost or fair value	7,351		—		7,351		—
Property held for sale	2,757		—		—		2,757

Valuation techniques and significant observable inputs

The valuation techniques and significant unobservable inputs used to measure Level 3 fair value measurements at September 30, 2020 were as follows.

Fair Value of Assets / (Liabilities) at September 30, 2020

Valuation
Technique(s)

Unobservable
Input

Range

Weighted
Average

(dollars in thousands)

Other repossessed property

17,991

Appraisal value

Collateral specific adjustment

N/A

Impaired loans

669,968

Appraisal value

Collateral specific adjustment

N/A

Property held for sale

600

Appraisal value

Collateral specific adjustment

N/A

Summary of fair values for balance sheet instruments

Fair values for on-balance sheet instruments as of September 30, 2020 and September 30, 2019 are as follows.


		September 30, 2020				September 30, 2019
	Level in Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
		(dollars in thousands)
Assets
Cash and cash equivalents	Level 1	$	432,887	$	432,887	$	243,474	$	243,474
Loans, net, excluding fair valued loans, loans held for sale and impaired loans ¹	Level 3	8,738,617		8,768,314		8,472,777		8,533,612
Liabilities
Time deposits	Level 2	$	1,282,978	$	1,287,814	$	2,095,676	$	2,101,239
FHLB advances and other borrowings	Level 2	195,000		204,715		340,000		351,517
Securities sold under repurchase agreements	Level 2	65,506		65,506		68,992		68,992
Subordinated debentures and subordinated notes payable	Level 2	108,832		96,424		108,636		101,164

1 Includes $29.0 million and $13.9 million of net deferred loan fees at September 30, 2020 and 2019, respectively, of which carrying value approximates fair value.