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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of Company's financial instruments measured at fair value on a recurring basis

The following fair value hierarchy table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis at the dates indicated:


	September 30, 2020
	Fair Value Measurement Using
	Level 1		Level 2		Level 3		Total Fair Value
	(Dollars in thousands)
Financial assets
Investment securities available-for-sale:
U.S. Treasury	$	—	$	32,739	$	—	$	32,739
Agency	—		603,045		—		603,045
Corporate	—		397,536		—		397,536
Municipal bonds	—		1,313,908		—		1,313,908
Collateralized mortgage obligations	—		358,280		—		358,280
Mortgage-backed securities	—		895,223		—		895,223
Total securities available-for-sale	$	—	$	3,600,731	$	—	$	3,600,731

Derivative assets:
Interest rate swaps	$	—	$	14,697	$	—	$	14,697
Equity warrants	—		—		1,920		1,920
Total derivative assets	$	—	$	14,697	$	1,920	$	16,617

Financial liabilities
Derivative liabilities	$	—	$	14,789	$	—	$	14,789


	December 31, 2019
	Fair Value Measurement Using
	Level 1		Level 2		Level 3		Total Fair Value
	(Dollars in thousands)
Financial assets
Investment securities available-for-sale:
U.S. Treasury	$	—	$	63,555	$	—	$	63,555
Agency	—		246,358		—		246,358
Corporate	—		151,353		—		151,353
Municipal bonds	—		397,298		—		397,298
Collateralized mortgage obligations	—		9,984		—		9,984
Mortgage-backed securities	—		499,836		—		499,836
Total securities available-for-sale	$	—	$	1,368,384	$	—	$	1,368,384

Derivative assets	$	—	$	2,103	$	—	$	2,103

Financial liabilities
Derivative liabilities	$	—	$	2,103	$	—	$	2,103

Schedule of reconciliation of fair value of equity warrants

The following table is a reconciliation of the fair value of the equity warrants that are classified as Level 3 and measured on a recurring basis as of :


	September 30, 2020
	Three Months Ended		Nine Months Ended
	(Dollars in thousands)
Beginning Balance	$	1,952	$	5,162
Change in fair value (1)	(32)		(35)
Sales	—		(3,207)
Ending balance	$	1,920	$	1,920

______________________________

(1) The changes in fair value are included in other income on the consolidated statement of income.

Schedule of quantitative information for level 3 fair value measurements

The following table presents quantitative information about level 3 of fair value measurements for assets measured at fair value on a recurring basis at September 30, 2020.

September 30, 2020

Range

Fair Value

Valuation Technique(s)

Unobservable Input(s)

Min

Max

Weighted Average

(Dollars in thousands)

Equity warrants

1,920

Black-Scholes
option pricing
model

Volatility
Risk free interest rate
Marketability discount

30.00% 0.13% 6.00%

35.00%

0.28%

16.00%

31.20%

0.17%

13.48%

The following table presents quantitative information about level 3 of fair value measurements for assets measured at fair value on a nonrecurring basis at September 30, 2020 and December 31, 2019.


	September 30, 2020
					Range
	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Min	Max	Weighted Average
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	591	Fair value of collateral	Collateral discount and cost to sell	10.00%	10.00%	10.00%


SBA secured by real estate (1)	202		Fair value of collateral	Collateral discount and cost to sell	10.00%	10.00%	10.00%

Business loans secured by real estate


SBA secured by real estate (2)	230		Fair value of collateral	Collateral discount and cost to sell	10.00%	10.00%	10.00%

Commercial loans
Commercial and industrial	22		Fair value of collateral	Collateral discount and cost to sell	10.00%	10.00%	10.00%
Franchise non-real estate secured	2,844		Fair value of collateral	Collateral discount and cost to sell	7.00%	10.00%	9.11%
SBA non-real estate secured	860		Fair value of collateral	Collateral discount and cost to sell	7.00%	10.00%	8.19%





Total individually evaluated loans	4,749

Total assets	$	4,749


	December 31, 2019
					Range
	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Min	Max	Weighted Average
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	569	Fair value of collateral	Collateral discount and cost to sell	10.00%	10.00%	10.00%


SBA secured by real estate (1)	408		Fair value of collateral	Collateral discount and cost to sell	10.00%	10.00%	10.00%

Business loans secured by real estate


SBA secured by real estate (2)	140		Fair value of collateral	Collateral discount and cost to sell	7.00%	10.00%	7.81%

Commercial loans


SBA non-real estate secured	1,140		Fair value of collateral	Collateral discount and cost to sell	7.00%	63.00%	15.33%





Total individually evaluated loans	$	2,257

______________________________

(1) SBA loans that are collateralized by hotel/motel real property.

(2) SBA loans that are collateralized by real property other than hotel/motel real property.

Schedule of Company's financial instruments measured at fair value on a nonrecuring basis

The following table presents our assets measured at fair value on a nonrecurring basis at September 30, 2020 and December 31, 2019.


	September 30, 2020
	Level 1		Level 2		Level 3		Total Fair Value
	(Dollars in thousands)
Financial assets
Collateral dependent loans	$	—	$	—	$	4,749	$	4,749


	December 31, 2019
	Level 1		Level 2		Level 3		Total Fair Value
	(Dollars in thousands)
Financial assets
Impaired loans	$	—	$	—	$	2,257	$	2,257

Schedule of carrying amount and estimated fair value of financial instruments

The fair value estimates presented herein are based on pertinent information available to management as of the dates indicated, representing an exit price.


	At September 30, 2020
	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
	(Dollars in thousands)
Assets
Cash and cash equivalents	$	1,103,077	$	1,103,077	$	—	$	—	$	1,103,077
Interest-bearing time deposits with financial institutions	2,845		2,845		—		—		2,845
Investments held-to-maturity	27,980		—		29,399		—		29,399
Investment securities available-for-sale	3,600,731		—		3,600,731		—		3,600,731
Loans held for sale	1,032		—		1,091		—		1,091
Loans held for investment, net	13,450,840		—		—		13,578,530		13,578,530

Derivative assets	16,617		—		14,697		1,920		16,617
Accrued interest receivable	73,112		73,112		—		—		73,112

Liabilities
Deposit accounts	$	16,330,807	$	14,612,343	$	1,724,569	$	—	$	16,336,912
FHLB advances	41,000		—		41,652		—		41,652

Subordinated debentures	501,443		—		515,729		—		515,729
Derivative liabilities	14,789		—		14,789		—		14,789
Accrued interest payable	7,638		7,638		—		—		7,638


	At December 31, 2019
	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
	(Dollars in thousands)
Assets
Cash and cash equivalents	$	326,850	$	326,850	$	—	$	—	$	326,850
Interest-bearing time deposits with financial institutions	2,708		2,708		—		—		2,708
Investments held-to-maturity	37,838		—		38,760		—		38,760
Investment securities available-for-sale	1,368,384		—		1,368,384		—		1,368,384
Loans held for sale	1,672		—		1,821		—		1,821
Loans held for investment, net	8,722,311		—		—		8,691,019		8,691,019
Derivative assets	2,103		—		2,103		—		2,103
Accrued interest receivable	39,442		39,442		—		—		39,442

Liabilities
Deposit accounts	$	8,898,509	$	7,850,667	$	1,048,583	$	—	$	8,899,250
FHLB advances	517,026		—		517,291		—		517,291

Subordinated debentures	215,145		—		237,001		—		237,001
Derivative liabilities	2,103		—		2,103		—		2,103
Accrued interest payable	2,686		2,686		—		—		2,686