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Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2020

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

The following fair value hierarchy tables present information about the Company’s assets measured at fair value on a recurring basis at the dates indicated:


	At December 31, 2020
	Fair Value Measurement Using
	Level 1		Level 2		Level 3		Securities at Fair Value
	(Dollars in thousands)
Financial assets
Investment securities available-for-sale:
U.S. Treasury	$	—	$	32,533	$	—	$	32,533
Agency	—		690,386		—		690,386
Corporate	—		415,308		—		415,308
Municipal bonds	—		1,446,019		—		1,446,019
Collateralized mortgage obligation: residential	—		513,366		—		513,366
Mortgage-backed securities: residential	—		833,503		—		833,503
Total securities available-for-sale	$	—	$	3,931,115	$	—	$	3,931,115

Derivative assets:
Interest rate swaps	$	—	$	12,053	$	—	$	12,053
Equity warrants	—		—		1,914		1,914
Total derivative assets	$	—	$	12,053	$	1,914	$	13,967

Financial liabilities
Derivative liabilities	$	—	$	12,066	$	—	$	12,066


	At December 31, 2019
	Fair Value Measurement Using
	Level 1		Level 2		Level 3		Securities at 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 obligation: residential	—		9,984		—		9,984
Mortgage-backed securities: residential	—		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:


	2020
	(Dollars in thousands)
Beginning Balance as of June 1, 2020	$	5,162
Change in fair value (1)	(41)
Sales	(3,207)
Ending balance as of December 31, 2020	$	1,914

______________________________

(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 December 31, 2020.

December 31, 2020

Range

Fair Value

Valuation Technique(s)

Unobservable Input(s)

Min

Max

Weighted Average

(Dollars in thousands)

Equity warrants

1,914

Black-Scholes
option pricing
model

Volatility
Risk free interest rate
Marketability discount

30.00%

0.13%

6.00%

35.00%

0.36%

16.00%

31.19%

0.18%

13.51%

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


	December 31, 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	$	198	Fair value of collateral	Collateral discount and cost to sell	10.00%	10.00%	10.00%


SBA secured by real estate (1)	746		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)	386		Fair value of collateral	Collateral discount and cost to sell	7.00%	10.00%	9.09%

Commercial loans
Commercial and industrial	2,040		Fair value of collateral	Collateral discount and cost to sell	7.00%	10.00%	9.06%

SBA non-real estate secured	707		Fair value of collateral	Collateral discount and cost to sell	7.00%	7.00%	7.00%





Total individually evaluated loans	$	4,077


	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.

Summary of assets measured at fair value on a nonrecurring basis

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


	At December 31, 2020
	Level 1		Level 2		Level 3		Total Fair Value
	(Dollars in thousands)
Financial assets
Individually evaluated loans	$	—	$	—	$	4,077	$	4,077


	At 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 December 31, 2020
	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	880,766	$	880,766	$	—	$	—	$	880,766
Interest-bearing time deposits with financial institutions	2,845		2,845		—		—		2,845
Investments held-to-maturity	23,732		—		25,013		—		25,013
Investment securities available-for-sale	3,931,115		—		3,931,115		—		3,931,115
Loans held for sale	601		—		645		—		645
Loans held for investment, net	13,236,433		—		—		13,351,092		13,351,092
Derivative asset	13,967		—		12,053		1,914		13,967
Accrued interest receivable	74,574		74,574		—		—		74,574
Liabilities:
Deposit accounts	16,214,177		14,587,335		1,631,047		—		16,218,382
FHLB advances	31,000		—		31,564		—		31,564

Subordinated debentures	501,511		—		544,436		—		544,436
Derivative liability	12,066		—		12,066		—		12,066
Accrued interest payable	6,569		6,569		—		—		6,569


	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 asset	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 liability	2,103		—		2,103		—		2,103
Accrued interest payable	2,686		2,686		—		—		2,686