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Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of Company's financial instruments 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, 2021
	Fair Value Measurement Using
(Dollars in thousands)	Level 1		Level 2		Level 3		Securities at Fair Value
Financial assets
Investment securities available-for-sale:
U.S. Treasury	$	—	$	57,866	$	—	$	57,866
Agency	—		432,135		—		432,135
Corporate	—		453,861		—		453,861
Municipal bonds	—		1,089,913		—		1,089,913
Collateralized mortgage obligation	—		676,643		—		676,643
Mortgage-backed securities	—		1,563,446		—		1,563,446
Total securities available-for-sale	$	—	$	4,273,864	$	—	$	4,273,864

Derivative assets:
Interest rate swaps	$	—	$	10,100	$	—	$	10,100
Equity warrants	—		—		1,889		1,889
Total derivative assets	$	—	$	10,100	$	1,889	$	11,989

Financial liabilities
Derivative liabilities	$	—	$	5,263	$	—	$	5,263


	At December 31, 2020
	Fair Value Measurement Using
(Dollars in thousands)	Level 1		Level 2		Level 3		Securities at Fair Value
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	—		513,366		—		513,366
Mortgage-backed securities	—		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

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:


(Dollars in thousands)	2021		2020
Beginning Balance	$	1,914	$	5,162
Change in fair value (1)	(25)		(41)
Sales	—		(3,207)
Ending balance	$	1,889	$	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, 2021.

December 31, 2021

Range

(Dollars in thousands)

Fair Value

Valuation Technique(s)

Unobservable Input(s)

Min

Max

Weighted Average

Equity warrants

1,889

Black-Scholes
option pricing
model

Volatility
Risk-free interest rate
Marketability discount

30.00%

0.39%

6.00%

35.00%

0.97%

16.00%

31.14%

0.52%

13.61%

December 31, 2020

Range

(Dollars in thousands)

Fair Value

Valuation Technique(s)

Unobservable Input(s)

Min

Max

Weighted Average

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, 2021 and 2020.

December 31, 2021

Range

(Dollars in thousands)

Fair Value

Valuation Technique(s)

Unobservable Input(s)

Min

Max

Weighted Average

Investor loans secured by real estate

SBA secured by real estate (1)

937

Fair value of collateral

Collateral discount and cost to sell

10.00%

Total individually evaluated loans

937


	December 31, 2020
					Range
(Dollars in thousands)	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Min	Max	Weighted Average
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

______________________________

(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 nonrecurring basis

The following table presents our assets measured at fair value on a nonrecurring basis at December 31, 2021 and 2020.


	At December 31, 2021
(Dollars in thousands)	Level 1		Level 2		Level 3		Total Fair Value
Financial assets
Collateral dependent loans	$	—	$	—	$	937	$	937


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

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, 2021
(Dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Assets:
Cash and cash equivalents	$	304,703	$	304,703	$	—	$	—	$	304,703
Interest-bearing time deposits with financial institutions	2,216		2,216		—		—		2,216
Investments held-to-maturity	381,674		—		384,423		—		384,423
Investment securities available-for-sale	4,273,864		—		4,273,864		—		4,273,864
Loans held for sale	10,869		—		11,959		—		11,959
Loans held for investment, net	14,295,897		—		—		14,392,684		14,392,684
Derivative asset	11,989		—		10,100		1,889		11,989
Accrued interest receivable	65,728		65,728		—		—		65,728
Liabilities:
Deposit accounts	17,115,589		16,057,316		1,058,822		—		17,116,138
FHLB advances	550,000		—		550,093		—		550,093
Other borrowings	8,000		—		8,000		—		8,000
Subordinated debentures	330,567		—		350,359		—		350,359
Derivative liability	5,263		—		5,263		—		5,263
Accrued interest payable	2,366		2,366		—		—		2,366


	At December 31, 2020
(Dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
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