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Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2022

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:


	March 31, 2022
	Fair Value Measurement Using
(Dollars in thousands)	Level 1		Level 2		Level 3		Total Fair Value
Financial assets
AFS investment securities:
U.S. Treasury	$	—	$	13,990	$	—	$	13,990
Agency	—		375,777		—		375,777
Corporate debt	—		595,065		—		595,065
Municipal bonds	—		415,284		—		415,284
Collateralized mortgage obligations	—		855,256		—		855,256
Mortgage-backed securities	—		966,723		—		966,723
Total AFS investment securities	$	—	$	3,222,095	$	—	$	3,222,095

Derivative assets:

Interest rate swaps	$	—	$	42,972	$	—	$	42,972
Equity warrants	—		—		1,908		1,908
Total derivative assets	$	—	$	42,972	$	1,908	$	44,880

Financial liabilities
Derivative liabilities:
Interest rate swaps	$	—	$	4,241	$	—	$	4,241


	December 31, 2021
	Fair Value Measurement Using
(Dollars in thousands)	Level 1		Level 2		Level 3		Total Fair Value
Financial assets
AFS investment securities:
U.S. Treasury	$	—	$	57,866	$	—	$	57,866
Agency	—		432,135		—		432,135
Corporate debt	—		453,861		—		453,861
Municipal bonds	—		1,089,913		—		1,089,913
Collateralized mortgage obligations	—		676,643		—		676,643
Mortgage-backed securities	—		1,563,446		—		1,563,446
Total AFS investment securities	$	—	$	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:
Interest rate swaps	$	—	$	5,263	$	—	$	5,263

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:


	Three Months Ended
	March 31,		December 31,		March 31,
(Dollars in thousands)	2022		2021		2021
Beginning balance	$	1,889	$	1,895	$	1,914
Change in fair value (1)	19		(6)		(3)

Ending balance	$	1,908	$	1,889	$	1,911

______________________________

(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 fair value measurements for assets measured at fair value on a recurring basis at the dates indicated.

March 31, 2022

Range

(Dollars in thousands)

Fair Value

Valuation Technique(s)

Unobservable Input(s)

Min

Max

Weighted Average

Equity warrants

1,908

Black-Scholes
option pricing
model

Volatility
Risk free interest rate
Marketability discount

30.00%

1.63%

5.50%

35.00%

2.45%

16.00%

31.16%

1.82%

13.56%

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%

The following table presents quantitative information about Level 3 fair value measurements for assets measured at fair value on a nonrecurring basis at the dates indicated.

March 31, 2022

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

8,590

Fair value of collateral

Collateral discount and cost to sell

7.00%

Commercial loans

Commercial and industrial

25,279

Fair value of collateral

Collateral discount and cost to sell

—%

7.40%

6.35%

Total individually evaluated loans

33,869

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

______________________________

(1) SBA loans that are collateralized by 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 the dates indicated.


	March 31, 2022
(Dollars in thousands)	Level 1		Level 2		Level 3		Total Fair Value
Financial assets
Collateral dependent loans	$	—	$	—	$	33,869	$	33,869


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

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 March 31, 2022
(Dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Assets
Cash and cash equivalents	$	809,259	$	809,259	$	—	$	—	$	809,259
Interest-bearing time deposits with financial institutions	2,216		2,216		—		—		2,216
Investment securities held-to-maturity	996,382		—		886,050		—		886,050
Investment securities available-for-sale	3,222,095		—		3,222,095		—		3,222,095
Loans held for sale	11,646		—		12,622		—		12,622
Loans held for investment, net	14,733,755		—		—		14,623,169		14,623,169
Derivative assets	44,880		—		42,972		1,908		44,880
Accrued interest receivable	60,922		—		60,922		—		60,922

Liabilities
Deposit accounts	$	17,689,223	$	—	$	17,685,458	$	—	$	17,685,458
FHLB advances	600,000		—		598,334		—		598,334

Subordinated debentures	330,726		—		338,603		—		338,603
Derivative liabilities	4,241		—		4,241		—		4,241
Accrued interest payable	5,115		—		5,115		—		5,115


	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
Investment securities 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 assets	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 liabilities	5,263		—		5,263		—		5,263
Accrued interest payable	2,366		2,366		—		—		2,366