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Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2023

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, 2023
	Fair Value Measurement Using						Total Fair Value
(Dollars in thousands)	Level 1		Level 2		Level 3
Financial assets
AFS investment securities:
U.S. Treasury	$	—	$	13,355	$	—	$	13,355
Agency	—		417,731		—		417,731
Corporate	—		508,189		—		508,189

Collateralized mortgage obligations	—		372,632		—		372,632
Mortgage-backed securities	—		800,945		—		800,945
Total AFS investment securities	$	—	$	2,112,852	$	—	$	2,112,852


Equity securities	$	962	$	—	$	—	$	962

Derivative assets:
Foreign exchange contracts	$	37	$	—	$	—	$	37
Interest rate swaps (1)	—		5,630		—		5,630
Equity warrants	—		—		412		412
Total derivative assets	$	37	$	5,630	$	412	$	6,079



Financial liabilities
Derivative liabilities:
Foreign exchange	$	8	$	—	$	—	$	8
Interest rate swaps	—		10,569		—		10,569
Total derivative liabilities	$	8	$	10,569	$	—	$	10,577

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(1) Represents amounts after the application of variation margin payments as settlements with central counterparties, where applicable. See Note 11 – Derivative Instruments for additional information.


	December 31, 2022
	Fair Value Measurement Using						Total Fair Value
(Dollars in thousands)	Level 1		Level 2		Level 3
Financial assets
AFS investment securities:
U.S. Treasury	$	—	$	47,017	$	—	$	47,017
Agency	—		431,438		—		431,438
Corporate	—		542,548		—		542,548

Collateralized mortgage obligations	—		764,229		—		764,229
Mortgage-backed securities	—		815,781		—		815,781
Total AFS investment securities	$	—	$	2,601,013	$	—	$	2,601,013

Equity securities (1)	$	925	$	—	$	—	$	13,526

Derivative assets:
Foreign exchange contracts	$	1	$	—	$	—	$	1
Interest rate swaps (2)	—		7,053		—		7,053
Equity warrants	—		—		1,894		1,894
Total derivative assets	$	1	$	7,053	$	1,894	$	8,948

Financial liabilities
Derivative liabilities:
Foreign exchange	$	1	$	—	$	—	$	1
Interest rate swaps	—		12,530		—		12,530
Total derivative liabilities	$	1	$	12,530	$	—	$	12,531

(1) Includes equity securities that are measured at net asset value per share (or its equivalent) as a practical expedient of $12.6 million at December 31, 2022 and are excluded from the fair value hierarchy.

(2) Represents amounts after the application of variation margin payments as settlements with central counterparties, where applicable. See Note 11 – Derivative Instruments for additional information.

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,		March 31,
(Dollars in thousands)	2023		2022
Beginning balance	$	1,894	$	1,889
Change in fair value (1)	(20)		19
Net exercise	(1,462)		—
Ending balance	$	412	$	1,908

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(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, 2023

Range

(Dollars in thousands)

Fair Value

Valuation Technique(s)

Unobservable Input(s)

Min

Max

Weighted Average

Equity warrants

412

Black-Scholes
option pricing
model

Volatility
Risk free interest rate
Marketability discount

35.00%

3.94%

5.50%

35.00%

3.94%

5.50%

35.00%

3.94%

5.50%

December 31, 2022

Range

(Dollars in thousands)

Fair Value

Valuation Technique(s)

Unobservable Input(s)

Min

Max

Weighted Average

Equity warrants

1,894

Black-Scholes
option pricing
model

Volatility
Risk free interest rate
Marketability discount

30.00%

4.32%

6.00%

35.00%

4.41%

16.00%

31.14%

4.39%

13.60%

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, 2023
					Range
(Dollars in thousands)	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Min	Max	Weighted Average
Investor loans secured by real estate

Multifamily	$	985	Fair value of collateral	Cost to sell	7.00%	7.00%	7.00%

















Total individually evaluated loans	$	985
Other real estate owned	5,499		Fair value of property	Cost to sell	6.00%	6.00%	6.00%
Total assets	$	6,484

December 31, 2022

Range

(Dollars in thousands)

Fair Value

Valuation Technique(s)

Unobservable Input(s)

Min

Max

Weighted Average

Commercial loans

Commercial and industrial

3,180

Fair value of collateral

Collateral discount and cost to sell

6.00%

Total individually evaluated loans

3,180

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(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, 2023
	Fair Value Measurement Using						Total Fair Value
(Dollars in thousands)	Level 1		Level 2		Level 3
Financial assets
Collateral dependent loans	$	—	$	—	$	985	$	985
Other real estate owned	—		—		5,499		5,499
Total assets	$	—	$	—	$	6,484	$	6,484


	December 31, 2022
	Fair Value Measurement Using						Total Fair Value
(Dollars in thousands)	Level 1		Level 2		Level 3
Financial assets
Collateral dependent loans	$	—	$	—	$	3,180	$	3,180

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, 2023
(Dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Assets
Cash and cash equivalents	$	1,424,896	$	1,424,896	$	—	$	—	$	1,424,896
Interest-bearing time deposits with financial institutions	1,734		1,734		—		—		1,734
HTM investment securities	1,749,030		—		1,496,494		—		1,496,494
AFS investment securities	2,112,852		—		2,112,852		—		2,112,852
Equity securities	962		962		—		—		962
Loans held for sale	1,247		—		1,296		—		1,296
Loans held for investment, net	14,171,784		—		—		13,412,607		13,412,607
Derivative assets (1)	6,079		37		5,630		412		6,079

Accrued interest receivable	69,660		—		69,660		—		69,660

Liabilities
Deposit accounts	$	17,207,810	$	—	$	17,204,363	$	—	$	17,204,363
FHLB advances	800,000		—		788,132		—		788,132

Subordinated debentures	331,364		—		325,170		—		325,170
Derivative liabilities	10,577		8		10,569		—		10,577
Accrued interest payable	23,261		—		23,261		—		23,261

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	At December 31, 2022
(Dollars in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Assets
Cash and cash equivalents	$	1,101,249	$	1,101,249	$	—	$	—	$	1,101,249
Interest-bearing time deposits with financial institutions	1,734		1,734		—		—		1,734
HTM investment securities	1,388,103		—		1,097,096		—		1,097,096
AFS investment securities	2,601,013		—		2,601,013		—		2,601,013
Equity securities (1)	13,526		925		—		—		13,526
Loans held for sale	2,643		—		2,755		—		2,755
Loans held for investment, net	14,676,298		—		—		13,846,403		13,846,403
Derivative assets (2)	8,948		1		7,053		1,894		8,948
Accrued interest receivable	73,784		—		73,784		—		73,784

Liabilities
Deposit accounts	$	17,352,401	$	—	$	17,334,219	$	—	$	17,334,219
FHLB advances	1,000,000		—		982,695		—		982,695

Subordinated debentures	331,204		—		327,609		—		327,609
Derivative liabilities	12,531		1		12,530		—		12,531
Accrued interest payable	14,661		—		14,661		—		14,661

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