XML 37 R26.htm IDEA: XBRL DOCUMENT v3.21.2
Fair Value of Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2021
Fair Value Disclosures [Abstract]  
Fair Value of Assets and Liabilities Recorded on a Recurring Basis
The following tables summarize financial assets and financial liabilities recorded at fair value on a recurring basis at September 30, 2021, and December 31, 2020, segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value. There were no changes in the valuation techniques during 2021 or 2020.
September 30, 2021
(Dollars in thousands)Level 1Level 2Level 3Total
State and municipal securities$— $366,634 $42,099 $408,733 
Corporate bonds— 78,827 — 78,827 
U.S. treasury securities93,047 — — 93,047 
U.S. government agency securities— 5,454 — 5,454 
Commercial mortgage-backed securities— 39,438 — 39,438 
Residential mortgage-backed securities— 555,351 — 555,351 
Commercial collateralized mortgage obligations— 10,437 — 10,437 
Residential collateralized mortgage obligations— 210,431 — 210,431 
Asset-backed securities— 84,825 — 84,825 
Securities available for sale93,047 1,351,397 42,099 1,486,543 
Securities carried at fair value through income— — 10,876 10,876 
Loans held for sale— 63,001 — 63,001 
Mortgage servicing rights— — 16,000 16,000 
Other assets - derivatives— 14,881 — 14,881 
Total recurring fair value measurements - assets$93,047 $1,429,279 $68,975 $1,591,301 
Other liabilities - derivatives$— $(14,679)$— $(14,679)
Total recurring fair value measurements - liabilities$— $(14,679)$— $(14,679)
December 31, 2020
(Dollars in thousands)Level 1Level 2Level 3Total
State and municipal securities$— $398,120 $44,065 $442,185 
Corporate bonds— 65,938 — 65,938 
U.S. government agency securities— 849 — 849 
Commercial mortgage-backed securities— 11,080 — 11,080 
Residential mortgage-backed securities— 214,951 — 214,951 
Residential collateralized mortgage obligations— 195,343 — 195,343 
Asset-backed securities— 74,328 — 74,328 
Securities available for sale— 960,609 44,065 1,004,674 
Securities carried at fair value through income— — 11,554 11,554 
Loans held for sale— 136,026 — 136,026 
Loans at fair value— — 17,011 17,011 
Mortgage servicing rights— — 13,660 13,660 
Other assets - derivatives— 23,694 — 23,694 
Total recurring fair value measurements - assets$— $1,120,329 $86,290 $1,206,619 
Other liabilities - derivatives$— $(23,020)$— $(23,020)
Total recurring fair value measurements - liabilities$— $(23,020)$— $(23,020)
Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis
The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the nine months ended September 30, 2021 and 2020, are summarized as follows:
(Dollars in thousands)Loans at Fair ValueMSRsSecurities Available for SaleSecurities at Fair Value Through Income
Balance at January 1, 2021$17,011 $13,660 $44,065 $11,554 
Gain (loss) recognized in earnings:
Mortgage banking revenue(1)
— (1,942)— — 
Other noninterest income(251)— — (413)
Loss recognized in AOCI— — (746)— 
Purchases, issuances, sales and settlements:
Originations— 4,282 — — 
Purchases— — 1,000 — 
Sales— — — — 
Settlements(16,760)— (2,220)(265)
Balance at September 30, 2021$— $16,000 $42,099 $10,876 
Balance at January 1, 2020$17,670 $20,697 $38,173 $11,513 
Gain (loss) recognized in earnings:
Mortgage banking revenue(1)
— (10,680)— — 
Other noninterest income30 — — 550 
Gain recognized in AOCI— — 1,352 — 
Purchases, issuances, sales and settlements:
Originations— 4,305 — — 
Purchases— — 1,598 — 
Sales— — (140)— 
Settlements(416)— (1,884)(250)
Balance at September 30, 2020$17,284 $14,322 $39,099 $11,813 
____________________________
(1)Total mortgage banking revenue includes changes in fair value due to market changes and run-off.
Significant Assumptions Used to Value Mortgage Servicing Rights The significant assumptions used to value MSRs were as follows:
September 30, 2021December 31, 2020
Range
Weighted Average(1)
Range
Weighted Average(1)
Prepayment speeds
9.22% - 37.69%
16.24 %
11.82% - 37.95%
22.08 %
Discount rates
9.00 - 10.50
9.45 
7.83 - 9.09
8.27 
__________________________
(1)The weighted average was calculated with reference to the principal balance of the underlying mortgages.
Difference Between Fair Value and the Unpaid Principal Balance for Financial Instruments for which the Fair Value Option has been Elected and Classification in Income Statement The following tables summarize the difference between the fair value and the unpaid principal balance for financial instruments for which the fair value option has been elected:
September 30, 2021
(Dollars in thousands)Aggregate Fair ValueAggregate Unpaid Principal BalanceDifference
Loans held for sale(1)
$63,001 $62,024 $977 
Securities carried at fair value through income10,876 10,353 523 
Total$73,877 $72,377 $1,500 
____________________________
(1)$2.1 million of loans held for sale were designated as nonaccrual or 90 days or more past due at September 30, 2021. Of this balance, $1.6 million was guaranteed by U.S. Government agencies.
December 31, 2020
(Dollars in thousands)Aggregate Fair ValueAggregate Unpaid Principal BalanceDifference
Loans held for sale(1)
$136,026 $129,955 $6,071 
Commercial real estate LHFI(2)
17,011 16,760 251 
Securities carried at fair value through income11,554 10,618 936 
Total$164,591 $157,333 $7,258 
____________________________
(1)$681,000 of loans held for sale were designated as nonaccrual or 90 days or more past due at December 31, 2020. Of this balance, $473,000 was guaranteed by U.S. Government agencies.
(2)There were no commercial real estate loans for which the fair value had been elected that were designated as nonaccrual or 90 days or more past due at December 31, 2020.
Changes in the fair value of assets for which the Company elected the fair value option are classified in the consolidated statement of income line items reflected in the following table:
(Dollars in thousands)Three Months Ended September 30,Nine Months Ended September 30,
Changes in fair value included in noninterest income:2021202020212020
Mortgage banking revenue$(791)$(221)$(5,094)$3,401 
Other income:
Loans at fair value held for investment(126)(103)(251)30 
Securities carried at fair value through income(97)(164)(413)550 
Total impact on other income(223)(267)(664)580 
Total fair value option impact on noninterest income (1)
$(1,014)$(488)$(5,758)$3,981 
____________________________
(1)The fair value option impact on noninterest income is offset by the derivative gain/loss recognized in noninterest income. Please see Note 6 - Mortgage Banking for more detail.
Carrying Value and Estimated Fair Value of Financial Instruments Not Measured at Fair Value
The carrying value and estimated fair values of financial instruments not recorded at fair value are as follows:
(Dollars in thousands)September 30, 2021December 31, 2020
Financial assets:
Level 1 inputs:
Carrying
Value		Estimated
Fair Value		Carrying
Value		Estimated
Fair Value
Cash and cash equivalents$351,965 $351,965 $377,214 $377,214 
Level 2 inputs:
Non-marketable equity securities held in other financial institutions
45,144 45,144 62,586 62,586 
Accrued interest and loan fees receivable23,806 23,806 27,146 27,146 
Level 3 inputs:
Securities held to maturity37,702 40,415 38,128 41,205 
LHFI, net(1)
5,117,341 5,092,269 5,621,092 5,802,744 
Financial liabilities:
Level 2 inputs:
Deposits6,158,768 6,160,571 5,751,315 5,756,312 
FHLB advances and other borrowings309,152 304,501 984,608 991,943 
Subordinated debentures157,357 156,569 157,181 156,395 
Accrued interest payable2,994 2,994 3,556 3,556 
____________________________
(1)Does not include loans for which the fair value option had been elected at December 31, 2020, as these loans are carried at fair value on a recurring basis. There are no loans for which the fair value option had been elected at September 30, 2021.