Fair Value of Financial Instruments (Tables)
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12 Months Ended |
Dec. 31, 2021 |
Fair Value Disclosures [Abstract] |
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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 December 31, 2021 and 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. | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2021 | | (Dollars in thousands) | Level 1 | | Level 2 | | Level 3 | | Total | | State and municipal securities | $ | — | | | $ | 364,357 | | | $ | 41,461 | | | $ | 405,818 | | | Corporate bonds | — | | | 82,734 | | | — | | | 82,734 | | | U.S. treasury securities | 92,245 | | | — | | | — | | | 92,245 | | | U.S. government agency securities | — | | | 5,413 | | | — | | | 5,413 | | | Commercial mortgage-backed securities | — | | | 64,243 | | | — | | | 64,243 | | | Residential mortgage-backed securities | — | | | 557,801 | | | — | | | 557,801 | | | Commercial collateralized mortgage obligations | — | | | 19,672 | | | — | | | 19,672 | | | Residential collateralized mortgage obligations | — | | | 193,740 | | | — | | | 193,740 | | | Asset-backed securities | — | | | 83,062 | | | — | | | 83,062 | | | Securities available for sale | 92,245 | | | 1,371,022 | | | 41,461 | | | 1,504,728 | | | Securities carried at fair value through income | — | | | — | | | 7,497 | | | 7,497 | | | Loans held for sale | — | | | 37,032 | | | — | | | 37,032 | | | | | | | | | | | | Mortgage servicing rights | — | | | — | | | 16,220 | | | 16,220 | | | Other assets - derivatives | — | | | 11,459 | | | — | | | 11,459 | | | Total recurring fair value measurements - assets | $ | 92,245 | | | $ | 1,419,513 | | | $ | 65,178 | | | $ | 1,576,936 | | | | | | | | | | | | Other liabilities - derivatives | $ | — | | | $ | (11,494) | | | $ | — | | | $ | (11,494) | | | Total recurring fair value measurements - liabilities | $ | — | | | $ | (11,494) | | | $ | — | | | $ | (11,494) | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2020 | | (Dollars in thousands) | Level 1 | | Level 2 | | Level 3 | | Total | | 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) | | |
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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 years ended December 31, 2021 and 2020, are summarized as follows: | | | | | | | | | | | | | | | | | | | | | | | | | (Dollars in thousands) | Loans at Fair Value | | MSRs | | Securities Available for Sale | | Securities 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) | — | | | (2,593) | | | — | | | — | | | Other noninterest income | (251) | | | — | | | — | | | (814) | | | Loss recognized in AOCI | — | | | — | | | (1,263) | | | — | | | Purchases, issuances, sales and settlements: | | | | | | | | | Originations | — | | | 5,153 | | | — | | | — | | | Purchases | — | | | — | | | 1,000 | | | — | | | Sales | — | | | — | | | — | | | — | | | Settlements | (16,760) | | | — | | | (2,341) | | | (3,243) | | | Balance at December 31, 2021 | $ | — | | | $ | 16,220 | | | $ | 41,461 | | | $ | 7,497 | | | | | | | | | | | | Balance at January 1, 2020 | $ | 17,670 | | | $ | 20,697 | | | $ | 38,173 | | | $ | 11,513 | | | Gain (loss) recognized in earnings: | | | | | | | | | Mortgage banking revenue(1) | — | | | (12,746) | | | — | | | — | | | Other noninterest income | (53) | | | — | | | — | | | 493 | | | Gain recognized in AOCI | — | | | — | | | 1,575 | | | — | | | Purchases, issuances, sales and settlements: | | | | | | | | | Originations | — | | | 5,709 | | | — | | | — | | | Purchases | — | | | — | | | 6,478 | | | — | | | Sales | — | | | — | | | (140) | | | — | | | Settlements | (606) | | | — | | | (2,021) | | | (452) | | | Balance at December 31, 2020 | $ | 17,011 | | | $ | 13,660 | | | $ | 44,065 | | | $ | 11,554 | | |
____________________________ (1)Total mortgage banking revenue includes changes in fair value due to market changes and run-off.
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Significant Assumptions Used to Value Mortgage Servicing Rights |
The significant assumptions used to value MSRs were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2021 | | December 31, 2020 | | Range | | Weighted Average(1) | | Range | | Weighted Average(1) | Prepayment speeds | 9.10% - 36.51% | | 15.63 | % | | 11.82% - 37.95% | | 22.08 | % | Discount rates | 8.89 - 10.39 | | 9.32 | | | 7.83 - 9.09 | | 8.27 | | | | | | | | | |
__________________________ (1)The weighted average was calculated with reference to the principal balance of the underlying mortgages.
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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: | | | | | | | | | | | | | | | | | | | December 31, 2021 | (Dollars in thousands) | Aggregate Fair Value | | Aggregate Unpaid Principal Balance | | Difference | Loans held for sale(1) | $ | 37,032 | | | $ | 36,072 | | | $ | 960 | | | | | | | | | | | | | | Securities carried at fair value through income | 7,497 | | | 7,375 | | | 122 | | Total | $ | 44,529 | | | $ | 43,447 | | | $ | 1,082 | |
____________________________ (1)$1.8 million of loans held for sale were designated as nonaccrual or 90 days or more past due at December 31, 2021. Of this balance, $1.2 million was guaranteed by U.S. Government agencies. | | | | | | | | | | | | | | | | | | | December 31, 2020 | (Dollars in thousands) | Aggregate Fair Value | | Aggregate Unpaid Principal Balance | | Difference | 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 income | 11,554 | | | 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) | | | | | Years Ended December 31, | Changes in fair value included in noninterest income: | | | | | | | | | 2021 | | 2020 | | 2019 | Mortgage banking revenue (loans held for sale) | | | | | | | | | $ | (5,111) | | | $ | 5,131 | | | $ | 550 | | Other income: | | | | | | | | | | | | | | Loans at fair value held for investment | | | | | | | | | (251) | | | (53) | | | 124 | | Securities carried at fair value through income | | | | | | | | | (814) | | | 493 | | | 586 | | Total impact on other income | | | | | | | | | (1,065) | | | 440 | | | 710 | | Total fair value option impact on noninterest income (1) | | | | | | | | | $ | (6,176) | | | $ | 5,571 | | | $ | 1,260 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
____________________________ (1)The fair value option impact on noninterest income is offset by the derivative gain/loss recognized in noninterest income. Please see Note 9 - Mortgage Banking for more detail.
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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) | December 31, 2021 | | December 31, 2020 | | Financial assets: Level 1 inputs: | Carrying Value | | Estimated Fair Value | | Carrying Value | | Estimated Fair Value | | Cash and cash equivalents | $ | 705,618 | | | $ | 705,618 | | | $ | 377,214 | | | $ | 377,214 | | | Level 2 inputs: | | | | | | | | | Non-marketable equity securities held in other financial institutions | 45,192 | | | 45,192 | | | 62,586 | | | 62,586 | | | Accrued interest and loan fees receivable | 23,402 | | | 23,402 | | | 27,146 | | | 27,146 | | | Level 3 inputs: | | | | | | | | | Securities held to maturity | 22,767 | | | 25,117 | | | 38,128 | | | 41,205 | | | LHFI, net(1) | 5,166,745 | | | 5,133,257 | | | 5,621,092 | | | 5,802,744 | | | Financial liabilities: | | | | | | | | | Level 2 inputs: | | | | | | | | | Deposits | 6,570,693 | | | 6,572,215 | | | 5,751,315 | | | 5,756,312 | | | FHLB advances and other borrowings | 309,801 | | | 305,374 | | | 984,608 | | | 991,943 | | | Subordinated indebtedness | 157,417 | | | 156,629 | | | 157,181 | | | 156,395 | | | Accrued interest payable | 2,696 | | | 2,696 | | | 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 December 31, 2021.
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