
		December 31, 2023				December 31, 2022
(in thousands)	Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:
Cash and cash equivalents	1	$	2,162,534	$	2,162,534	$	1,294,643	$	1,294,643
Equity and other investment securities	1,2	76,995		76,995		72,959		72,959
Investment securities available for sale	1,2	8,829,870		8,829,870		3,196,166		3,196,166
Investment securities held to maturity	3	2,300		3,025		2,476		3,197
Loans held for sale	2	30,715		30,715		71,647		71,647
Loans and leases, net	2,3	37,001,080		35,810,989		25,854,846		24,399,370
Restricted equity securities	1	179,274		179,274		47,144		47,144
Residential mortgage servicing rights	3	109,243		109,243		185,017		185,017
Bank owned life insurance	1	680,948		680,948		331,759		331,759
Derivatives	2,3	38,085		38,085		15,444		15,444
Financial liabilities:
Demand, money market, and savings deposits	1	$	35,379,451	$	35,379,451	$	24,355,381	$	24,355,381
Time deposits	2	6,227,569		6,201,519		2,710,231		2,667,535
Securities sold under agreements to repurchase	2	252,119		252,119		308,769		308,769
Borrowings	2	3,950,000		3,950,037		906,175		905,591
Junior subordinated debentures, at fair value	3	316,440		316,440		323,639		323,639
Junior and other subordinated debentures, at amortized cost	3	107,895		97,695		87,813		80,922
Derivatives	2,3	261,091		261,091		271,205		271,205


(in thousands)	December 31, 2023
Description	Total		Level 1		Level 2		Level 3
Financial assets:
Equity and other investment securities
Investments in mutual funds and other securities	$	63,298	$	44,839	$	18,459	$	—
Equity securities held in rabbi trusts	13,697		13,697		—		—

Investment securities available for sale
U.S. Treasury and agencies	1,478,392		373,664		1,104,728		—
Obligations of states and political subdivisions	1,072,105		—		1,072,105		—
Mortgage-backed securities and collateralized mortgage obligations	6,279,373		—		6,279,373		—

Loans held for sale, at fair value	30,715		—		30,715		—
Loans and leases, at fair value	275,140		—		275,140		—
Residential mortgage servicing rights, at fair value	109,243		—		—		109,243
Derivatives

Interest rate futures	3,745		—		3,745		—
Interest rate forward sales commitments	9		—		9		—
Interest rate swaps	33,874		—		33,874		—
Foreign currency derivatives	457		—		457		—
Total assets measured at fair value	$	9,360,048	$	432,200	$	8,818,605	$	109,243
Financial liabilities:
Junior subordinated debentures, at fair value	$	316,440	$	—	$	—	$	316,440
Derivatives
Interest rate lock commitments	137		—		—		137

Interest rate forward sales commitments	535		—		535		—
Interest rate swaps	260,064		—		260,064		—
Foreign currency derivatives	355		—		355		—
Total liabilities measured at fair value	$	577,531	$	—	$	260,954	$	316,577


(in thousands)	December 31, 2022
Description	Total		Level 1		Level 2		Level 3
Financial assets:
Equity and other investment securities
Investments in mutual funds and other securities	$	61,593	$	44,256	$	17,337	$	—
Equity securities held in rabbi trusts	11,366		11,366		—		—

Investment securities available for sale
U.S. Treasury and agencies	936,174		225,853		710,321		—
Obligations of states and political subdivisions	269,800		—		269,800		—
Mortgage-backed securities and collateralized mortgage obligations	1,990,192		—		1,990,192		—

Loans held for sale, at fair value	71,647		—		71,647		—
Loans and leases, at fair value	285,581		—		285,581		—
Residential mortgage servicing rights, at fair value	185,017		—		—		185,017
Derivatives
Interest rate lock commitments	50		—		—		50

Interest rate forward sales commitments	512		—		512		—
Interest rate swaps	14,657		—		14,657		—
Foreign currency derivatives	225		—		225		—
Total assets measured at fair value	$	3,826,814	$	281,475	$	3,360,272	$	185,067
Financial liabilities:
Junior subordinated debentures, at fair value	$	323,639	$	—	$	—	$	323,639
Derivatives
Interest rate lock commitments	18		—		—		18
Interest rate futures	392		—		392		—
Interest rate forward sales commitments	601		—		601		—
Interest rate swaps	270,009		—		270,009		—
Foreign currency derivatives	185		—		185		—
Total liabilities measured at fair value	$	594,844	$	—	$	271,187	$	323,657

Securities—Fair values for investment securities are based on quoted market prices when available or through the use of alternative approaches, such as matrix or model pricing, or broker indicative bids, when market quotes are not readily accessible or available. Management periodically reviews the pricing information received from the third-party pricing service and compares it to a secondary pricing service, evaluating significant price variances between services to determine an appropriate estimate of fair value to report.

Loans Held for Sale—Fair value for residential mortgage loans originated as held for sale is determined based on quoted secondary market prices for similar loans, including the implicit fair value of embedded servicing rights. For loans not originated as held for sale, these loans are accounted for at lower of cost or market, with the fair value estimated based on the expected sales price.

Loans and leases—Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type, including commercial, real estate and consumer loans. Each loan category is further segregated by fixed and adjustable rate loans. The fair value of loans is calculated by discounting expected cash flows at rates at which similar loans are currently being made. These amounts are discounted further by embedded probable losses expected to be realized in the portfolio. For loans originated as held for sale and transferred into loans held for investment, the fair value is determined based on quoted secondary market prices for similar loans. As of December 31, 2023, there were $275.1 million in residential mortgage loans recorded at fair value as they were previously transferred from held for sale to loans held for investment.

Residential Mortgage Servicing Rights—The fair value of MSR is estimated using a DCF model. Assumptions used include market discount rates, anticipated prepayment speeds, delinquency and foreclosure rates, and ancillary fee income net of servicing costs. This model is periodically validated by an independent model validation group. The model assumptions and the MSR fair value estimates are also compared to observable trades of similar portfolios as well as to MSR broker valuations and industry surveys, as available. Management believes the significant inputs utilized are indicative of those that would be used by market participants.

Junior Subordinated Debentures—The fair value of junior subordinated debentures is estimated using an income approach valuation technique. The significant unobservable input utilized in the estimation of fair value of these instruments is the credit risk adjusted spread. The credit risk adjusted spread represents the non-performance risk of the liability, contemplating the inherent risk of the obligation. The Company periodically utilizes a valuation firm to determine or validate the reasonableness of inputs and factors that are used to determine the fair value. The ending carrying (fair) value of the junior subordinated debentures measured at fair value represents the estimated amount that would be paid to transfer these liabilities in an orderly transaction amongst market participants. Due to credit concerns in the capital markets and inactivity in the trust preferred markets that have limited the observability of market spreads, the Company has classified this as a Level 3 fair value measurement.

Derivative Instruments—The fair value of the interest rate lock commitments, interest rate futures, and forward sales commitments are estimated using quoted or published market prices for similar instruments, adjusted for factors such as pull-through rate assumptions based on historical information, where appropriate. The pull-through rate assumptions are considered Level 3 valuation inputs and are significant to the interest rate lock commitment valuation; as such, the interest rate lock commitment derivatives are classified as Level 3. The fair value of the interest rate swaps is determined using a DCF technique incorporating credit valuation adjustments to reflect non-performance risk in the measurement of fair value. Although the Bank has determined that the majority of the inputs used to value its interest rate swap derivatives fall within Level 2 of the fair value hierarchy, the CVA associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of December 31, 2023, the Bank has assessed the significance of the impact of the CVA on the overall valuation of its interest rate swap positions and has determined that the CVA are not significant to the overall valuation of its interest rate swap derivatives. As a result, the Bank has classified its interest rate swap and futures derivative valuations in Level 2 of the fair value hierarchy.

The following table provides a description of the valuation technique, significant unobservable inputs, and qualitative information about the unobservable inputs for the Company's assets and liabilities classified as Level 3 and measured at fair value on a recurring basis as of December 31, 2023:


Financial Instrument	Fair Value (in thousands)		Valuation Technique	Unobservable Input	Range of Inputs	Weighted Average
Assets:
Residential mortgage servicing rights	$	109,243	Discounted cash flow
				Constant prepayment rate	6.07% - 28.17%	6.78%
				Discount rate	9.50% - 16.05%	10.25%
Liabilities:
Interest rate lock commitments, net	$	137	Internal pricing model
				Pull-through rate	67.33% - 100.00%	85.53%
Junior subordinated debentures	$	316,440	Discounted cash flow
				Credit spread	2.25% - 4.66%	3.39%

Generally, increases in the constant prepayment rate or the discount rate utilized in the fair value measurement of the residential mortgage servicing rights will result in a decrease in fair value. Conversely, decreases in the constant prepayment rate or the discount rate will result in an increase in fair value.

Management believes that the credit risk adjusted spread utilized in the fair value measurement of the junior subordinated debentures carried at fair value is indicative of the non-performance risk premium a willing market participant would require under current market conditions, which is an inactive market. Generally, an increase in the credit spread will result in a decrease in the estimated fair value. Conversely, a decrease in the credit spread will result in an increase in the estimated fair value.


	2023						2022
(in thousands)	Residential mortgage servicing rights		Interest rate lock commitments, net		Junior subordinated debentures, at fair value		Residential mortgage servicing rights		Interest rate lock commitments, net		Junior subordinated debentures, at fair value
Beginning balance	$	185,017	$	32	$	(323,639)	$	123,615	$	4,641	$	(293,081)

Change included in earnings	(23,816)		(234)		(29,045)		37,265		(7,342)		(15,715)
Change in fair values included in comprehensive income/loss	—		—		7,866		—		—		(28,842)
Purchases and issuances	5,347		(1,029)		—		24,137		10,103		—
Sales and settlements	(57,305)		1,094		28,378		—		(7,370)		13,999
Ending balance	$	109,243	$	(137)	$	(316,440)	$	185,017	$	32	$	(323,639)
Change in unrealized gains or losses for the period included in earnings for assets and liabilities held at end of period	$	(6,122)	$	(137)	$	(29,045)	$	57,537	$	32	$	(15,715)
Change in unrealized gains or losses for the period included in other comprehensive income for assets and liabilities held at end of period	$	—	$	—	$	7,866	$	—	$	—	$	(28,842)

Changes in residential mortgage servicing rights carried at fair value are recorded in residential mortgage banking revenue within non-interest income. Gains (losses) on interest rate lock commitments carried at fair value are recorded in residential mortgage banking revenue within non-interest income.

The contractual interest expense on the junior subordinated debentures is recorded on an accrual basis as interest on junior subordinated debentures within interest expense. Settlements related to the junior subordinated debentures represent the payment of accrued interest that is embedded in the fair value of these liabilities. The change in fair value of junior subordinated debentures is attributable to the change in the instrument specific credit risk; accordingly, the unrealized gain on fair value of junior subordinated debentures of $7.9 million, for the year ended December 31, 2023, is recorded net of tax as other comprehensive gain of $5.8 million. Comparatively, the unrealized loss of $28.8 million was recorded net of tax as other comprehensive loss of $21.4 million for the year ended December 31, 2022. The gain recorded for the year ended December 31, 2023 was due to a decrease in the implied forward curve and the spot curve shifting higher, partially offset by a decrease in credit spread, which resulted in a decrease in the liability.

From time to time, certain assets are measured at fair value on a nonrecurring basis. These adjustments to fair value generally result from the application of lower-of-cost-or-market accounting or write-downs of individual assets due to impairment, typically on CDL. The following table presents information about the Company's assets and liabilities measured at fair value on a nonrecurring basis for which a nonrecurring change in fair value has been recorded during the reporting period. The amounts disclosed below represent the fair values at the time the nonrecurring fair value measurements were made, and not necessarily the fair value as of the dates reported upon.

The following provides a description of the valuation technique and inputs for the Company's assets and liabilities classified as Level 3 and measured at fair value on a nonrecurring basis. Unobservable inputs and qualitative information about the unobservable inputs are not presented as the fair value is determined by third-party information for loans and leases.

The loans and leases amounts above represent collateral-dependent loans and leases that have been adjusted to fair value. When a loan or non-homogeneous lease is identified as collateral-dependent, the Bank measures the impairment using the current fair value of the collateral, less selling costs. Depending on the characteristics of a loan or lease, the fair value of collateral is generally estimated by obtaining external appraisals, but in some cases, the value of the collateral may be estimated as having little to no value. When a homogeneous lease or equipment finance agreement becomes 181 days past due, it is determined that the collateral has little to no value. If it is determined that the value of the collateral-dependent loan or lease is less than its recorded investment, the Bank recognizes this impairment and adjusts the carrying value of the loan or lease to fair value, less costs to sell, through the ACL. The loss represents charge-offs on collateral-dependent loans and leases for fair value adjustments based on the fair value of collateral.

The following table presents the difference between the aggregate fair value and the aggregate unpaid principal balance of loans held for sale and loans held for investment accounted for under the fair value option as of December 31, 2023 and 2022:


	December 31, 2023						December 31, 2022
(in thousands)	Fair Value		Aggregate Unpaid Principal Balance		Fair Value Less Aggregate Unpaid Principal Balance		Fair Value		Aggregate Unpaid Principal Balance		Fair Value Less Aggregate Unpaid Principal Balance
Loans held for sale	$	30,715	$	29,629	$	1,086	$	71,647	$	70,219	$	1,428
Loans	$	275,140	$	320,397	$	(45,257)	$	285,581	$	333,469	$	(47,888)

The Bank elected to measure certain residential mortgage loans held for sale under the fair value option, with interest income on these loans held for sale reported in interest and fees on loans and leases on the statement of operations. This reduces certain timing differences and better matches changes in the value of these assets with changes in the value of derivatives used as economic hedges for these assets. Residential mortgage loans held for sale accounted for under the fair value option are measured initially at fair value with subsequent changes in fair value recognized in earnings. Gains and losses from such changes in fair value are reported as a component of residential mortgage banking revenue. For the years ended December 31, 2023, 2022, and 2021, the Company recorded a net decrease in fair value of $342,000, a net decrease of $10.7 million, and a net decrease of $13.2 million, respectively, representing the change in fair value reflected in earnings.

Management’s intent to sell residential mortgage loans classified as held for sale may change over time due to such factors as changes in the overall liquidity in markets or changes in characteristics specific to certain loans held for sale. Consequently, these loans may be reclassified to loans held for investment and maintained in the Bank's loan portfolio. In such cases, the loans will continue to be measured at fair value. Gains and losses from changes in fair value for these loans are reported in earnings as a component of other income and interest income on these loans are reported in interest and fees on loans and leases on the statement of operations. For the years ended December 31, 2023 and 2022, the Company recorded a net increase in fair value of $2.6 million and a net decrease of $58.5 million, respectively.