Fair value of financial instruments
 12 Months Ended
Dec. 31, 2020
Fair Value Disclosures [Abstract]  
Fair value of financial instruments Fair value of financial instruments:FASB ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a framework for measuring the fair value of assets and liabilities according to a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that are derived from assumptions based on management’s estimate of assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances.
The hierarchy is broken down into the following three levels, based on the reliability of inputs:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs for assets or liabilities that are derived from assumptions based on management’s estimate of assumptions that market participants would use in pricing the assets or liabilities.
The Company records the fair values of financial assets and liabilities on a recurring and non-recurring basis using the following methods and assumptions:
Investment securities-Investment securities are recorded at fair value on a recurring basis. Fair values for securities are based on quoted market prices, where available. If quoted prices are not available, fair values are based on quoted market prices of similar instruments or are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the pricing relationship or correlation among other benchmark quoted securities. Investment securities valued using quoted market prices of similar instruments or that are valued using matrix pricing are classified as Level 2. When significant inputs to the valuation are unobservable, the available-for-sale securities are classified within Level 3 of the fair value hierarchy.
Where no active market exists for a security or other benchmark securities, fair value is estimated by the Company with reference to discount margins for other high-risk securities.
Loans held for sale-Loans held for sale are carried at fair value. Fair value is determined using current secondary market prices for loans with similar characteristics, that is, using Level 2 inputs.
Derivatives-The fair value of the interest rate swaps are based upon fair values provided from entities that engage in interest rate swap activity and is based upon projected future cash flows and interest rates. Fair value of commitments is based on fees currently charged to enter into similar agreements, and for fixed-rate commitments, the difference between current levels of interest rates and the committed rates is also considered. These financial instruments are classified as Level 2.
Other real estate owned (“OREO”)-OREO is comprised of commercial and residential real estate obtained in partial or total satisfaction of loan obligations and excess land and facilities held for sale. OREO acquired in settlement of indebtedness is recorded at the lower of the carrying amount of the loan or the fair value of the real estate less costs to sell. Fair value is determined on a nonrecurring basis based on appraisals by qualified licensed appraisers and is adjusted for management’s estimates of costs to sell and holding period discounts. The valuations are classified as Level 3.
Mortgage servicing rights ("MSRs")-MSRs are carried at fair value. Fair value is determined using an income approach with various assumptions including expected cash flows, market discount rates, prepayment speeds, servicing costs, and other factors. As such, mortgage servicing rights are considered Level 3.
Collateral dependent loans (Impaired loans prior to the adoption of ASC 326)-loans for which, based on current information and events, the Company has determined foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loan to be provided substantially through the operation or sale of the collateral and it is probable that the creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. Collateral dependent loans are classified as Level 3.
The following table contains the estimated fair values and the related carrying values of the Company's financial instruments. Items which are not financial instruments are not included.
 
 Fair Value
December 31, 2020Carrying amount Level 1Level 2Level 3Total
Financial assets:     
Cash and cash equivalents$1,317,898 $1,317,898 $— $— $1,317,898 
Investment securities1,176,991 — 1,176,991 — 1,176,991 
Loans, net6,912,570 — — 7,058,693 7,058,693 
Loans held for sale899,173 — 683,770 215,403 899,173 
Interest receivable43,603 33 5,254 38,316 43,603 
Mortgage servicing rights79,997 — — 79,997 79,997 
Derivatives68,938 — 68,938 — 68,938 
Financial liabilities: 
Deposits: 
Without stated maturities$8,020,783 $8,020,783 $— $— $8,020,783 
With stated maturities1,437,254 — 1,446,605 — 1,446,605 
Securities sold under agreement to
repurchase and federal funds sold
32,199 32,199 — — 32,199 
Subordinated debt189,527 — — 192,149 192,149 
Other borrowings16,598 — 16,598 — 16,598 
Interest payable6,772 327 4,210 2,235 6,772 
Derivatives48,242 — 48,242 — 48,242 

 
 Fair Value
December 31, 2019Carrying amount Level 1Level 2Level 3Total
Financial assets:     
Cash and cash equivalents$232,681 $232,681 $— $— $232,681 
Investment securities691,676 — 691,676 — 691,676 
Loans, net4,378,503 — — 4,363,903 4,363,903 
Loans held for sale262,518 — 262,518 — 262,518 
Interest receivable17,083 — 3,282 13,801 17,083 
Mortgage servicing rights75,521 — — 75,521 75,521 
Derivatives21,981 — 21,981 — 21,981 
Financial liabilities: 
Deposits: 
Without stated maturities$3,743,085 $3,743,085 $— $— $3,743,085 
With stated maturities1,191,853 — 1,200,145 — 1,200,145 
Securities sold under agreement to
repurchase and federal funds sold
23,745 23,745 — — 23,745 
Federal Home Loan Bank advances250,000 — 250,213 — 250,213 
Subordinated debt30,930 — 29,706 — 29,706 
Interest payable6,465 376 6,089 — 6,465 
Derivatives17,933 — 17,933 — 17,933 
The balances and levels of the assets measured at fair value on a recurring basis at December 31, 2020 are presented in the following table:
December 31, 2020Quoted prices
in active
markets for
identical assets
(liabilities)
(level 1)		Significant
other
observable
inputs
(level 2) 		Significant unobservable
inputs
(level 3) 		Total
Recurring valuations:    
Financial assets:     
Available-for-sale securities:    
U.S. government agency securities$— $2,003 $— $2,003 
Mortgage-backed securities - residential— 773,336 — 773,336 
Mortgage-backed securities - commercial— 21,588 — 21,588 
Municipals, tax-exempt— 356,329 — 356,329 
Treasury securities— 16,628 — 16,628 
Corporate securities— 2,516 — 2,516 
Equity securities— 4,591 — 4,591 
Total$— $1,176,991 $— $1,176,991 
Loans held for sale$— $683,770 $215,403 $899,173 
Mortgage servicing rights— — 79,997 79,997 
Derivatives— 68,938 — 68,938 
Financial Liabilities:
Derivatives— 48,242 — 48,242 


The balances and levels of the assets measured at fair value on a non-recurring basis at December 31, 2020 are presented in the following table: 
At December 31, 2020Quoted prices
in active
markets for
identical assets
(liabilities
(level 1)		Significant
other
observable
inputs
(level 2) 		Significant unobservable
inputs
(level 3) 		Total
Non-recurring valuations:    
Financial assets:    
Other real estate owned$— $— $6,662 $6,662 
Collateral dependent loans:
Commercial and industrial$— $— $1,728 $1,728 
Construction— — 3,877 3,877 
Residential real estate:
1-4 family mortgage— — 226 226 
Residential line of credit— — 1,174 1,174 
Commercial real estate:
Non-owner occupied— — 3,391 3,391 
Consumer and other— — 8,164 8,164 
Total collateral dependent loans$— $— $18,560 $18,560 
The balances and levels of the assets measured at fair value on a recurring basis at December 31, 2019 are presented in the following table: 
At December 31, 2019Quoted prices
in active
markets for
identical assets
(liabilities)
(level 1)		Significant
other
observable
inputs
(level 2) 		Significant unobservable
inputs
(level 3) 		Total
Recurring valuations:    
Financial assets:     
Available-for-sale securities:    
Mortgage-backed securities - residential$— $477,312 $— $477,312 
Mortgage-backed securities - commercial— 13,364 — 13,364 
Municipals, tax-exempt— 189,235 — 189,235 
Treasury securities— 7,448 — 7,448 
Corporate securities— 1,022 — 1,022 
Equity securities— 3,295 — 3,295 
Total$— $691,676 $— $691,676 
Loans held for sale$— $262,518 $— $262,518 
Mortgage servicing rights— — 75,521 75,521 
Derivatives— 21,981 — 21,981 
Financial Liabilities:
Derivatives— 17,933 — 17,933 
 
The balances and levels of the assets measured at fair value on a non-recurring basis at December 31, 2019 are presented in the following table: 
At December 31, 2019Quoted prices
in active
markets for
identical assets
(liabilities)
(level 1)		Significant
other observable inputs
(level 2)		Significant unobservable
inputs
(level 3)		Total
Non-recurring valuations:    
Financial assets:    
Other real estate owned$— $— $9,774 $9,774 
Impaired Loans (1):
Commercial and industrial$— $— $6,481 $6,481 
Residential real estate:
1-4 family mortgage— — 378 378 
Residential line of credit— — 321 321 
Commercial real estate: 
Owner occupied— — 951 951 
Non-owner occupied— — 2,560 2,560 
Total$— $— $10,691 $10,691 
(1) Includes both impaired non-purchased loans and collateral-dependent PCI loans.
The following table presents information as of December 31, 2020 about significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a nonrecurring basis:
Financial instrumentFair ValueValuation techniqueSignificant 
Unobservable inputs		Range of
inputs
Collateral dependent loans$18,560 Valuation of collateralDiscount for comparable sales
0%-30%
Other real estate owned$6,662 Appraised value of property less costs to sellDiscount for costs to sell
0%-15%
The following table presents information as of December 31, 2019 about significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a nonrecurring basis:
Financial instrumentFair ValueValuation techniqueSignificant 
Unobservable inputs		Range of
inputs
Impaired loans (1)
$10,691 Valuation of collateralDiscount for comparable sales
0%-30%
Other real estate owned$9,774 Appraised value of property less costs to sellDiscount for costs to sell
0%-15%
(1) Includes both impaired non-purchased loans and collateral-dependent PCI loans.
For collateral dependent loans, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. Fair value of the loan's collateral is determined by third-party appraisals, which are then adjusted for the estimated selling and closing costs related to liquidation of of the collateral. Collateral dependent loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on changes in market conditions from the time of valuation and management's knowledge of the client and client's business. Other real estate owned acquired in settlement of indebtedness is recorded at fair value of the real estate less estimated costs to sell. Subsequently, it may be necessary to record nonrecurring fair value adjustments for declines in fair value. Any write-downs based on the asset's fair value at the date of foreclosure are charged to the allowance for credit losses. Appraisals for both collateral dependent loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the lending administrative department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry wide statistics.
Fair value option
The Company measures mortgage loans originated for sale at fair value under the fair value option as permitted under ASC 825. Electing to measure these assets at fair value reduces certain timing differences and more accurately matches the changes in fair value of the loans with changes in the fair value of derivative instruments used to economically hedge them.
Net gains of $24,233 resulting from fair value changes of mortgage loans were recorded in income during the year ended December 31, 2020, compared to net losses of $2,861 during the year ended December 31, 2019, respectively. The amount does not reflect changes in fair values of related derivative instruments used to hedge exposure to market-related risks associated with these mortgage loans. The change in fair value of both loans held for sale and the related derivative instruments are recorded in Mortgage Banking Income in the consolidated statements of income. Election of the fair value option allows the Company to reduce the accounting volatility that would otherwise result from the asymmetry created by accounting for the financial instruments at the lower of cost or fair value and the derivatives at fair value.
As of December 31, 2020, and 2019, there were $151,184 and $51,705, respectively, of GNMA loans previously sold that the Company did not record on its consolidated balance sheets as the Company determined there not to be a more-than-trivial benefit based on an analysis of interest rates and an assessment of potential reputational risk associated with these loans.
The Company’s valuation of loans held for sale incorporates an assumption for credit risk; however, given the short-term period that the Company holds these loans, valuation adjustments attributable to instrument-specific credit risk is nominal.
Interest income on loans held for sale measured at fair value is accrued as it is earned based on contractual rates and is reflected in loan interest income in the consolidated statements of income.
The following table summarizes the differences between the fair value and the principal balance for loans held for sale and nonaccrual loans measured at fair value as of December 31, 2020 and 2019: 
December 31, 2020Aggregate
fair value 		Aggregate
Unpaid
Principal
Balance 		Difference
Mortgage loans held for sale measured at fair value$683,770 $651,887 $31,883 
Commercial loans held for sale measured at fair value208,914 226,867 (17,953)
Past due loans of 90 days or more83 163 (80)
Nonaccrual loans6,406 12,033 (5,627)
December 31, 2019 
Mortgage loans held for sale measured at fair value$262,518 $254,868 $7,650 
Past due loans of 90 days or more— — — 
Nonaccrual loans— — —