Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2025

Schedule of Rollforward of Level 3 Equity Warrant Asset Fair Values

The table below provides a rollforward of the Level 3 equity warrant asset fair values:


	Three Months Ended March 31,
Equity Warrant Assets	2025		2024
Balance at beginning of period	$	7,162	$	2,874
New equity warrant assets	217		370
Changes in fair value, net	(304)		5,661
Settlements	(40)		(205)
Balance at end of period	$	7,035	$	8,700

Schedule of Record Amount of Assets and Liabilities Measured at Fair Value on a Recurring Basis

The tables below present the recorded amount of assets and liabilities measured at fair value on a recurring basis.


March 31, 2025	Total		Level 1		Level 2		Level 3
Investment securities available-for-sale
U.S. government agencies	$	17,857	$	—	$	17,857	$	—
Mortgage-backed securities	1,291,773		—		1,291,773		—
Municipal bonds (1)	3,050		—		2,967		83

Loans held for investment	316,807		—		—		316,807
Servicing assets (2)	56,684		—		—		56,684
Mutual fund	341		—		341		—
Equity warrant assets	7,035		—		—		7,035
Total assets at fair value	$	1,693,547	$	—	$	1,312,938	$	380,609


December 31, 2024	Total		Level 1		Level 2		Level 3
Investment securities available-for-sale
U.S. government agencies	$	17,897	$	—	$	17,897	$	—
Mortgage-backed securities	1,227,333		—		1,227,333		—
Municipal bonds (1)	2,973		—		2,890		83


Loans held for investment	328,746		—		—		328,746
Servicing assets (2)	55,788		—		—		55,788
Mutual fund	458		—		458		—
Equity warrant assets	7,162		—		—		7,162
Total assets at fair value	$	1,640,357	$	—	$	1,248,578	$	391,779


(1)			During the three months ended March 31, 2025 and March 31, 2024 there was no level 3 fair value adjustment gain or loss.
(2)			See Note 7 for a rollforward of recurring Level 3 fair values for servicing assets.

Schedule of Fair Value Carrying Amount and Unpaid Principal Outstanding of Loans Under Fair Value Option

The following tables provide more information about the fair value carrying amount and the unpaid principal outstanding of loans accounted for under the fair value option at March 31, 2025 and December 31, 2024.


	March 31, 2025
	Total Loans						Nonaccruals						90 Days or More Past Due
	Fair Value Carrying Amount		Unpaid Principal Balance		Difference		Fair Value Carrying Amount		Unpaid Principal Balance		Difference		Fair Value Carrying Amount		Unpaid Principal Balance		Difference
Fair Value Option Elections
Loans held for investment	$	316,807	$	331,203	$	(14,396)	$	68,038	$	69,662	$	(1,623)	$	54,226	$	55,503	$	(1,277)
	$	316,807	$	331,203	$	(14,396)	$	68,038	$	69,662	$	(1,623)	$	54,226	$	55,503	$	(1,277)


	December 31, 2024
	Total Loans						Nonaccruals						90 Days or More Past Due
	Fair Value Carrying Amount		Unpaid Principal Balance		Difference		Fair Value Carrying Amount		Unpaid Principal Balance		Difference		Fair Value Carrying Amount		Unpaid Principal Balance		Difference
Fair Value Option Elections
Loans held for investment	$	328,746	$	342,150	$	(13,404)	$	63,386	$	64,784	$	(1,398)	$	51,272	$	52,528	$	(1,256)
	$	328,746	$	342,150	$	(13,404)	$	63,386	$	64,784	$	(1,398)	$	51,272	$	52,528	$	(1,256)

The following table presents the net gains (losses) from changes in fair value.


	Three Months Ended March 31,
Gains (Losses) on Loans Accounted for under the Fair Value Option	2025		2024

Loans held for investment	$	(1,034)	$	(219)
	$	(1,034)	$	(219)

Schedule of the Activity Pertaining to Loans Accounted for Under Fair Value Option

The following tables summarize the activity pertaining to loans accounted for under the fair value option:


	Three Months Ended March 31,
Loans held for investment	2025		2024
Balance at beginning of period	$	328,746	$	388,036
Repurchases	6,252		8,565
Fair value changes	(1,034)		(219)

Settlements	(17,157)		(17,160)
Balance at end of period	$	316,807	$	379,222

Schedule of Recorded Amount of Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The tables below present the recorded amount of assets measured at fair value on a non-recurring basis. The Company has no liabilities recorded at fair value on a non-recurring basis.


March 31, 2025	Total		Level 1		Level 2		Level 3
Collateral-dependent loans	$	17,602	$	—	$	—	$	17,602
Foreclosed assets	668		—		—		668
Total assets at fair value	$	18,270	$	—	$	—	$	18,270


December 31, 2024	Total		Level 1		Level 2		Level 3
Collateral-dependent loans	$	17,085	$	—	$	—	$	17,085
Foreclosed assets	1,944		—		—		1,944
Total assets at fair value	$	19,029	$	—	$	—	$	19,029

Schedule of Analysis of Level 3 Valuation Techniques

For Level 3 assets measured at fair value on a recurring or non-recurring basis as of March 31, 2025 and December 31, 2024, the significant unobservable inputs used in the fair value measurements were as follows:


March 31, 2025
Level 3 Assets with Significant Unobservable Inputs	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range		Weighted Average (1)
Recurring fair value
Municipal bond	$	83	Discounted expected cash flows	Discount rate	7.2	%	N/A
				Prepayment speed	5.0	%	N/A


Loans held for investment	$	316,807	Discounted expected cash flows	Loss rate	0.0 % - 6.6 %		1.1	%
				Discount rate	7.0 % - 18.0 %		9.1	%
				Prepayment speed	15.0 % - 30.4 %		17.1	%

Servicing assets	$	56,684	Discounted expected cash flows	Discount rate	13.5%		13.5	%
				Prepayment speed	12.0% - 18.6%		16.0	%
Equity warrant assets	$	7,035	Black-Scholes option pricing model	Volatility	13.1 % - 90.0 %		33.3	%
				Risk-free interest rate	4.1 % - 4.3%		4.2	%
				Marketability discount	15.0 % - 25.0 %		17.1	%
				Remaining life	2.7 - 11.4 years		4.5 years
Non-recurring fair value
Collateral-dependent loans	$	17,602	Discounted appraisals	Appraisal adjustments (2)	0.0 % - 95.3 %		45.4	%
Foreclosed assets	$	668	Discounted appraisals	Appraisal adjustments (2)	10.0	%	10.0	%


December 31, 2024
Level 3 Assets with Significant Unobservable Inputs	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range		Weighted Average (1)
Recurring fair value
Municipal bond	$	83	Discounted expected cash flows	Discount rate	7.2	%	N/A
				Prepayment speed	5.0	%	N/A
Loans held for investment	$	328,746	Discounted expected cash flows	Loss rate	0.0 % - 6.3 %		1.1	%
				Discount rate	7.0 % - 18.0 %		9.2	%
				Prepayment speed	14.3% - 30.1%		16.3	%

Servicing assets	$	55,788	Discounted expected cash flows	Discount rate	13.5	%	13.5	%
				Prepayment speed	11.9% - 18.3%		15.6	%
Equity warrant assets	$	7,162	Black-Scholes option pricing model	Volatility	13.1 % - 90.0 %		32.1	%
				Risk-free interest rate	4.5 % - 4.6 %		4.5	%
				Marketability discount	10.0% - 25.0%		13.8	%
				Remaining life	2.9 - 12 years		4.5 years
Non-recurring fair value
Collateral-dependent loans	$	17,085	Discounted appraisals	Appraisal adjustments (2)	0.0 % - 95.8 %		45.4	%
Foreclosed assets	$	1,944	Discounted appraisals	Appraisal adjustments (2)	10.0%		10.0	%


(1)			Weighted averages are determined by the relative fair value of the instruments or the relative contribution to the instruments fair value.
(2)			Appraisals may be adjusted by management for customized discounting criteria, estimated sales costs, and other qualitative adjustments.

Schedule of Carrying Amount and Estimated Fair Value of Financial Instruments

The carrying amounts and estimated fair values of the Company’s financial instruments not measured at fair value on a recurring or non-recurring basis are as follows:


March 31, 2025	Carrying Amount		Quoted Price In Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Financial assets
Cash and due from banks	$	744,263	$	744,263	$	—	$	—	$	744,263

Certificates of deposit with other banks	250		250		—		—		250
Loans held for sale	367,955		—		—		390,155		390,155
Loans and leases held for investment, net of allowance for credit losses on loans and leases	10,186,920		—		—		10,096,104		10,096,104
Financial liabilities
Deposits	12,395,945		—		11,953,670		—		11,953,670
Borrowings	110,247		—		—		117,449		117,449


December 31, 2024	Carrying Amount		Quoted Price In Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Financial assets
Cash and due from banks	$	608,800	$	608,800	$	—	$	—	$	608,800

Certificates of deposit with other banks	250		250		—		—		250
Loans held for sale	346,002		—		—		367,993		367,993
Loans and leases held for investment, net of allowance for credit losses on loans and leases	9,737,112		—		—		9,556,981		9,556,981
Financial liabilities
Deposits	11,760,494		—		11,317,639		—		11,317,639
Borrowings	112,820		—		—		121,026		121,026

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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