Fair Value of Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2018

Summary of Balances of Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present the balances of assets and liabilities measured at fair value on a recurring basis for the periods presented:



	December 31, 2018
(Dollars in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities
U.S. Treasury	$	126,404	$	126,404	$	—	$	—
U.S. Government agencies	140,307		—		137,157		3,150
Municipal	138,490		—		29,564		108,926
Corporate notes	91,045		—		91,045		—
Mortgage-backed	1,629,835		—		1,629,835		—
Trading account securities	1,692		—		1,692		—
Equity securities with readily determinable fair value	34,717		—		34,717		—
Mortgage loans held-for-sale	264,070		—		264,070		—
Loans held-for-investment	93,857		—		82,510		11,347
MSRs	75,183		—		—		75,183
Nonqualified deferred compensations assets	11,282		—		11,282		—
Derivative assets	73,172		—		70,715		2,457
Total	$	2,680,054	$	126,404	$	2,352,587	$	201,063
Derivative liabilities	$	68,088	$	—	$	68,088	$	—

	December 31, 2017
(Dollars in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities
U.S. Treasury	$	143,822	$	143,822	$	—	$	—
U.S. Government agencies	156,915		—		153,136		3,779
Municipal	115,352		—		38,171		77,181
Corporate notes	31,050		—		31,050		—
Mortgage-backed	1,319,725		—		1,319,725		—
Equity securities	36,802		—		36,802		—
Trading account securities	995		—		995		—
Mortgage loans held-for-sale	313,592		—		313,592		—
Loans held-for-investment	33,717		—		—		33,717
MSRs	33,676		—		—		33,676
Nonqualified deferred compensations assets	11,065		—		11,065		—
Derivative assets	52,069		—		49,912		2,157
Total	$	2,248,780	$	143,822	$	1,954,448	$	150,510
Derivative liabilities	$	35,671	$	—	$	35,671	$	—

Summary of Changes in Level Three Assets and Liabilities Measured at Fair Value on a Recurring Basis

The changes in Level 3 assets measured at fair value on a recurring basis during the year ended December 31, 2018 are summarized as follows:



				U.S. Government Agencies			Loans held-for-investment			MSRs		Derivative assets
(Dollars in thousands)	Municipal			U.S. Government Agencies			Loans held-for-investment			MSRs		Derivative assets
Balance at January 1, 2018	$	77,181		$	3,779		$	33,717		$	33,676	$	2,157
Total net gains (losses) included in:
Net income ⁽¹⁾	—			—			(1,077		)	27,701		300
Other comprehensive loss	(8,541		)	(314		)	—			—		—
Purchases ⁽²⁾	63,644			—			—			13,806		—
Issuances	—			—			—			—		—
Sales	—			—			—			—		—
Settlements	(23,358		)	(315		)	(28,367		)	—		—
Net transfers into/(out of) Level 3	—			—			7,074			—		—
Balance at December 31, 2018	$	108,926		$	3,150		$	11,347		$	75,183	$	2,457


(1)	Changes in the balance of MSRs and derivative assets as presented in the table above are recorded as a component of mortgage banking revenue in non-interest income. Changes in the balance of loans held-for-investment related to fair value adjustments are recorded as other non-interest income.


(2)	Purchased as a part of the Veterans First business combination. See Note 7 - Business Combinations and Asset Acquisitions for further discussion.

The changes in Level 3 assets measured at fair value on a recurring basis during the year ended December 31, 2017 are summarized as follows:



(Dollars in thousands)	Municipal			U.S. Government Agencies			Loans held-for-investment			MSRs		Derivative assets
Balance at January 1, 2017	$	79,626		$	—		$	22,137		$	19,103	$	2,291
Total net gains (losses) included in:
Net income ⁽¹⁾	—			—			1,025			14,573		(134		)
Other comprehensive loss	(501		)	(504		)	—			—		—
Purchases	33,593			—			—			—		—
Issuances	—			—			—			—		—
Sales	—			—			—			—		—
Settlements	(35,537		)	—			(13,219		)	—		—
Net transfers into/(out of) Level 3 ⁽²⁾	—			4,283			23,774			—		—
Balance at December 31, 2017	$	77,181		$	3,779		$	33,717		$	33,676	$	2,157


(1)	Changes in the balance of MSRs and derivative assets as presented in the table above are recorded as a component of mortgage banking revenue in non-interest income. Changes in the balance of loans held-for-investment related to fair value adjustments are recorded as other non-interest income.


(2)	Transfers into Level 3 relate to certain U.S. government agency available-for-sale investment securities and loans reclassified from the held-for-sale portfolio at the time of market conditions or other developments changing management's intent with respect to the disposition of those loans.

Summary of Assets Measured at Fair Value on a Nonrecurring Basis

For assets measured at fair value on a nonrecurring basis that were still held in the balance sheet at the end of the period, the following table provides the carrying value of the related individual assets or portfolios at December 31, 2018.



	December 31, 2018								Year Ended December 31, 2018 Fair Value Losses Recognized, net
(Dollars in thousands)	Total		Level 1		Level 2		Level 3
Impaired loans-collateral based	$	99,803	$	—	$	—	$	99,803	$	18,721
Other real estate owned ⁽¹⁾	24,820		—		—		24,820		5,965
Total	$	124,623	$	—	$	—	$	124,623	$	24,686


(1)	Fair value losses recognized, net on other real estate owned include valuation adjustments and charge-offs during the respective period.

Schedule of Valuation Techniques and Significant Unobservable Inputs Used to Measure Both Recurring and Nonrecurring

The valuation techniques and significant unobservable inputs used to measure both recurring and non-recurring Level 3 fair value measurements at December 31, 2018 were as follows:

(Dollars in thousands)

Fair Value

Valuation Methodology

Significant Unobservable Input

Range

of Inputs

Weighted

Average

of Inputs

Impact to valuation

from an increased or

higher input value

Measured at fair value on a recurring basis:

Municipal securities

108,926

Bond pricing

Equivalent rating

BBB-AA+

N/A

Increase

U.S. Government agencies

3,150

Bond pricing

Equivalent rating

AAA

Increase

Loans held-for-investment

11,347

Discounted cash flows

Discount rate

4%-5%

4.31%

Decrease

Credit spread

0%-7%

1.30%

Decrease

Constant prepayment rate (CPR)

12.06%

Decrease

MSRs

75,183

Discounted cash flows

Discount rate

6%-18%

9.98%

Decrease

Constant prepayment rate (CPR)

6%-91%

11.76%

Decrease

Cost of servicing

$15-$200

Decrease

Cost of servicing - delinquent

$200-$1,000

273

Decrease

Derivatives

2,457

Discounted cash flows

Pull-through rate

17%-100%

86.15

Increase

Measured at fair value on a non-recurring basis:

Impaired loans—collateral based

99,803

Appraisal value

Appraisal adjustment - cost of sale

10%

10.00%

Decrease

Other real estate owned, including covered other real-estate owned

24,820

Appraisal value

Appraisal adjustment - cost of sale

10%

10.00%

Decrease

Summary of Carrying Amounts and Estimated Fair Values of Financial Instruments

The table below presents the carrying amounts and estimated fair values of the Company’s financial instruments as of the dates shown:



	December 31, 2018				December 31, 2017
(Dollars in thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Cash and cash equivalents	$	392,200	$	392,200	$	277,591	$	277,591
Interest bearing deposits with banks	1,099,594		1,099,594		1,063,242		1,063,242
Available-for-sale securities	2,126,081		2,126,081		1,803,666		1,803,666
Held-to-maturity securities	1,067,439		1,036,096		826,449		812,516
Trading account securities	1,692		1,692		995		995
Equity securities with readily determinable fair value	34,717		34,717		—		—
FHLB and FRB stock, at cost	91,354		91,354		89,989		89,989
Brokerage customer receivables	12,609		12,609		26,431		26,431
Mortgage loans held-for-sale, at fair value	264,070		264,070		313,592		313,592
Loans held-for-investment, at fair value	93,857		93,857		33,717		33,717
Loans held-for-investment, at amortized cost	23,726,834		23,780,739		21,607,080		21,768,978
MSRs	75,183		75,183		33,676		33,676
Nonqualified deferred compensation assets	11,282		11,282		11,065		11,065
Derivative assets	73,172		73,172		52,069		52,069
Accrued interest receivable and other	260,281		260,281		227,649		227,649
Total financial assets	$	29,330,365	$	29,352,927	$	26,367,211	$	26,515,176
Financial Liabilities
Non-maturity deposits	$	20,833,837	$	20,833,837	$	18,775,977	$	18,775,977
Deposits with stated maturities	5,260,841		5,283,063		4,407,370		4,350,004
FHLB advances	426,326		429,830		559,663		544,750
Other borrowings	393,855		393,855		266,123		266,123
Subordinated notes	139,210		138,345		139,088		144,266
Junior subordinated debentures	253,566		263,846		253,566		264,696
Derivative liabilities	68,088		68,088		35,671		35,671
Accrued interest payable	16,025		16,025		8,030		8,030
Total financial liabilities	$	27,391,748	$	27,426,889	$	24,445,488	$	24,389,517