Fair Value of Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2019

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, 2019
(Dollars in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities
U.S. Treasury	$	121,088	$	121,088	$	—	$	—
U.S. Government agencies	365,442		—		362,796		2,646
Municipal	145,318		—		33,368		111,950
Corporate notes	94,841		—		94,841		—
Mortgage-backed	2,379,525		—		2,379,525		—
Trading account securities	1,068		—		1,068		—
Equity securities with readily determinable fair value	50,840		42,774		8,066		—
Mortgage loans held-for-sale	377,313		—		377,313		—
Loans held-for-investment	132,718		—		123,098		9,620
MSRs	85,638		—		—		85,638
Nonqualified deferred compensations assets	14,213		—		14,213		—
Derivative assets	103,644		—		101,013		2,631
Total	$	3,871,648	$	163,862	$	3,495,301	$	212,485
Derivative liabilities	$	129,204	$	—	$	129,204	$	—

	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	$	—

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 years ended December 31, 2019 and 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, 2019	$	108,926		$	3,150		$	11,347		$	75,183	$	2,457
Total net gains included in:
Net income ⁽¹⁾	—			—			827			10,047		174
Other comprehensive income	3,147			126			—			—		—
Purchases ⁽²⁾	38,686			—			—			408		—
Issuances	—			—			—			—		—
Sales	—			—			—			—		—
Settlements	(38,809		)	(630		)	(5,447		)	—		—
Net transfers into/(out of) Level 3	—			—			2,893			—		—
Balance at December 31, 2019	$	111,950		$	2,646		$	9,620		$	85,638	$	2,631



(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 related to fair value adjustments are recorded as a component of mortgage banking revenue. Changes in the balance of loans held-for-investment related to fair value adjustments are recorded as other non-interest income.

(2)

Mortgage servicing rights purchased as a part of the ROC and Veterans First business combinations in 2019 and 2018, respectively. See Note 7 - Business Combinations and Asset Acquisitions for further discussion.

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, 2019.



	December 31, 2019								Year Ended December 31, 2019 Fair Value Losses Recognized, net
(Dollars in thousands)	Total		Level 1		Level 2		Level 3
Impaired loans-collateral based	$	90,307	$	—	$	—	$	90,307	$	44,591
Other real estate owned ⁽¹⁾	15,171		—		—		15,171		3,034
Total	$	105,478	$	—	$	—	$	105,478	$	47,625

(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, 2019 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

111,950

Bond pricing

Equivalent rating

BBB-AA+

N/A

Increase

U.S. Government agencies

2,646

Bond pricing

Equivalent rating

AAA

Increase

Loans held-for-investment

9,620

Discounted cash flows

Discount rate

3%-4%

3.47%

Decrease

Credit discount

0%-8%

1.37%

Decrease

Constant prepayment rate (CPR)

14.12%

Decrease

MSRs

85,638

Discounted cash flows

Discount rate

7%-17%

9.96%

Decrease

Constant prepayment rate (CPR)

0%-94%

14.12%

Decrease

Cost of servicing

$70-$200

Decrease

Cost of servicing - delinquent

$200-$1,000

396

Decrease

Derivatives

2,631

Discounted cash flows

Pull-through rate

23%-100%

81.86

Increase

Measured at fair value on a non-recurring basis:

Impaired loans—collateral based

90,307

Appraisal value

Appraisal adjustment - cost of sale

10%

10.00%

Decrease

Other real estate owned

15,171

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, 2019				December 31, 2018
(Dollars in thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Cash and cash equivalents	$	286,476	$	286,476	$	392,200	$	392,200
Interest bearing deposits with banks	2,164,560		2,164,560		1,099,594		1,099,594
Available-for-sale securities	3,106,214		3,106,214		2,126,081		2,126,081
Held-to-maturity securities	1,134,400		1,138,396		1,067,439		1,036,096
Trading account securities	1,068		1,068		1,692		1,692
Equity securities with readily determinable fair value	50,840		50,840		34,717		34,717
FHLB and FRB stock, at cost	100,739		100,739		91,354		91,354
Brokerage customer receivables	16,573		16,573		12,609		12,609
Mortgage loans held-for-sale, at fair value	377,313		377,313		264,070		264,070
Loans held-for-investment, at fair value	132,718		132,718		93,857		93,857
Loans held-for-investment, at amortized cost	26,667,572		26,659,903		23,726,834		23,780,739
Nonqualified deferred compensation assets	14,213		14,213		11,282		11,282
Derivative assets	103,644		103,644		73,172		73,172
Accrued interest receivable and other	303,090		303,090		260,281		260,281
Total financial assets	$	34,459,420	$	34,455,747	$	29,255,182	$	29,277,744
Financial Liabilities
Non-maturity deposits	$	24,483,867	$	24,483,867	$	20,833,837	$	20,833,837
Deposits with stated maturities	5,623,271		5,635,475		5,260,841		5,283,063
FHLB advances	674,870		715,129		426,326		429,830
Other borrowings	418,174		418,174		393,855		393,855
Subordinated notes	436,095		458,796		139,210		138,345
Junior subordinated debentures	253,566		243,158		253,566		263,846
Derivative liabilities	129,204		129,204		68,088		68,088
Accrued interest payable	19,940		19,940		16,025		16,025
Total financial liabilities	$	32,038,987	$	32,103,743	$	27,391,748	$	27,426,889