Fair Value Measurement and Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2018

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Schedule of assets (liabilities) measured at fair value on a recurring basis

The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017:




($ in thousands)	Assets (Liabilities) Measured at Fair Value on a Recurring Basis as of March 31, 2018
($ in thousands)	Fair Value Measurements		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available-for-sale investment securities ⁽¹⁾:
U.S. Treasury securities	$	651,830	$	651,830	$	—	$	—
U.S. government agency and U.S. government sponsored enterprise debt securities	233,016		—		233,016		—
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	339,834		—		339,834		—
Residential mortgage-backed securities	989,453		—		989,453		—
Municipal securities	74,076		—		74,076		—
Non-agency residential mortgage-backed securities:
Investment grade	8,404		—		8,404		—
Corporate debt securities:
Investment grade	35,858		—		35,858		—
Foreign bonds:
Investment grade	478,945		—		478,945		—
Total available-for-sale investment securities	$	2,811,416	$	651,830	$	2,159,586	$	—

Investments in tax credit and other investments:
Equity securities with readily determinable fair value ⁽²⁾	$	30,987	$	20,489	$	10,498	$	—
Total investments in tax credit and other investments	$	30,987	$	20,489	$	10,498	$	—

Derivative assets⁽³⁾:
Interest rate swaps and options	$	51,933	$	—	$	51,933	$	—
Foreign exchange spot and forwards	6,087		—		6,087		—
RPAs	1		—		1		—
Equity warrants	1,513		—		582		931
Commodity options	297		—		297		—
Total derivative assets	$	59,831	$	—	$	58,900	$	931

Derivative liabilities:
Interest rate swaps ⁽³⁾	$	8,251	$	—	$	8,251	$	—
Foreign exchange forwards ⁽¹⁾	1,154		—		1,154		—
Interest rate swaps and options ⁽³⁾	72,893		—		72,893		—
Foreign exchange spot and forwards ⁽³⁾	4,066		—		4,066		—
RPAs ⁽³⁾	21		—		21		—
Commodity options ⁽³⁾	288		—		288		—
Total derivative liabilities	$	86,673	$	—	$	86,673	$	—


(1)	Changes in fair value of these financial instruments are recorded through other comprehensive income.


(2)	Equity securities with readily determinable fair value were comprised of mutual funds as of March 31, 2018. These securities are held at NAV and changes in fair value are recorded through net income.

(3) Changes in fair value of these financial instruments are recorded through net income.




($ in thousands)	Assets (Liabilities) Measured at Fair Value on a Recurring Basis as of December 31, 2017
($ in thousands)	Fair Value Measurements		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available-for-sale investment securities ⁽¹⁾:
U.S. Treasury securities	$	640,280	$	640,280	$	—	$	—
U.S. government agency and U.S. government sponsored enterprise debt securities	203,392		—		203,392		—
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	318,957		—		318,957		—
Residential mortgage-backed securities	1,190,271		—		1,190,271		—
Municipal securities	99,982		—		99,982		—
Non-agency residential mortgage-backed securities:
Investment grade	9,117		—		9,117		—
Corporate debt securities:
Investment grade	37,003		—		37,003		—
Foreign bonds:
Investment grade	486,408		—		486,408		—
Other securities	31,342		20,735		10,607		—
Total available-for-sale investment securities	$	3,016,752	$	661,015	$	2,355,737	$	—

Derivative assets ⁽²⁾:
Interest rate swaps and options	$	58,633	$	—	$	58,633	$	—
Foreign exchange spot and forwards	5,840		—		5,840		—
RPAs	1		—		1		—
Equity warrants	1,672		—		993		679
Total derivative assets	$	66,146	$	—	$	65,467	$	679

Derivative liabilities ⁽²⁾:
Interest rate swaps	$	6,799	$	—	$	6,799	$	—
Interest rate swaps and options	57,958		—		57,958		—
Foreign exchange spot and forwards	10,170		—		10,170		—
RPAs	8		—		8		—
Total derivative liabilities	$	74,935	$	—	$	74,935	$	—


(1)	Changes in fair value of these financial instruments are recorded through other comprehensive income.


(2)	Changes in fair value of these financial instruments are recorded through net income.

Reconciliation of the beginning and ending balances for warrants measured at fair value on a recurring basis using significant unobservable inputs (Level 3)

The following table presents a reconciliation of the beginning and ending balances for these warrants for the three months ended March 31, 2018:




($ in thousands)	Three Months Ended March 31, 2018
Equity warrants
Beginning balance	$	679
Total gains for the period included in earnings⁽¹⁾:	244
Issuances	8
Ending balance	$	931


(1)	Unrealized gains of warrant income are included in Ancillary loan fees and other income on the Consolidated Statement of Income.

Schedule of assets with fair value changes measured on a nonrecurring basis

The following tables present the carrying amounts of assets included on the Consolidated Balance Sheet that had fair value changes measured on a nonrecurring basis as of March 31, 2018 and December 31, 2017:




	Assets Measured at Fair Value on a Nonrecurring Basis as of March 31, 2018
($ in thousands)	Fair Value Measurements		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Non-PCI impaired loans:
Commercial lending:
Commercial and industrial (“C&I”)	$	29,403	$	—	$	—	$	29,403
Commercial real estate (“CRE”)	5,171		—		—		5,171
Consumer lending:
Single-family residential	2,600		—		—		2,600
Total non-PCI impaired loans	$	37,174	$	—	$	—	$	37,174




	Assets Measured at Fair Value on a Nonrecurring Basis as of December 31, 2017
($ in thousands)	Fair Value Measurements		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Non-PCI impaired loans:
Commercial lending:
C&I	$	31,404	$	—	$	—	$	31,404
CRE	2,667		—		—		2,667
Construction and land	3,973		—		—		3,973
Consumer lending:
Single-family residential	144		—		—		144
Total non-PCI impaired loans	$	38,188	$	—	$	—	$	38,188
OREO	$	9	$	—	$	—	$	9

Schedule of fair value adjustments of assets measured on a nonrecurring basis recognized

The following table presents the fair value adjustments of assets measured on a nonrecurring basis recognized during the three months ended and included on the Consolidated Balance Sheet as of March 31, 2018 and 2017:




	Three Months Ended March 31,
($ in thousands)	2018			2017
Non-PCI impaired loans:
Commercial lending:
C&I	$	13,899		$	32
CRE	95			(64		)
Consumer lending:
Single-family residential	(15		)	82
Other consumer	—			(1		)
Total non-PCI impaired loans	$	13,979		$	49
OREO	$	—		$	(285	)

Schedule of the carrying and fair values per the fair value hierarchy of certain financial instruments

The following tables present the fair value estimates for financial instruments as of March 31, 2018 and December 31, 2017, excluding financial instruments recorded at fair value on a recurring basis as they are included in the tables presented elsewhere in Note 4 — Fair Value Measurement and Fair Value of Financial Instruments. The carrying amounts in the following tables are recorded on the Consolidated Balance Sheet under the indicated captions, except for accrued interest receivable, accrued interest payable and mortgage servicing rights, which are included in Other assets. These financial assets and liabilities are measured at amortized cost basis on the Company’s Consolidated Balance Sheet. During the first quarter of 2018, the Company adopted ASU 2016-01 and has updated its valuation methods as necessary to conform to an “exit price” concept as required by ASU 2016-01.




($ in thousands)	March 31, 2018
($ in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	2,314,938	$	2,314,938	$	—	$	—	$	2,314,938
Interest-bearing deposits with banks	$	478,871	$	—	$	478,871	$	—	$	478,871
Resale agreements ⁽¹⁾	$	1,050,000	$	—	$	1,026,415	$	—	$	1,026,415
Restricted equity securities	$	73,787	$	—	$	73,787	$	—	$	73,787
Loans held-for-sale	$	46,181	$	—	$	46,181	$	—	$	46,181
Loans held-for-investment, net	$	29,257,594	$	—	$	—	$	29,503,038	$	29,503,038
Mortgage servicing rights	$	7,659	$	—	$	—	$	12,626	$	12,626
Accrued interest receivable	$	127,905	$	—	$	127,905	$	—	$	127,905
Financial liabilities:
Customer deposits:
Demand, checking, savings and money market deposits	$	26,407,708	$	—	$	26,407,708	$	—	$	26,407,708
Time deposits	$	6,201,069	$	—	$	6,177,010	$	—	$	6,177,010
Short-term borrowings	$	30,277	$	—	$	30,277	$	—	$	30,277
FHLB advances	$	324,451	$	—	$	335,788	$	—	$	335,788
Repurchase agreements ⁽¹⁾	$	50,000	$	—	$	114,260	$	—	$	114,260
Long-term debt	$	166,640	$	—	$	172,521	$	—	$	172,521
Accrued interest payable	$	12,686	$	—	$	12,686	$	—	$	12,686


(1)	Resale and repurchase agreements are reported net pursuant to ASC 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. As of March 31, 2018, $400.0 million out of $450.0 million of repurchase agreements were eligible for netting against resale agreements.




($ in thousands)	December 31, 2017
($ in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	2,174,592	$	2,174,592	$	—	$	—	$	2,174,592
Interest-bearing deposits with banks	$	398,422	$	—	$	398,422	$	—	$	398,422
Resale agreements ⁽¹⁾	$	1,050,000	$	—	$	1,035,158	$	—	$	1,035,158
Restricted equity securities	$	73,521	$	—	$	73,521	$	—	$	73,521
Loans held-for-sale	$	85	$	—	$	85	$	—	$	85
Loans held-for-investment, net	$	28,688,590	$	—	$	—	$	28,956,349	$	28,956,349
Branch assets held-for-sale	$	91,318	$	5,143	$	10,970	$	78,132	$	94,245
Mortgage servicing rights	$	7,771	$	—	$	—	$	11,324	$	11,324
Accrued interest receivable	$	121,719	$	—	$	121,719	$	—	$	121,719
Financial liabilities:
Customer deposits:
Demand, checking, savings and money market deposits	$	25,974,314	$	—	$	25,974,314	$	—	$	25,974,314
Time deposits	$	5,640,749	$	—	$	5,626,855	$	—	$	5,626,855
Branch liability held-for-sale	$	605,111	$	—	$	—	$	643,937	$	643,937
FHLB advances	$	323,891	$	—	$	335,901	$	—	$	335,901
Repurchase agreements ⁽¹⁾	$	50,000	$	—	$	104,830	$	—	$	104,830
Long-term debt	$	171,577	$	—	$	171,673	$	—	$	171,673
Accrued interest payable	$	10,724	$	—	$	10,724	$	—	$	10,724


(1)	Resale and repurchase agreements are reported net pursuant to ASC 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreements. As of December 31, 2017, $400.0 million out of $450.0 million of repurchase agreements were eligible for netting against resale agreements.

Fair Value, Measurements, Recurring

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Schedule of quantitative information about significant unobservable inputs used in the valuation of assets classified as Level 3

The following table presents quantitative information about significant unobservable inputs used in the valuation of assets measured on a recurring basis classified as Level 3 as of March 31, 2018. Significant unobservable inputs presented in the table below are those that the Company considers significant to the fair value of the Level 3 assets or liabilities. The Company considers unobservable inputs to be significant if, by their exclusion, the fair value of the Level 3 assets or liabilities would be impacted by a predetermined percentage change.




($ in thousands)	Fair Value Measurements (Level 3)		Valuation Technique	Unobservable Input(s)	Weighted- Average
Derivative assets:
Equity warrants	$	931	Black-Scholes option pricing model	Volatility	48%
				Liquidity discount	47%

Fair Value, Measurements, Nonrecurring

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Schedule of quantitative information about significant unobservable inputs used in the valuation of assets classified as Level 3

The following table presents the quantitative information about the significant unobservable inputs used in the valuation of assets measured on a nonrecurring basis classified as Level 3 as of March 31, 2018 and December 31, 2017:




($ in thousands)	Fair Value Measurements (Level 3)		Valuation Technique(s)	Unobservable Input(s)	Range of Input(s)	Weighted-Average
March 31, 2018
Non-PCI impaired loans	$	28,596	Discounted cash flows	Discount	4% — 7%	5%
	$	3,114	Fair value of property	Selling cost	8%	8%
	$	4,849	Fair value of collateral	Discount	15% — 50%	39%
	$	615	Fair value of collateral	Contract value	NM	NM
December 31, 2017
Non-PCI impaired loans	$	22,802	Discounted cash flows	Discount	4% — 10%	6%
	$	9,773	Fair value of property	Selling cost	8%	8%
	$	3,207	Fair value of collateral	Discount	20% — 32%	29%
	$	2,406	Fair value of collateral	Contract value	NM	NM
OREO	$	9	Fair value of property	Selling cost	8%	8%

NM — Not meaningful.