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

12 Months Ended

Dec. 31, 2018

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 December 31, 2018 and 2017:




($ in thousands)	Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2018
($ in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Available-for-sale investment securities:
U.S. Treasury securities	$	564,815	$	—	$	—	$	564,815
U.S. government agency and U.S. government sponsored enterprise debt securities	—		217,173		—		217,173
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	—		408,603		—		408,603
Residential mortgage-backed securities	—		946,693		—		946,693
Municipal securities	—		82,020		—		82,020
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities
Investment grade	—		26,052		—		26,052
Residential mortgage-backed securities
Investment grade	—		9,931		—		9,931
Corporate debt securities:
Investment grade	—		10,869		—		10,869
Foreign bonds:
Investment grade	—		463,048		—		463,048
Asset-backed securities:
Investment grade	—		12,643		—		12,643
Total available-for-sale investment securities	$	564,815	$	2,177,032	$	—	$	2,741,847

Investments in tax credit and other investments:
Equity securities with readily determinable fair value ⁽¹⁾	$	20,678	$	10,531	$	—	$	31,209
Total investments in tax credit and other investments	$	20,678	$	10,531	$	—	$	31,209


(1)	Equity securities with readily determinable fair value were comprised of mutual funds as of December 31, 2018.




	Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2018
($ in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total Fair Value
Derivative assets:
Interest rate contracts	$	—	$	69,818		$	—	$	69,818
Foreign exchange contracts	—		21,624			—		21,624
Credit contracts	—		1			—		1
Equity contracts	—		1,278			673		1,951
Commodity contracts	—		14,422			—		14,422
Gross derivative assets	$	—	$	107,143		$	673	$	107,816
Netting adjustments ⁽²⁾	$	—	$	(45,146	)	$	—	$	(45,146	)
Net derivative assets	$	—	$	61,997		$	673	$	62,670

Derivative liabilities:
Interest rate contracts	$	—	$	75,133		$	—	$	75,133
Foreign exchange contracts	—		19,940			—		19,940
Credit contracts	—		164			—		164
Commodity contracts	—		23,068			—		23,068
Gross derivative liabilities	$	—	$	118,305		$	—	$	118,305
Netting adjustments ⁽²⁾	$	—	$	(38,402	)	$	—	$	(38,402	)
Net derivative liabilities	$	—	$	79,903		$	—	$	79,903


(2)	Represents balance sheet netting of derivative assets and liabilities and related cash collateral under master netting agreements or similar agreements. See Note 6 — Derivatives to the Consolidated Financial Statements for additional information.




($ in thousands)	Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2017
($ in thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total Fair Value
Available-for-sale investment securities:
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 mortgage-backed securities:
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	20,735		10,607			—		31,342
Total available-for-sale investment securities	$	661,015	$	2,355,737		$	—	$	3,016,752

Derivative assets:
Interest rate contracts	$	—	$	59,564		$	—	$	59,564
Foreign exchange contracts	—		5,840			—		5,840
Credit contracts	—		1			—		1
Equity contracts	—		993			679		1,672
Gross derivative assets	$	—	$	66,398		$	679	$	67,077
Netting adjustments ⁽¹⁾	$	—	$	(28,686	)	$	—	$	(28,686	)
Net derivative assets	$	—	$	37,712		$	679	$	38,391

Derivative liabilities:
Interest rate contracts	$	—	$	65,660		$	—	$	65,660
Foreign exchange contracts	—		10,170			—		10,170
Credit contracts	—		8			—		8
Gross derivative liabilities	$	—	$	75,838		$	—	$	75,838
Netting adjustments ⁽¹⁾	$	—	$	(31,342	)	$	—	$	(31,342	)
Net derivative liabilities	$	—	$	44,496		$	—	$	44,496


(1)	Represents balance sheet netting of derivative assets and liabilities and related cash collateral under master netting agreements or similar agreements. See Note 6 — Derivatives to the Consolidated Financial Statements for additional information.

Reconciliation of the beginning and ending balances for warrants and other securities 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 of these warrants for the years ended December 31, 2018 and 2017:




($ in thousands)	Year Ended December 31,
	2018			2017
	Equity Warrants			Other Securities			Equity Warrants
Beginning balance	$	679		$	—		$	—
Transfer of investment security from held-to-maturity to available-for-sale	—			115,615			—
Total gains included in earnings⁽¹⁾	162			1,156			—
Issuances, sales and settlements:
Issuances	65			—			679
Sales	—			(116,771		)	—
Settlements	(233		)	—			—
Ending balance	$	673		$	—		$	679

(1)

Includes unrealized gains of $225 thousand for the year ended December 31, 2018. There were no unrealized gains (losses) for the year ended December 31, 2017. Net realized/unrealized gains of equity warrants are included in Ancillary loan fees and other income on the Consolidated Statement of Income. Net realized gains of other securities are included in Net gains on sales of available-for-sale investment securities on the Consolidated Statement of Income.

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

The Company considers unobservable inputs to be significant if, by their exclusion, the fair value of the Level 3 assets would be impacted by a predetermined percentage change.

($ in thousands)

Fair Value

Measurements

(Level 3)

Valuation

Technique

Unobservable

Inputs

Range of
Inputs

Weighted-

Average⁽¹⁾

Derivative assets:

Equity warrants

673

Black-Scholes option pricing model

Volatility

49% — 52%

51%

Liquidity discount

47%


(1)	Weighted-average is calculated based on fair value of equity warrants as of December 31, 2018.

Fair Value, Measurements, Nonrecurring

Fair Value, Assets and Liabilities

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 December 31, 2018 and 2017:




($ in thousands)	Fair Value Measurements (Level 3)		Valuation Technique(s)	Unobservable Input(s)	Range of Input(s)	Weighted- Average ⁽¹⁾
December 31, 2018
Non-PCI impaired loans	$	16,921	Discounted cash flows	Discount	4% — 7%	6	%
	$	1,687	Fair value of property	Selling cost	8%	8	%
	$	2,751	Fair value of collateral	Discount	15% — 50%	21	%
	$	11,499	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.


(1)	Weighted-average is based on the relative fair value of the respective assets as of December 31, 2018 and 2017.

Schedule of assets measured at fair value 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 December 31, 2018 and 2017:




($ in thousands)	Assets Measured at Fair Value on a Nonrecurring Basis as of December 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:
C&I	$	26,873	$	—	$	—	$	26,873
CRE	3,434		—		—		3,434
Consumer:
Single-family residential	2,551		—		—		2,551
Total non-PCI impaired loans	$	32,858	$	—	$	—	$	32,858




($ in thousands)	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:
C&I	$	31,404	$	—	$	—	$	31,404
CRE	2,667		—		—		2,667
Construction and land	3,973		—		—		3,973
Consumer:
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 total change in value of assets for which a fair value adjustment has been included on the Consolidated Statement of Income for the years ended December 31, 2018, 2017 and 2016:




($ in thousands)	Year Ended December 31,
($ in thousands)	2018			2017			2016
Non-PCI impaired loans:
Commercial:
C&I	$	(9,341	)	$	(19,703	)	$	(27,106	)
CRE	270			(272		)	1,084
Construction and land	—			(147		)	—
Consumer:
Single-family residential	15			(11		)	(224		)
HELOCs	—			—			34
Other consumer	—			(2,491		)	—
Total non-PCI impaired loans nonrecurring fair value losses	$	(9,056	)	$	(22,624	)	$	(26,212	)
OREO nonrecurring fair value losses	$	—		$	(1	)	$	(23	)
Loans held-for-sale lower of cost or fair value adjustments	$	—		$	—		$	(5,565	)

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 December 31, 2018 and 2017, excluding financial instruments recorded at fair value on a recurring basis as they are included in the tables presented elsewhere in this Note. The carrying amounts in the following tables are recorded on the Consolidated Balance Sheet under the indicated captions, except for accrued interest receivable and mortgage servicing rights that are included in Other assets, and accrued interest payable that is included in Accrued expenses and other liabilities. 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)	December 31, 2018
($ in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	3,001,377	$	3,001,377	$	—	$	—	$	3,001,377
Interest-bearing deposits with banks	$	371,000	$	—	$	371,000	$	—	$	371,000
Resale agreements ⁽¹⁾	$	1,035,000	$	—	$	1,016,724	$	—	$	1,016,724
Restricted equity securities, at cost	$	74,069	$	—	$	74,069	$	—	$	74,069
Loans held-for-sale	$	275	$	—	$	275	$	—	$	275
Loans held-for-investment, net	$	32,073,867	$	—	$	—	$	32,273,157	$	32,273,157
Mortgage servicing rights	$	7,836	$	—	$	—	$	11,427	$	11,427
Accrued interest receivable	$	146,262	$	—	$	146,262	$	—	$	146,262
Financial liabilities:
Demand, checking, savings and money market deposits	$	26,370,562	$	—	$	26,370,562	$	—	$	26,370,562
Time deposits	$	9,069,066	$	—	$	9,084,597	$	—	$	9,084,597
Short-term borrowings	$	57,638	$	—	$	57,638	$	—	$	57,638
FHLB advances	$	326,172	$	—	$	334,793	$	—	$	334,793
Repurchase agreements ⁽¹⁾	$	50,000	$	—	$	87,668	$	—	$	87,668
Long-term debt	$	146,835	$	—	$	152,556	$	—	$	152,556
Accrued interest payable	$	22,893	$	—	$	22,893	$	—	$	22,893


(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, 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, at cost	$	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:
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 agreemen