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

12 Months Ended

Dec. 31, 2017

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, 2017 and 2016:




($ 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:
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:
Interest rate swaps and options	$	58,633		$	—	$	58,633		$	—
Foreign exchange contracts	5,840			—		5,840			—
Credit risk participation agreements (“RPAs”)	1			—		1			—
Warrants	1,672			—		993			679
Total derivative assets	$	66,146		$	—	$	65,467		$	679

Derivative liabilities:
Interest rate swaps on certificates of deposit	$	(6,799	)	$	—	$	(6,799	)	$	—
Interest rate swaps and options	(57,958		)	—		(57,958		)	—
Foreign exchange contracts	(10,170		)	—		(10,170		)	—
RPAs	(8		)	—		(8		)	—
Total derivative liabilities	$	(74,935	)	$	—	$	(74,935	)	$	—




	Assets (Liabilities) Measured at Fair Value on a Recurring Basis as of December 31, 2016
($ 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:
U.S. Treasury securities	$	720,479		$	720,479	$	—		$	—
U.S. government agency and U.S. government sponsored enterprise debt securities	274,866			—		274,866			—
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	266,799			—		266,799			—
Residential mortgage-backed securities	1,258,747			—		1,258,747			—
Municipal securities	147,654			—		147,654			—
Non-agency residential mortgage-backed securities:
Investment grade	11,477			—		11,477			—
Corporate debt securities:
Investment grade	222,377			—		222,377			—
Non-investment grade	9,173			—		9,173			—
Foreign bonds:
Investment grade	383,894			—		383,894			—
Other securities	40,329			30,991		9,338			—
Total available-for-sale investment securities	$	3,335,795		$	751,470	$	2,584,325		$	—

Derivative assets:
Foreign currency forward contracts	$	4,325		$	—	$	4,325		$	—
Interest rate swaps and options	67,578			—		67,578			—
Foreign exchange contracts	11,874			—		11,874			—
RPAs	3			—		3			—
Total derivative assets	$	83,780		$	—	$	83,780		$	—

Derivative liabilities:
Interest rate swaps on certificates of deposit	$	(5,976	)	$	—	$	(5,976	)	$	—
Interest rate swaps and options	(65,131		)	—		(65,131		)	—
Foreign exchange contracts	(11,213		)	—		(11,213		)	—
RPAs	(3		)	—		(3		)	—
Total derivative liabilities	$	(82,323	)	$	—	$	(82,323	)	$	—

Reconciliation of major asset categories 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 the major asset and liability categories measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2017 and 2015:




($ in thousands)	Year Ended December 31,
	2017					2015
	Other Securities			Warrants		Corporate Debt Securities: Non-Investment Grade			Embedded Derivative Liabilities
Beginning balance	$	—		$	—	$	6,528		$	(3,392	)
Transfer of investment security from held-to-maturity to available-for-sale	115,615			—		—			—
Total gains (losses) for the period:
Included in earnings ⁽¹⁾	1,156			—		960			(20		)
Included in other comprehensive income (loss)⁽²⁾	—			—		922			—
Issuances, sales and settlements:
Issuances	—			679		—			—
Sales	(116,771		)	—		(7,219		)	—
Settlements	—			—		(98		)	3,412
Transfers out of Level 3	—			—		(1,093		)	—
Ending balance	$	—		$	679	$	—		$	—


(1)	Net realized gains of other securities and corporate debt securities are included in Net gains on sales of available-for-sale investment securities on the Consolidated Statement of Income. Net realized and unrealized losses of embedded derivative liabilities are included in Other operating expense on the Consolidated Statement of Income.


(2)	Net unrealized gains of corporate debt securities are included in Net changes in unrealized losses on available-for-sale investment securities on the Consolidated Statement of Comprehensive Income.

Reconciliation of major liability categories measured at fair value on a recurring basis using significant unobservable inputs (level 3)




($ in thousands)	Year Ended December 31,
	2017					2015
	Other Securities			Warrants		Corporate Debt Securities: Non-Investment Grade			Embedded Derivative Liabilities
Beginning balance	$	—		$	—	$	6,528		$	(3,392	)
Transfer of investment security from held-to-maturity to available-for-sale	115,615			—		—			—
Total gains (losses) for the period:
Included in earnings ⁽¹⁾	1,156			—		960			(20		)
Included in other comprehensive income (loss)⁽²⁾	—			—		922			—
Issuances, sales and settlements:
Issuances	—			679		—			—
Sales	(116,771		)	—		(7,219		)	—
Settlements	—			—		(98		)	3,412
Transfers out of Level 3	—			—		(1,093		)	—
Ending balance	$	—		$	679	$	—		$	—


(1)	Net realized gains of other securities and corporate debt securities are included in Net gains on sales of available-for-sale investment securities on the Consolidated Statement of Income. Net realized and unrealized losses of embedded derivative liabilities are included in Other operating expense on the Consolidated Statement of Income.


(2)	Net unrealized gains of corporate debt securities are included in Net changes in unrealized losses on available-for-sale investment securities on the Consolidated Statement of Comprehensive Income.

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, 2017 and 2016:




($ 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 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
HELOCs	—		—		—		—
Total non-PCI impaired loans	$	38,188	$	—	$	—	$	38,188
OREO	$	9	$	—	$	—	$	9




($ in thousands)	Assets Measured at Fair Value on a Nonrecurring Basis as of December 31, 2016
($ 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	$	52,172	$	—	$	—	$	52,172
CRE	14,908		—		—		14,908
Consumer lending:
Single-family residential	2,464		—		—		2,464
HELOCs	610		—		—		610
Total non-PCI impaired loans	$	70,154	$	—	$	—	$	70,154
OREO	$	345	$	—	$	—	$	345
Loans held-for-sale	$	22,703	$	—	$	22,703	$	—

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 years ended and which were included on the Consolidated Balance Sheet as of December 31, 2017, 2016 and 2015:




($ in thousands)	Year Ended December 31,
($ in thousands)	2017			2016			2015
Non-PCI impaired loans:
Commercial lending:
C&I	$	(19,703	)	$	(27,106	)	$	(5,612	)
CRE	(272		)	1,084			(2,629		)
Multifamily residential	—			—			(115		)
Construction and land	(147		)	—			(118		)
Consumer lending:
Single-family residential	(11		)	(224		)	(496		)
HELOCs	—			34			(59		)
Other consumer	(2,491		)	—			—
Total non-PCI impaired loans	$	(22,624	)	$	(26,212	)	$	(9,029	)
OREO	$	(1	)	$	(23	)	$	(233	)
Loans held-for-sale	$	—		$	(5,565	)	$	(1,991	)

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 December 31, 2017. 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 Inputs	Weighted- Average
Derivative assets:
Warrants	$	679	Black-Scholes option pricing model	Volatility	44%
				Liquidity discount	47%

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, 2017 and 2016, 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 and accrued interest payable, which are included in Other assets.




($ 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
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.




($ in thousands)	December 31, 2016
($ in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	1,878,503	$	1,878,503	$	—	$	—	$	1,878,503
Interest-bearing deposits with banks	$	323,148	$	—	$	323,148	$	—	$	323,148
Resale agreements ⁽¹⁾	$	2,000,000	$	—	$	1,980,457	$	—	$	1,980,457
Held-to-maturity investment security	$	143,971	$	—	$	—	$	144,593	$	144,593
Restricted equity securities	$	72,775	$	—	$	72,775	$	—	$	72,775
Loans held-for-sale	$	23,076	$	—	$	23,076	$	—	$	23,076
Loans held-for-investment, net	$	25,242,619	$	—	$	—	$	24,915,143	$	24,915,143
Accrued interest receivable	$	100,524	$	—	$	100,524	$	—	$	100,524
Financial liabilities:
Customer deposits:
Demand, checking, savings and money market deposits	$	24,275,714	$	—	$	24,275,714	$	—	$	24,275,714
Time deposits	$	5,615,269	$	—	$	5,611,746	$	—	$	5,611,746
Short-term borrowings	$	60,050	$	—	$	60,050	$	—	$	60,050
FHLB advances	$	321,643	$	—	$	334,859	$	—	$	334,859
Repurchase agreements ⁽¹⁾	$	350,000	$	—	$	411,368	$	—	$	411,368
Long-term debt	$	186,327	$	—	$	186,670	$	—	$	186,670
Accrued interest payable	$	9,440	$	—	$	9,440	$	—	$	9,440


(1)	Resale and repurchase agreements are reported net pursuant to ASC 210-20-45-11, Balance Sheet Offsetting: Repurchase and Reverse Repurchase Agreement. As of December 31, 2016, $100.0 million out of $450.0 million of repurchase agreements were eligible for netting against resale agreement

Fair Value, Measurements, Nonrecurring

Quantitative information

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, 2017 and 2016:




($ in thousands)	Fair Value Measurements (Level 3)		Valuation Technique(s)	Unobservable Input(s)	Range of Input(s)	Weighted- Average
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	%
December 31, 2016
Non-PCI impaired loans	$	31,835	Discounted cash flows	Discount	4% — 8%	5	%
	$	14,941	Fair value of property	Selling cost	4% — 8%	6	%
	$	18,417	Fair value of collateral	Discount	0% — 75%	35	%
	$	4,961	Fair value of collateral	Contract value	NM	NM
OREO	$	345	Fair value of property	Selling cost	8%	8	%

NM — Not meaningful.