Fair Value of Measurements (Tables)

3 Months Ended

Mar. 31, 2018

Summary of asset and liabilities measure at fair value on a recurring basis

The following tables summarize the financial assets and liabilities measured at fair value on a recurring basis.



			Fair Value Measurements at the End of the Reporting Period Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	March 31, 2018		(Level 1)		(Level 2)		(Level 3)
	(In Thousands)
Recurring fair value measurements
Assets:
Trading account assets:
U.S. Treasury and other U.S. government agencies	$	91,770	$	91,770	$	—	$	—
State and political subdivisions	561		—		561		—
Other debt securities	115		—		115		—
Interest rate contracts	110,694		—		110,694		—
Foreign exchange contracts	13,325		—		13,325		—
Total trading account assets	216,465		91,770		124,695		—
Debt securities available for sale:
U.S. Treasury and other U.S. government agencies	4,794,332		3,906,091		888,241		—
Mortgage-backed securities	2,621,878		—		2,621,878		—
Collateralized mortgage obligations	4,016,289		—		4,016,289		—
States and political subdivisions	1,653		—		1,653		—
Total debt securities available for sale	11,434,152		3,906,091		7,528,061		—
Loans held for sale	76,401		—		76,401		—
Derivative assets:
Interest rate contracts	18,142		—		15,533		2,609
Equity contracts	34,248		—		34,248		—
Foreign exchange contracts	2,360		—		2,360		—
Total derivative assets	54,750		—		52,141		2,609
Other assets:
Equity securities	18,610		18,610		—		—
MSR	53,025		—		—		53,025
SBIC	47,987		—		—		47,987
Liabilities:
Trading account liabilities:
U.S. Treasury and other U.S. government agencies	$	29,999	$	29,999	$	—	$	—
Interest rate contracts	163,060		—		163,060		—
Foreign exchange contracts	11,639		—		11,639		—
Total trading account liabilities	204,698		29,999		174,699		—
Derivative liabilities:
Interest rate contracts	41,885		—		41,884		1
Equity contracts	30,435		—		30,435		—
Foreign exchange contracts	789		—		789		—
Total derivative liabilities	73,109		—		73,108		1



			Fair Value Measurements at the End of the Reporting Period Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	December 31, 2017		(Level 1)		(Level 2)		(Level 3)
	(In Thousands)
Recurring fair value measurements
Assets:
Trading account assets:
U.S. Treasury and other U.S. government agencies	$	74,195	$	74,195	$	—	$	—
State and political subdivisions	557		—		557		—
Other debt securities	79		—		79		—
Interest rate contracts	133,516		—		133,516		—
Foreign exchange contracts	12,149		—		12,149		—
Total trading account assets	220,496		74,195		146,301		—
Debt securities available for sale:
U.S. Treasury and other U.S. government agencies	4,204,438		3,248,898		955,540		—
Mortgage-backed securities	2,812,800		—		2,812,800		—
Collateralized mortgage obligations	5,200,011		—		5,200,011		—
States and political subdivisions	2,383		—		2,383		—
Total debt securities available for sale	12,219,632		3,248,898		8,970,734		—
Loans held for sale	67,110		—		67,110		—
Derivative assets:
Interest rate contracts	22,263		38		19,809		2,416
Equity contracts	39,791		—		39,791		—
Foreign exchange contracts	375		—		375		—
Total derivative assets	62,429		38		59,975		2,416
Other assets:
Equity securities	13,577		13,577		—		—
MSR	49,597		—		—		49,597
SBIC	45,042		—		—		45,042
Liabilities:
Trading account liabilities:
U.S. Treasury and other U.S. government agencies	$	17,996	$	17,996	$	—	$	—
Interest rate contracts	134,073		—		134,073		—
Foreign exchange contracts	10,524		—		10,524		—
Total trading account liabilities	162,593		17,996		144,597		—
Derivative liabilities:
Interest rate contracts	21,387		—		21,387		—
Equity contracts	35,562		—		35,562		—
Foreign exchange contracts	3,890		—		3,890		—
Total derivative liabilities	60,839		—		60,839		—

Reconciliation of assets measured on a recurring basis using significant unobservable inputs

The following table reconciles the assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3).



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Three Months Ended March 31,	Other Trading Assets			Interest Rate Contracts, net		Other Assets - MSR			Other Assets - SBIC
	(In Thousands)
Balance, December 31, 2016	$	859		$	2,392	$	51,428		$	15,639
Transfers into Level 3	—			—		—			—
Transfers out of Level 3	—			—		—			—
Total gains or losses (realized/unrealized):
Included in earnings (1)	(40		)	785		(2,670		)	550
Included in other comprehensive income	—			—		—			—
Purchases, issuances, sales and settlements:
Purchases	—			—		—			6,364
Issuances	—			—		2,018			—
Sales	—			—		—			—
Settlements	—			—		—			—
Balance, March 31, 2017	$	819		$	3,177	$	50,776		$	22,553
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at March 31, 2017	$	(40	)	$	785	$	(2,670	)	$	550

Balance, December 31, 2017	$	—		$	2,416	$	49,597		$	45,042
Transfers into Level 3	—			—		—			—
Transfers out of Level 3	—			—		—			—
Total gains or losses (realized/unrealized):
Included in earnings (1)	—			192		1,885			—
Included in other comprehensive income	—			—		—			—
Purchases, issuances, sales and settlements:
Purchases	—			—		—			2,945
Issuances	—			—		1,543			—
Sales	—			—		—			—
Settlements	—			—		—			—
Balance, March 31, 2018	$	—		$	2,608	$	53,025		$	47,987
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at March 31, 2018	$	—		$	192	$	1,885		$	—


(1)	Included in noninterest income in the Unaudited Condensed Consolidated Statements of Income.

Schedule of carrying amounts and estimated fair values within the fair value hierarchy

The following tables represent those assets that were subject to fair value adjustments during the three months ended March 31, 2018 and 2017, and still held as of the end of the period, and the related gains and losses from fair value adjustments on assets sold during the period as well as assets still held as of the end of the period.



			Fair Value Measurements at the End of the Reporting Period Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Gains (Losses)
	March 31, 2018		(Level 1)		(Level 2)		(Level 3)		Three Months Ended March 31, 2018
	(In Thousands)
Nonrecurring fair value measurements
Assets:
Debt securities held to maturity	$	2,260	$	—	$	—	$	2,260	$	(309	)
Impaired loans (1)	7,251		—		—		7,251		(4,559		)
OREO	16,147		—		—		16,147		(527		)

			Fair Value Measurements at the End of the Reporting Period Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Gains (Losses)
	March 31, 2017		(Level 1)		(Level 2)		(Level 3)		Three Months Ended March 31, 2017
	(In Thousands)
Nonrecurring fair value measurements
Assets:
Debt securities held to maturity	$	2,013	$	—	$	—	$	2,013	$	(242	)
Impaired loans (1)	3,510		—		—		3,510		(15,921		)
OREO	25,113		—		—		25,113		(1,723		)


(1)	Total gains (losses) represent charge-offs on impaired loans for which adjustments are based on the appraised value of the collateral.

Schedule of fair value measurement inputs

The table below presents quantitative information about the significant unobservable inputs for material assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring and nonrecurring basis.



			Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at				Range of Unobservable Inputs
	March 31, 2018		Valuation Technique	Unobservable Input(s)	(Weighted Average)
	(In Thousands)
Recurring fair value measurements:
Interest rate contracts, net	$	2,608	Discounted cash flow	Closing ratios (pull-through)	24.9% - 99.3% (66.9%)
				Cap grids	0.0% - 2.7% (1.0%)
Other assets - MSRs	53,025		Discounted cash flow	Option adjusted spread	8.0% - 9.7% (8.1%)
				Constant prepayment rate or life speed	0.0% - 27.5% (7.7%)
				Cost to service	$65 - $4,000 ($79)
Other assets - SBIC investments	47,987		Transaction price	Transaction price	N/A
Nonrecurring fair value measurements:
Debt securities held to maturity	$	2,260	Discounted cash flow	Prepayment rate	7.2%
				Default rate	17.0%
				Loss severity	65.0%
Impaired loans	7,251		Appraised value	Appraised value	0.0% - 70.0% (16.7%)
OREO	16,147		Appraised value	Appraised value	8.0% (1)


(1)	Represents discount to appraised value for estimated costs to sell.



			Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at				Range of Unobservable Inputs
	December 31, 2017		Valuation Technique	Unobservable Input(s)	(Weighted Average)
	(In Thousands)
Recurring fair value measurements:
Interest rate contracts, net	$	2,416	Discounted cash flow	Closing ratios (pull-through)	24.9% - 99.3% (66.1%)
				Cap grids	0.2% - 2.3% (0.9%)
Other assets - MSRs	49,597		Discounted cash flow	Option adjusted spread	4.6% - 17.2% (8.2%)
				Constant prepayment rate or life speed	0.0% - 46.7% (8.6%)
				Cost to service	$65 - $4,000 ($81)
Other assets - SBIC investments	45,042		Transaction price	Transaction price	N/A
Nonrecurring fair value measurements:
Debt securities held to maturity	$	1,659	Discounted cash flow	Prepayment rate	5.1%
				Default rate	4.8%
				Loss severity	70.6%
Impaired loans	70,749		Appraised value	Appraised value	0.0% - 100.0% (19.2%)
OREO	17,278		Appraised value	Appraised value	8.0% (1)


(1)	Represents discount to appraised value for estimated costs to sell.

Schedule of fair value by balance sheet location

The carrying amounts and estimated fair values, as well as the level within the fair value hierarchy, of the Company’s financial instruments, excluding financial instruments measured at fair value on a recurring basis, are as follows:



	March 31, 2018
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(In Thousands)
Financial Instruments:
Assets:
Cash and cash equivalents	$	3,523,332	$	3,523,332	$	3,523,332	$	—	$	—
Debt securities held to maturity	1,975,729		1,967,996		—		934,348		1,033,648
Loans, net	61,375,790		58,822,080		—		—		58,822,080
Liabilities:
Deposits	$	69,940,412	$	69,990,606	$	—	$	69,990,606	$	—
FHLB and other borrowings	3,322,940		3,355,549		—		3,355,549		—
Federal funds purchased and securities sold under agreements to repurchase	5,933		5,933		—		5,933		—



	December 31, 2017
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(In Thousands)
Financial Instruments:
Assets:
Cash and cash equivalents	$	4,082,826	$	4,082,826	$	4,082,826	$	—	$	—
Debt securities held to maturity	1,046,093		1,040,543		—		—		1,040,543
Loans, net	60,781,008		57,906,982		—		—		57,906,982
Liabilities:
Deposits	$	69,256,313	$	69,302,597	$	—	$	69,302,597	$	—
FHLB and other borrowings	3,959,930		4,010,308		—		4,010,308		—
Federal funds purchased and securities sold under agreements to repurchase	19,591		19,591		—		19,591		—

Schedule of differences between aggregate fair value and aggregate unpaid principle balance

The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance for residential mortgage loans measured at fair value.



	Aggregate Fair Value		Aggregate Unpaid Principal Balance		Difference
	(In Thousands)
March 31, 2018
Residential mortgage loans held for sale	$	76,401	$	74,456	$	1,945
December 31, 2017
Residential mortgage loans held for sale	$	67,110	$	64,992	$	2,118

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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- Definition

Tabular disclosure of the application of the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) the reasons for electing a fair value option for each eligible item or group of similar eligible items and (b) if the fair value option is elected for some but not all eligible items within a group of similar eligible items: (i) a description of those similar items and the reasons for partial election and (ii) information of how the group of similar items relates to individual balance sheet line items; (c) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected, information of how each line item in the statement of financial position relates to major categories of assets and liabilities presented in accordance with other fair value disclosures; (2) for items included in the income statement: (a) a description of how interest and dividends are measured and where they are reported in the income statement; (b) how the gains or losses attributable to changes in instrument-specific credit risk were determined; (c) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk: (i) qualitative information about the reasons for the changes and (ii) how the gains and losses attributable to changes in instrument-specific credit risk were determined; and (3) certain other disclosures as required or determined to be provided.

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