Disclosures About Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2018

Estimated Fair Values of Financial Instruments

The estimated fair values of Customers' financial instruments at June 30, 2018 and December 31, 2017 were as follows.



					Fair Value Measurements at June 30, 2018
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(amounts in thousands)
Assets:
Cash and cash equivalents	$	251,726	$	251,726	$	251,726	$	—	$	—
Debt securities, available for sale	1,157,944		1,157,944		—		1,157,944		—
Equity securities	3,056		3,056		3,056		—		—
Loans held for sale	1,931,781		1,931,781		—		1,931,781		—
Loans receivable, net of allowance for loan losses	7,143,438		7,127,315		—		—		7,127,315
FHLB, Federal Reserve Bank and other restricted stock	136,066		136,066		—		136,066		—
Derivatives	16,247		16,247		—		16,114		133
Liabilities:
Deposits	$	7,295,954	$	7,288,828	$	5,223,793	$	2,065,035	$	—
Federal funds purchased	105,000		105,000		105,000		—		—
FHLB advances	2,389,797		2,389,785		1,504,797		884,988		—
Other borrowings	186,888		185,364		63,554		121,810		—
Subordinated debt	108,929		114,675		—		114,675		—
Derivatives	13,698		13,698		—		13,698		—



					Fair Value Measurements at December 31, 2017
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(amounts in thousands)
Assets:
Cash and cash equivalents	$	146,323	$	146,323	$	146,323	$	—	$	—
Investment securities, available for sale	471,371		471,371		3,352		468,019		—
Loans held for sale	1,939,485		1,939,659		—		1,795,294		144,365
Loans receivable, net of allowance for loan losses	6,730,243		6,676,763		—		—		6,676,763
FHLB, Federal Reserve Bank and other restricted stock	105,918		105,918		—		105,918		—
Derivatives	9,752		9,752		—		9,692		60
Liabilities:
Deposits	$	6,800,142	$	6,796,095	$	4,894,449	$	1,901,646	$	—
Federal funds purchased	155,000		155,000		155,000		—		—
FHLB advances	1,611,860		1,611,603		881,860		729,743		—
Other borrowings	186,497		193,557		65,072		128,485		—
Subordinated debt	108,880		115,775		—		115,775		—
Derivatives	10,074		10,074		—		10,074		—

Summary of Financial Assets and Liabilities Measured at Fair Value on a Recurring and Nonrecurring Basis

For financial assets and liabilities measured at fair value on a recurring and nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at June 30, 2018 and December 31, 2017 were as follows:



	June 30, 2018
	Fair Value Measurements at the End of the Reporting Period Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
(amounts in thousands)
Measured at Fair Value on a Recurring Basis:
Assets
Available-for-sale debt securities:
Agency-guaranteed residential mortgage-backed securities	$	—	$	476,563	$	—	$	476,563
Agency-guaranteed commercial mortgage-backed securities	—		320,373		—		320,373
Corporate notes	—		361,008		—		361,008
Equity securities	3,056		—		—		3,056
Derivatives	—		16,114		133		16,247
Loans held for sale – fair value option	—		1,931,781		—		1,931,781
Total assets - recurring fair value measurements	$	3,056	$	3,105,839	$	133	$	3,109,028
Liabilities
Derivatives	$	—	$	13,698	$	—	$	13,698
Measured at Fair Value on a Nonrecurring Basis:
Assets
Impaired loans, net of reserves of $1,381	$	—	$	—	$	11,929	$	11,929
Other real estate owned	—		—		1,027		1,027
Total assets - nonrecurring fair value measurements	$	—	$	—	$	12,956	$	12,956



	December 31, 2017
	Fair Value Measurements at the End of the Reporting Period Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
(amounts in thousands)
Measured at Fair Value on a Recurring Basis:
Assets
Available-for-sale securities:
Agency-guaranteed residential mortgage-backed securities	$	—	$	183,458	$	—	$	183,458
Agency-guaranteed commercial real estate mortgage-backed securities	—		238,472		—		238,472
Corporate notes	—		46,089		—		46,089
Equity securities	3,352		—		—		3,352
Derivatives	—		9,692		60		9,752
Loans held for sale – fair value option	—		1,795,294		—		1,795,294
Total assets - recurring fair value measurements	$	3,352	$	2,273,005	$	60	$	2,276,417
Liabilities
Derivatives	$	—	$	10,074	$	—	$	10,074
Measured at Fair Value on a Nonrecurring Basis:
Assets
Impaired loans, net of reserves of $1,451	$	—	$	—	$	13,902	$	13,902
Other real estate owned	—		—		1,449		1,449
Total assets - nonrecurring fair value measurements	$	—	$	—	$	15,351	$	15,351

Statement of Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis

The changes in Level 3 assets measured at fair value on a recurring basis for the three and six months ended June 30, 2018 and 2017 are summarized in the tables below. Additional information about residential mortgage loan commitments can be found in NOTE 11 - DERIVATIVES INSTRUMENTS AND HEDGING ACTIVITIES.



	Residential Mortgage Loan Commitments
	Three Months Ended June 30,
	2018			2017
(amounts in thousands)
Balance at March 31	$	83		$	95
Issuances	133			102
Settlements	(83		)	(95		)
Balance at June 30	$	133		$	102



	Residential Mortgage Loan Commitments
	Six Months Ended June 30,
	2018			2017
(amounts in thousands)
Balance at December 31	$	60		$	45
Issuances	216			197
Settlements	(143		)	(140		)
Balance at June 30	$	133		$	102

Summary of Financial Assets and Financial Liabilities Measured at Fair Value on Recurring and Nonrecurring Basis

The following table summarizes financial assets and financial liabilities measured at fair value as of June 30, 2018 and December 31, 2017 on a recurring and nonrecurring basis for which Customers utilized Level 3 inputs to measure fair value.



	Quantitative Information about Level 3 Fair Value Measurements
June 30, 2018	Fair Value Estimate		Valuation Technique	Unobservable Input	Range (Weighted Average) (3)
(amounts in thousands)
Impaired loans	$	11,929	Collateral appraisal (1)	Liquidation expenses (2)	(8)%
Other real estate owned	1,027		Collateral appraisal (1)	Liquidation expenses (2)	(8)%
Residential mortgage loan commitments	133		Adjusted market bid	Pull-through rate	90%



	Quantitative Information about Level 3 Fair Value Measurements
December 31, 2017	Fair Value Estimate		Valuation Technique	Unobservable Input	Range (Weighted Average) (3)
(amounts in thousands)
Impaired loans	$	13,902	Collateral appraisal (1)	Liquidation expenses (2)	(8)%
Other real estate owned	1,449		Collateral appraisal (1)	Liquidation expenses (2)	(8)%
Residential mortgage loan commitments	60		Adjusted market bid	Pull-through rate	90%


(1)	Obtained from approved independent appraisers. Appraisals are current and in compliance with credit policy. The Bank does not generally discount appraisals.


(2)	Fair value is adjusted for estimated costs to sell based on a percentage of the value as determined by the appraisal.


(3)	Presented as a percentage of the value determined by appraisal for impaired loans and other real estate owned.

- 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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