Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2017

Summary of assets measured at fair value on a recurring basis

For assets and liabilities measured at fair value on a recurring basis, quantitative disclosures about the fair value measurements for each major category of assets and liabilities follow:



(Dollars in thousands)	Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
June 30, 2017
Investment securities – available-for-sale:
U.S. Treasury securities	$	5,793	$	—	$	—	$	5,793
Government sponsored agencies	—		247,474		—		247,474
State and political subdivisions	—		292,035		—		292,035
Residential mortgage-backed securities	—		292,912		—		292,912
Collateralized mortgage obligations	—		733,187		—		733,187
Corporate bonds	—		158,168		—		158,168
Preferred stock and trust preferred securities	—		37,909		—		37,909
Total investment securities – available-for-sale	5,793		1,761,685		—		1,767,478
Loans held-for-sale	—		65,371		—		65,371
Loan servicing rights	—		—		64,522		64,522
Derivative assets:
Customer-initiated derivatives	—		8,636		—		8,636
Forward contracts related to mortgage loans to be delivered for sale	—		617		—		617
Interest rate lock commitments	—		1,997		—		1,997
Power Equity CD	—		2,062		—		2,062
Risk management derivatives	—		224		—		224
Total derivatives	—		13,536		—		13,536
Total assets at fair value	$	5,793	$	1,840,592	$	64,522	$	1,910,907
Derivative liabilities:
Customer-initiated derivatives	—		9,152		—		9,152
Power Equity CD	—		2,062		—		2,062
Risk management derivatives	—		282		—		282
Total derivatives	—		11,496		—		11,496
Total liabilities at fair value	$	—	$	11,496	$	—	$	11,496
December 31, 2016
Investment securities – available-for-sale:
U.S. Treasury securities	$	5,793	$	—	$	—	$	5,793
Government sponsored agencies	—		215,011		—		215,011
State and political subdivisions	—		300,088		—		300,088
Residential mortgage-backed securities	—		272,282		—		272,282
Collateralized mortgage obligations	—		320,025		—		320,025
Corporate bonds	—		89,474		—		89,474
Preferred stock and trust preferred securities	—		32,291		—		32,291
Total investment securities – available-for-sale	5,793		1,229,171		—		1,234,964
Loans held-for-sale	—		81,830		—		81,830
Loan servicing rights	—		—		48,085		48,085
Derivative assets:
Customer-initiated derivatives	—		4,406		—		4,406
Forward contracts related to mortgage loans to be delivered for sale	—		635		—		635
Interest rate lock commitments	—		956		—		956
Power Equity CD	—		2,218		—		2,218
Total derivatives	—		8,215		—		8,215
Total assets at fair value	$	5,793	$	1,319,216	$	48,085	$	1,373,094
Derivative liabilities:
Customer-initiated derivatives	—		4,141		—		4,141
Power Equity CD	—		2,218		—		2,218
Total derivatives	—		6,359		—		6,359
Total liabilities at fair value	$	—	$	6,359	$	—	$	6,359

Summary of changes in Level 3 assets measured at fair value on a recurring basis

The following table summarizes the changes in Level 3 assets measured at fair value on a recurring basis.



	Three Months Ended June 30, 2017			Six Months Ended June 30, 2017
(Dollars in thousands)	Loan servicing rights
Balance, beginning of period	$	64,604		$	48,085
Transfer in based on new accounting policy election⁽¹⁾	—			15,891
Gains (losses):
Recorded in earnings (realized):
Recorded in "Net gain on sale of loans and other mortgage banking revenue"	(2,466		)	(3,591		)
New originations	2,384			4,137
Balance, end of period	$	64,522		$	64,522

(1) Refer to Note 1, Basis of Presentation and Significant Accounting Policies, for further details.

Schedule of aggregate fair value contractual balance and gain (loss) for loans held-for-sale

The aggregate fair value, contractual balance (including accrued interest), and gain or loss for loans held-for-sale carried at fair value option was as follows:



(Dollars in thousands)	June 30, 2017		December 31, 2016
Aggregate fair value	$	65,371	$	81,830
Contractual balance	63,162		81,009
Unrealized gain (loss)	2,209		821

Amount of gains (losses) from loans held for sale included in the Consolidated Statements of Income

The total amount of gains (losses) from loans held-for-sale included in the Consolidated Statements of Income were as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2017		2016		2017		2016
Interest income⁽¹⁾	$	463	$	20	$	1,014	$	39
Change in fair value⁽²⁾	787		—		1,388		—
Net gain on sales of loans⁽²⁾	13,905		2,135		20,025		3,431
Total included in earnings	$	15,155	$	2,155	$	22,427	$	3,470

(1) Included in "Interest and fees on loans" in the Consolidated Statements of Income.

(2) Included in "Net gain on sale of loans and other mortgage banking revenue" in the Consolidated Statements of Income.

Summary of assets measured at fair value on a nonrecurring basis

For assets measured at fair value on a nonrecurring basis, quantitative disclosures about fair value measurements for each major category of assets follows:



(Dollars in thousands)	Significant Unobservable Inputs (Level 3)		Total
June 30, 2017
Impaired originated loans	$	63,694	$	63,694
Other real estate/repossessed assets	3,811		3,811
Total	$	67,505	$	67,505
December 31, 2016
Impaired originated loans	$	62,184	$	62,184
Other real estate/repossessed assets	1,386		1,386
Loan servicing rights	2		2
Total	$	63,572	$	63,572

Additional information about significant unobservable inputs used in the fair value measurement of financial assets

The following table presents additional information about the significant unobservable inputs used in the fair value measurement of financial assets measured on a nonrecurring basis that were categorized within the Level 3 of the fair value hierarchy:



(Dollars in thousands)	Fair Value at June 30, 2017		Valuation Technique	Significant Unobservable Inputs	Range
Impaired originated loans	$	63,694	Appraisal of collateral	Discount for type of collateral and age of appraisal	10%-25%
Other real estate/repossessed assets	3,811		Appraisal of property	Discount for type of property and age of appraisal	10%-25%

Summary of carrying amounts and estimated fair values of the financial instruments

A summary of carrying amounts and estimated fair values of the Corporation’s financial instruments not recorded at fair value in their entirety on a recurring basis on the Consolidated Statements of Financial Position was as follows:



	Level in Fair Value Measurement Hierarchy	June 30, 2017				December 31, 2016
(Dollars in thousands)	Level in Fair Value Measurement Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	Level 1	$	619,241	$	619,241	$	474,402	$	474,402
Investment securities:
Held-to-maturity	Level 2	645,105		639,683		622,927		608,221
Held-to-maturity	Level 3	500		360		500		310
Nonmarketable equity securities	Level 2	180,196		180,196		97,350		97,350
Net loans⁽¹⁾	Level 3	13,583,575		13,758,368		12,912,511		13,069,315
Interest receivable	Level 2	45,832		45,832		42,235		42,235
Bank-owned life insurance	Level 2	145,671		145,671		143,718		143,718
Financial liabilities:
Deposits:
Deposits without defined maturities	Level 2	$	10,217,235	$	10,217,235	$	9,862,755	$	9,862,755
Time deposits	Level 2	2,987,132		2,987,779		3,010,367		3,010,048
Total deposits		13,204,367		13,205,014		12,873,122		12,872,803
Interest payable	Level 2	5,112		5,112		5,415		5,415
Securities sold under agreements to repurchase with customers	Level 2	310,042		310,042		343,047		343,047
Short-term borrowings	Level 2	2,050,000		2,048,744		825,000		825,000
Long-term borrowings	Level 2	435,852		431,345		597,847		591,227


(1)	Included $63.7 million and $62.2 million of impaired loans recorded at fair value on a nonrecurring basis at June 30, 2017 and December 31, 2016, respectively.