Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2018

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
September 30, 2018
Investment securities – carried at fair value:
Government and government-sponsored agencies	$	—	$	254,453	$	—	$	254,453
State and political subdivisions	—		491,909		—		491,909
Residential mortgage-backed securities	—		177,021		—		177,021
Collateralized mortgage obligations	—		1,477,818		—		1,477,818
Corporate bonds	—		287,405		—		287,405
Trust preferred securities	—		48,274		—		48,274
Total investment securities – carried at fair value	—		2,736,880		—		2,736,880
Loans held-for-sale	—		93,736		—		93,736
Loan servicing rights	—		—		72,707		72,707
Derivative assets:
Customer-initiated derivatives	—		21,390		—		21,390
Foreign exchange forwards	—		3		—		3
Forward contracts related to mortgage loans to be delivered for sale	—		760		—		760
Interest rate lock commitments	—		1,081		—		1,081
Power Equity CD	—		1,260		—		1,260
Risk management derivatives	—		21,067		—		21,067
Total derivatives	—		45,561		—		45,561
Total assets at fair value	$	—	$	2,876,177	$	72,707	$	2,948,884
Derivative liabilities:
Customer-initiated derivatives	$	—	$	21,703	$	—	$	21,703
Foreign exchange forwards	—		3		—		3
Power Equity CD	—		1,260		—		1,260
Total derivatives	—		22,966		—		22,966
Total liabilities at fair value	$	—	$	22,966	$	—	$	22,966
December 31, 2017
Investment securities – available-for-sale:
Government and government-sponsored agencies	$	—	$	202,916	$	—	$	202,916
State and political subdivisions	—		345,970		—		345,970
Residential mortgage-backed securities	—		150,131		—		150,131
Collateralized mortgage obligations	—		1,033,845		—		1,033,845
Corporate bonds	—		192,794		—		192,794
Trust preferred securities	—		36,066		—		36,066
Preferred stock	—		1,824		—		1,824
Total investment securities – available-for-sale	—		1,963,546		—		1,963,546
Loans held-for-sale	—		52,133		—		52,133
Loan servicing rights	—		—		63,841		63,841
Derivative assets:
Customer-initiated derivatives	—		9,376		—		9,376
Interest rate lock commitments	—		1,222		—		1,222
Power Equity CD	—		2,184		—		2,184
Risk management derivatives	—		5,899		—		5,899
Total derivatives	—		18,681		—		18,681
Total assets at fair value	$	—	$	2,034,360	$	63,841	$	2,098,201
Derivative liabilities:
Customer-initiated derivatives	$	—	$	10,139	$	—	$	10,139
Forward contracts related to mortgage loans to be delivered for sale	—		34		—		34
Power Equity CD	—		2,184		—		2,184
Total derivatives	—		12,357		—		12,357
Total liabilities at fair value	$	—	$	12,357	$	—	$	12,357

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 September 30,					Nine Months Ended September 30,
	2018		2017			2018		2017
(Dollars in thousands)	Loan servicing rights
Balance, beginning of period	$	70,364	$	64,522		$	63,841	$	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"	257		(4,651		)	2,529		(8,242		)
New originations	2,086		2,324			6,337		6,461
Balance, end of period	$	72,707	$	62,195		$	72,707	$	62,195


⁽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)	September 30, 2018		December 31, 2017
Aggregate fair value	$	93,736	$	52,133
Contractual balance	91,839		50,597
Unrealized gain (loss)	1,897		1,536

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 September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2018		2017		2018		2017
Interest income⁽¹⁾	$	849	$	810	$	1,670	$	1,824
Change in fair value⁽²⁾	577		614		361		2,002
Net gain on sales of loans⁽²⁾	4,241		6,512		9,772		26,537
Total included in earnings	$	5,667	$	7,936	$	11,803	$	30,363


⁽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)
September 30, 2018
Impaired loans	$	73,137
Other real estate and repossessed assets	1,843
Total	$	74,980
December 31, 2017
Impaired loans	$	70,619
Other real estate and repossessed assets	2,899
Total	$	73,518

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 September 30, 2018		Valuation Technique	Significant Unobservable Inputs	Range
Impaired loans	$	73,137	Appraisal of collateral	Discount for type of collateral and age of appraisal	20%-30%
Other real estate and repossessed assets	1,843		Appraisal of property	Discount for type of property and age of appraisal	20%-30%

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 are disclosed in the table below.



	Level in Fair Value Measurement Hierarchy	September 30, 2018				December 31, 2017
(Dollars in thousands)	Level in Fair Value Measurement Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Investment securities:
Held-to-maturity	Level 2	$	607,867	$	597,747	$	676,593	$	662,516
Held-to-maturity	Level 3	500		450		500		390
Net loans⁽¹⁾	Level 3	14,692,211		14,301,208		14,063,380		14,114,545
Financial liabilities:
Time deposits	Level 2	$	3,865,489	$	3,827,695	$	3,217,207	$	3,225,847
Collateralized customer deposits	Level 2	377,471		376,969		415,236		415,236
Short-term borrowings	Level 2	1,670,000		1,669,662		2,000,000		1,999,137
Long-term borrowings	Level 2	430,971		426,105		372,882		367,984


⁽¹⁾	Included $73.1 million and $70.6 million of impaired loans recorded at fair value on a nonrecurring basis at September 30, 2018 and December 31, 2017, respectively.