Fair Value Measurements

The Company uses fair value measurements to record fair value adjustments to certain financial and nonfinancial assets and liabilities and to determine fair value disclosures. Various financial instruments such as available for sale and trading securities, certain non-marketable securities relating to private equity activities, and derivatives are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets and liabilities on a nonrecurring basis, such as loans held for sale, mortgage servicing rights and certain other investment securities. These nonrecurring fair value adjustments typically involve lower of cost or fair value accounting, or write-downs of individual assets.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, the Company uses various valuation techniques and assumptions when estimating fair value. For accounting disclosure purposes, a three-level valuation hierarchy of fair value measurements has been established. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:


•	Level 1 – inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.


•	Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and inputs that are observable for the assets or liabilities, either directly or indirectly (such as interest rates, yield curves, and prepayment speeds).


•	Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value. These may be internally developed, using the Company’s best information and assumptions that a market participant would consider.

When determining the fair value measurements for assets and liabilities required or permitted to be recorded or disclosed at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. When possible, the Company looks to active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, the Company looks to observable market data for similar assets and liabilities. Nevertheless, certain assets and liabilities are not actively traded in observable markets, and the Company must use alternative valuation techniques to derive an estimated fair value measurement. A detailed description of the Company's valuation inputs and methodologies used for instruments measured at fair value on either a recurring or nonrecurring basis is presented in in the Fair Value Measurements note included in the Company's 2011 Annual Report on Form 10-K. There have been no changes in these inputs and methodologies since December 31, 2011.

The table below presents the June 30, 2012 and December 31, 2011 carrying values of assets and liabilities measured at fair value on a recurring basis. There were no transfers among levels during the first six months of 2012 or the year ended December 31, 2011.



			Fair Value Measurements Using
(In thousands)	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2012
Assets:
Available for sale securities:
U.S. government and federal agency obligations	$	370,123	$	362,608	$	7,515	$	—
Government-sponsored enterprise obligations	266,702		—		266,702		—
State and municipal obligations	1,358,537		—		1,230,997		127,540
Agency mortgage-backed securities	3,802,110		—		3,802,110		—
Non-agency mortgage-backed securities	269,304		—		269,304		—
Other asset-backed securities	2,991,092		—		2,991,092		—
Other debt securities	110,814		—		110,814		—
Equity securities	37,769		24,373		13,396		—
Trading securities	14,313		—		14,313		—
Private equity investments	65,766		—		—		65,766
Derivatives *	20,445		—		20,435		10
Assets held in trust	5,145		5,145		—		—
Total assets	$	9,312,120	$	392,126	$	8,726,678	$	193,316
Liabilities:
Derivatives *	$	21,515	$	—	$	21,406	$	109
Total liabilities	$	21,515	$	—	$	21,406	$	109
December 31, 2011
Assets:
Available for sale securities:
U.S. government and federal agency obligations	$	364,665	$	357,155	$	7,510	$	—
Government-sponsored enterprise obligations	315,698		—		315,698		—
State and municipal obligations	1,245,284		—		1,109,663		135,621
Agency mortgage-backed securities	4,106,059		—		4,106,059		—
Non-agency mortgage-backed securities	316,902		—		316,902		—
Other asset-backed securities	2,693,143		—		2,693,143		—
Other debt securities	141,260		—		141,260		—
Equity securities	41,691		27,808		13,883		—
Trading securities	17,853		—		17,853		—
Private equity investments	66,978		—		—		66,978
Derivatives *	21,537		—		21,502		35
Assets held in trust	4,506		4,506		—		—
Total assets	$	9,335,576	$	389,469	$	8,743,473	$	202,634
Liabilities:
Derivatives *	$	22,722	$	—	$	22,564	$	158
Total liabilities	$	22,722	$	—	$	22,564	$	158

* The fair value of each class of derivative is shown in Note 10.

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis are summarized as follows:



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
(In thousands)	State and Municipal Obligations			Private Equity Investments			Derivatives			Total
For the three months ended June 30, 2012
Balance March 31, 2012	$	129,873		$	72,121		$	(106	)	$	201,888
Total gains or losses (realized/unrealized):
Included in earnings	—			1,475			7			1,482
Included in other comprehensive income	520			—			—			520
Investment securities called	(3,000		)	—			—			(3,000		)
Discount accretion	147			—			—			147
Sale/pay down of private equity investments	—			(7,845		)	—			(7,845		)
Capitalized interest/dividends	—			15			—			15
Balance June 30, 2012	$	127,540		$	65,766		$	(99	)	$	193,207
Total gains or losses for the three months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2012	$	—		$	600		$	7		$	607
For the six months ended June 30, 2012
Balance January 1, 2012	$	135,621		$	66,978		$	(123	)	$	202,476
Total gains or losses (realized/unrealized):
Included in earnings	—			5,600			(4		)	5,596
Included in other comprehensive income	(4,938		)	—			—			(4,938		)
Investment securities called	(3,350		)	—			—			(3,350		)
Discount accretion	207			—			—			207
Purchase of private equity securities	—			3,275			—			3,275
Sale/pay down of private equity investments	—			(10,279		)	—			(10,279		)
Capitalized interest/dividends	—			192			—			192
Purchase of risk participation agreement	—			—			28			28
Balance June 30, 2012	$	127,540		$	65,766		$	(99	)	$	193,207
Total gains or losses for the six months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2012	$	—		$	4,575		$	5		$	4,580
For the three months ended June 30, 2011
Balance March 31, 2011	$	143,207		$	55,507		$	(8	)	$	198,706
Total gains or losses (realized/unrealized):
Included in earnings	—			2,605			(5		)	2,600
Included in other comprehensive income	(340		)	—			—			(340		)
Investment securities called	(1,025		)	—			—			(1,025		)
Discount accretion	98			—			—			98
Purchase of private equity investments	—			3,060			—			3,060
Capitalized interest/dividends	—			1			—			1
Sales of risk participation agreements	—			—			(275		)	(275		)
Balance June 30, 2011	$	141,940		$	61,173		$	(288	)	$	202,825
Total gains or losses for the three months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2011	$	—		$	2,605		$	108		$	2,713
For the six months ended June 30, 2011
Balance January 1, 2011	$	150,089		$	53,860		$	352		$	204,301
Total gains or losses (realized/unrealized):
Included in earnings	—			4,030			(368		)	3,662
Included in other comprehensive income	(1,611		)	—			—			(1,611		)
Investment securities called	(6,943		)	—			—			(6,943		)
Discount accretion	405			—			—			405
Purchase of private equity investments	—			3,239			—			3,239
Capitalized interest/dividends	—			44			—			44
Purchase of risk participation agreement	—			—			79			79
Sales of risk participation agreements	—			—			(351		)	(351		)
Balance June 30, 2011	$	141,940		$	61,173		$	(288	)	$	202,825
Total gains or losses for the six months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at June 30, 2011	$	—		$	4,030		$	114		$	4,144

Gains and losses on the Level 3 assets and liabilities in the previous table are reported in the following income categories:



(In thousands)	Loan Fees and Sales			Other Non-Interest Income		Investment Securities Gains (Losses), Net		Total
For the three months ended June 30, 2012
Total gains or losses included in earnings	$	—		$	7	$	1,475	$	1,482
Change in unrealized gains or losses relating to assets still held at June 30, 2012	$	—		$	7	$	600	$	607
For the six months ended June 30, 2012
Total gains or losses included in earnings	$	(9	)	$	5	$	5,600	$	5,596
Change in unrealized gains or losses relating to assets still held at June 30, 2012	$	—		$	5	$	4,575	$	4,580
For the three months ended June 30, 2011
Total gains or losses included in earnings	$	(34	)	$	29	$	2,605	$	2,600
Change in unrealized gains or losses relating to assets still held at June 30, 2011	$	79		$	29	$	2,605	$	2,713
For the six months ended June 30, 2011
Total gains or losses included in earnings	$	(403	)	$	35	$	4,030	$	3,662
Change in unrealized gains or losses relating to assets still held at June 30, 2011	$	79		$	35	$	4,030	$	4,144

Level 3 Inputs

As shown above, the Company's significant Level 3 measurements which employ unobservable inputs that are readily quantifiable pertain to auction rate securities (ARS) and investments in portfolio concerns held by the Company's private equity subsidiaries. ARS are included in state and municipal securities and totaled $127.5 million at June 30, 2012, while private equity investments, included in non-marketable securities, totaled $65.8 million.

Information about these inputs is presented in the table and discussions below.



Quantitative Information about Level 3 Fair Value Measurements
	Valuation Technique	Unobservable Input	Range
Auction rate securities	Discounted cash flow	Estimated market recovery period	5 years
		Estimated market rate	2.9%	-	4.3%
Private equity investments	Market comparable companies	EBITDA multiple	4.0%	-	5.5%

The fair values of ARS are estimated using a discounted cash flows analysis in which estimated cash flows are based on mandatory interest rates paid under failing auctions and projected over an estimated market recovery period. Under normal conditions, ARS traded in weekly auctions and were considered liquid investments. The Company's estimate of when these auctions might resume is highly judgmental and subject to variation depending on current and projected market conditions. Few auctions of these securities have been held since 2008, and most sales have been privately arranged. Estimated cash flows during the period over which the Company expects to hold the securities are discounted at an estimated market rate reflecting adjustments for liquidity premium and nonperformance risk. These securities are comprised of bonds issued by various states and municipalities for healthcare and student lending purposes, and market rates are derived for each type. An increase in the holding period alone would result in a higher fair value measurement, while an increase in the estimated market rate (the discount rate) alone would result in a lower fair value measurement.

The fair values of the Company's private equity investments are based on a determination of fair value of the investee company less exit costs and preference payments assuming the sale of the investee company. Investee companies are normally non-public entities. The fair value of the investee company is determined by reference to the investee's total earnings before interest, depreciation/amortization, and income taxes (EBITDA) multiplied by an EBITDA factor. EBITDA is normally determined based on a trailing prior period adjusted for specific factors including current economic outlook, investee management, and specific unique circumstances such as sales order information, major customer status, regulatory changes, etc. The EBITDA multiple is based on management's review of published trading multiples for recent private equity transactions and other judgments, and is derived for each individual investee. The value of the investee company is then reduced to reflect appropriate assumed selling and liquidation costs. The fair value of the Company's investment (which is usually a partial interest in the investee company) is then calculated based on its ownership percentage in the investee company.

For assets measured at fair value on a nonrecurring basis during the first six months of 2012 and 2011 and still held as of June 30, 2012 and 2011, the following table provides the adjustments to fair value recognized during the respective periods, the level of valuation inputs used to determine each adjustment, and the carrying value of the related individual assets or portfolios at June 30, 2012 and 2011. The loss in fair value recognized on long-lived assets in the first six months of 2012 resulted primarily from the Company's decision to market certain property adjacent to an office building in downtown Kansas City, also held for sale, which required a write-down to fair value less selling costs.



			Fair Value Measurements Using
(In thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses) Recognized During the Six Months Ended June 30
June 30, 2012
Loans	$	27,176	$	—	$	—	$	27,176	$	(5,918	)
Mortgage servicing rights	574		—		—		574		20
Foreclosed assets	1,550		—		—		1,550		(425		)
Long-lived assets	5,397		—		—		5,397		(3,398		)

June 30, 2011
Loans	$	39,957	$	—	$	—	$	39,957	$	(8,101	)
Mortgage servicing rights	1,195		—		—		1,195		11
Foreclosed assets	2,163		—		—		2,163		(377		)
Long-lived assets	4,403		—		—		4,403		(1,511		)