Fair Value of Financial Instruments

The carrying amounts and estimated fair values of financial instruments held by the Company, in addition to a discussion of the methods used and assumptions made in computing those estimates, are set forth below.

Loans

The fair values of loans are estimated by discounting the expected future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. This method of estimating fair value does not incorporate the exit-price concept of fair value prescribed by ASC 820 “Fair Value Measurements and Disclosures”. Expected future cash flows for each individual loan are based on contractual features, and for loans with optionality, such as variable rates and prepayment features, are based on a multi-rate path process. Each loan's expected future cash flows are discounted using the LIBOR/swap curve plus an appropriate spread. For business, construction and business real estate loans, internally-developed pricing spreads based on loan type, term and credit score are utilized. The spread for personal real estate loans is generally based on newly originated loans with similar characteristics. For consumer loans, the spread is calculated at loan origination as part of the Bank's funds transfer pricing process, which is indicative of individual borrower creditworthiness. All consumer credit card loans are discounted at the same spread, depending on whether the rate is variable or fixed.

Investment Securities and Derivative Instruments

Detailed descriptions of the fair value measurements of these instruments are provided in Note 16 on Fair Value Measurements.

Federal Funds Purchased and Sold, Interest Earning Deposits With Banks and Cash and Due From Banks

The carrying amounts of federal funds purchased and sold, interest earning deposits with banks, and cash and due from banks approximates fair value, as these instruments are payable on demand or mature overnight.

Securities Purchased/Sold under Agreements to Resell/Repurchase

The fair values of these investments and borrowings are estimated by discounting contractual maturities using an estimate of the current market rate for similar instruments.

Deposits

The fair value of deposits with no stated maturity is equal to the amount payable on demand. Such deposits include savings and interest and non-interest bearing demand deposits. These fair value estimates do not recognize any benefit the Company receives as a result of being able to administer, or control, the pricing of these accounts. Because they are payable on demand, they are classified as Level 1 in the fair value hierarchy. The fair value of time open and certificates of deposit is based on the discounted value of cash flows, taking early withdrawal optionality into account. Discount rates are based on the Company’s approximate cost of obtaining similar maturity funding in the market. Their fair value measurement is classified as Level 3.

Other Borrowings

The fair value of other borrowings, which consists mainly of long-term debt, is estimated by discounting contractual maturities using an estimate of the current market rate for similar instruments.

The estimated fair values of the Company’s financial instruments are as follows:



	Fair Value Hierarchy Level	2014				2013
(In thousands)		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets
Loans:
Business	Level 3	$	3,969,952	$	3,982,531	$	3,715,319	$	3,723,263
Real estate - construction and land	Level 3	403,507		407,905		406,197		410,022
Real estate - business	Level 3	2,288,215		2,315,378		2,313,550		2,345,124
Real estate - personal	Level 3	1,883,092		1,933,456		1,787,626		1,802,364
Consumer	Level 3	1,705,134		1,701,037		1,512,716		1,519,830
Revolving home equity	Level 3	430,873		433,508		420,589		424,811
Consumer credit card	Level 3	782,370		794,929		796,228		811,550
Overdrafts	Level 3	6,095		6,095		4,611		4,611
Investment securities:
Available for sale	Level 1	519,382		519,382		530,342		530,342
Available for sale	Level 2	8,909,035		8,909,035		8,257,614		8,257,614
Available for sale	Level 3	95,143		95,143		127,724		127,724
Trading	Level 2	15,357		15,357		19,993		19,993
Non-marketable	Level 3	106,875		106,875		107,324		107,324
Federal funds sold	Level 1	32,485		32,485		43,845		43,845
Securities purchased under agreements to resell	Level 3	1,050,000		1,048,866		1,150,000		1,149,625
Interest earning deposits with banks	Level 1	600,744		600,744		707,249		707,249
Cash and due from banks	Level 1	467,488		467,488		518,420		518,420
Derivative instruments	Level 2	10,454		10,454		12,976		12,976
Derivative instruments	Level 3	3		3		4		4
Financial Liabilities
Non-interest bearing deposits	Level 1	$	6,811,959	$	6,811,959	$	6,750,674	$	6,750,674
Savings, interest checking and money market deposits	Level 1	10,541,601		10,541,601		10,108,236		10,108,236
Time open and certificates of deposit	Level 3	2,122,218		2,121,114		2,188,438		2,190,610
Federal funds purchased	Level 1	3,840		3,840		24,795		24,795
Securities sold under agreements to repurchase	Level 3	1,858,678		1,858,731		1,321,763		1,321,633
Other borrowings	Level 3	104,058		111,102		107,310		116,843
Derivative instruments	Level 2	10,722		10,722		13,260		13,260
Derivative instruments	Level 3	226		226		69		69

Off-Balance Sheet Financial Instruments

The fair value of letters of credit and commitments to extend credit is based on the fees currently charged to enter into similar agreements. The aggregate of these fees is not material. These instruments are also referenced in Note 20 on Commitments, Contingencies and Guarantees.

Limitations

Fair value estimates are made at a specific point in time based on relevant market information. They do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for many of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, risk characteristics and economic conditions. These estimates are subjective, involve uncertainties and cannot be determined with precision. Changes in assumptions could significantly affect the estimates.