Fair Value Measurement

As defined in ASC 820, Fair Value Measurements and Disclosures, fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between market participants in the principal market or most advantageous market for the asset or liability. Fair value is based on quoted market prices, when available, for identical or similar assets or liabilities. In the absence of quoted market prices, Management determines the fair value of the Corporation's assets and liabilities using valuation models or third-party pricing services. Both of these approaches rely on market-based parameters when available, such as interest rate yield curves, option volatilities and credit spreads, or unobservable inputs. Unobservable inputs may be based on Management's judgment, assumptions and estimates related to credit quality, liquidity, interest rates and other relevant inputs.

U.S. GAAP establishes a three-level valuation hierarchy for determining fair value that is based on the transparency of the inputs used in the valuation process. The inputs used in determining fair value in each of the three levels of the hierarchy, highest ranking to lowest, are as follow:


•	Level 1 - Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.


•	Level 2 - Significant other observable inputs other than Level 1 prices such quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.


•	Level 3 - Significant unobservable inputs that reflect a company's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The level in the fair value hierarchy ascribed to a fair value measurement in its entirety is based on the lowest level input that is significant to the overall fair value measurement.

Valuation adjustments, such as those pertaining to counterparty and the Corporation's own credit quality and liquidity, may be necessary to ensure that assets and liabilities are recorded at fair value. Credit valuation adjustments are made when market pricing does not accurately reflect the counterparty's credit quality. As determined by Management, liquidity valuation adjustments may be made to the fair value of certain assets to reflect the uncertainty in the pricing and trading of the instruments when Management is unable to observe recent market transactions for identical or similar instruments. Liquidity valuation adjustments are based on the following factors:


•	the amount of time since the last relevant valuation;


•	whether there is an actual trade or relevant external quote available at the measurement date; and


•	volatility associated with the primary pricing components.

Management ensures that fair value measurements are accurate and appropriate by relying upon various controls, including:


•	an independent review and approval of valuation models;


•	recurring detailed reviews of profit and loss; and


•	a validation of valuation model components against benchmark data and similar products, where possible.

Management reviews any changes to its valuation methodologies to ensure they are appropriate and justified, and refines valuation methodologies as more market-based data becomes available. Transfers between levels of the fair value hierarchy are recognized at the end of the reporting period.

The following tables presents the balances of assets and liabilities measured at fair value on a recurring and nonrecurring basis as of March 31, 2012, December 31, 2011 and March 31, 2011:



			Fair Value by Hierarchy
	March 31, 2012		Level 1		Level 2		Level 3
Recurring fair value measurement
Available-for-sale securities:
Money market mutual funds	$	3,308	$	3,308	$	—	$	—
U.S. government agency debentures	35,455		—		35,455		—
U.S. States and political subdivisions	386,525		—		386,525		—
Residential mortgage-backed securities:
U.S. government agencies	1,454,416		—		1,454,416		—
Commercial mortgage-backed securities:
U.S. government agencies	27,663		—		27,663		—
Residential collateralized mortgage-backed securities:
U.S. government agencies	1,251,304		—		1,251,304		—
Non-agency	41,832		—		2		41,830
Commercial collateralized mortgage-backed securities:
U.S. government agencies	147,355		—		147,355		—
Corporate debt securities	143,789		—		97,132		46,657
Total available-for-sale securities	3,491,647		3,308		3,399,852		88,487
Residential loans held for sale	42,447		—		42,447		—
Derivative assets:
Interest rate swaps - fair value hedges	—		—		—		—
Interest rate swaps - nondesignated	56,298		—		56,298		—
Mortgage loan commitments	3,268		—		3,268		—
Forward sale contracts	446		—		446		—
Foreign exchange	103		—		103		—
Total derivative assets	60,115		—		60,115		—
Total fair value of assets (a)	$	3,594,209	$	3,308	$	3,502,414	$	88,487
Derivative liabilities:
Interest rate swaps - fair value hedges	23,786		—		23,786		—
Interest rate swaps - nondesignated	56,298		—		56,298		—
Foreign exchange	90		—		90		—
Total derivative liabilities	80,174		—		80,174		—
True-up liability	11,725		—		—		11,725
Total fair value of liabilities (a)	$	91,899	$	—	$	80,174	$	11,725
Nonrecurring fair value measurement
Mortgage servicing rights (b)	$	18,869	$	—	$	—	$	18,869
Impaired loans (c)	50,854		—		—		50,854
Other property (d)	4,768		—		—		4,768
Other real estate covered by loss share (e)	47,765		—		—		47,765
Total fair value	$	122,256	$	—	$	—	$	122,256

(a) - There were no transfers between levels 1 and 2 of the fair value hierarchy during the quarter ended March 31, 2012.

(b) - Mortgage servicing rights with a recorded investment of $20.9 million were reduced by a specific valuation allowance totaling $2.2 million to a reported carrying value of $18.8 million resulting in recognition of a recovery of $1.3 million in the quarter ended March 31, 2012.

(c) - Collateral dependent impaired loans with a recorded investment of $58.3 million were reduced by specific valuation allowance allocations totaling $7.5 million to a reported net carrying value of $50.9 million.

(d) - Amounts do not include assets held at cost at March 31, 2012. During the quarter ended March 31, 2012, the re-measurement of foreclosed assets at fair value subsequent to initial recognition resulted in losses of $0.9 million included in noninterest expense.

(e) - Amounts do not include assets held at cost at March 31, 2012. During the quarter ended March 31, 2012, the re-measurement of covered foreclosed assets at fair value subsequent to initial recognition resulted in losses $0.6 million included in noninterest expense.



				Fair Value by Hierarchy
	December 31, 2011			Level 1		Level 2			Level 3
Recurring fair value measurement
Available-for-sale securities:
Money market mutual funds	$	3,299		$	3,299	$	—		$	—
U.S. government agency debentures	123,069			—		123,069			—
U.S. States and political subdivisions	357,731			—		357,731			—
Residential mortgage-backed securities:
U.S. government agencies	1,460,343			—		1,460,343			—
Residential collateralized mortgage-backed securities:
U.S. government agencies	1,137,835			—		1,137,835			—
Non-agency	43,307			—		2			43,305
Commercial collateralized mortgage-backed securities:
U.S. government agencies	129,127			—		129,127			—
Corporate debt securities	98,842			—		54,608			44,234
Total available-for-sale securities	3,353,553			3,299		3,262,715			87,539
Residential loans held for sale	30,077			—		30,077			—
Derivative assets:
Interest rate swaps - fair value hedges	—			—		—			—
Interest rate swaps - nondesignated	58,875			—		58,875			—
Mortgage loan commitments	4,959			—		4,959			—
Forward sale contracts	(1,798		)	—		(1,798		)	—
Foreign exchange	20			—		20			—
Total derivative assets	62,056			—		62,056			—
Total fair value of assets (a)	$	3,445,686		$	3,299	$	3,354,848		$	87,539
Derivative liabilities:
Interest rate swaps - fair value hedges	25,889			—		25,889			—
Interest rate swaps - nondesignated	58,875			—		58,875			—
Foreign exchange	18			—		18			—
Other	1,324			—		1,324			—
Total derivative liabilities	86,106			—		86,106			—
True-up liability	11,551			—		—			11,551
Total fair value of liabilities (a)	$	97,657		$	—	$	86,106		$	11,551
Nonrecurring fair value measurement
Mortgage servicing rights (b)	$	17,749		$	—	$	—		$	17,749
Impaired loans (c)	56,739			—		—			56,739
Other property (d)	4,087			—		—			4,087
Other real estate covered by loss share (e)	43,616			—		—			43,616
Total fair value	$	122,191		$	—	$	—		$	122,191

(a) - There were no transfers between levels 1 and 2 of the fair value hierarchy during the quarter ended December 31, 2011.

(b) - Mortgage servicing rights with a recorded investment of $21.2 million were reduced by a specific valuation allowance totaling $3.5 million to a reported carrying value of $17.6 million resulting in the recognition of an impairment charge of $3.5 million in the year ended December 31, 2011.

(c) - Collateral dependent impaired loans with a recorded investment of $64.5 million were reduced by specific valuation allowance allocations totaling $7.7 million to a reported net carrying value of $56.7 million.

(d) Amounts do not include assets held at cost at December 31, 2011. During the year ended December 31, 2011, the re-measurement of foreclosed assets at fair value subsequent to initial recognition resulted in losses of $5.4 million included in noninterest expense.

(e) Amounts do not include assets held at cost at December 31, 2011. During the year ended December 31, 2011, the re-measurement of covered foreclosed assets at fair value subsequent to initial recognition resulted in losses of $3.0 million included in noninterest expense.



				Fair Value by Hierarchy
	March 31, 2011			Level 1		Level 2			Level 3
Recurring fair value measurement
Available-for-sale securities:
Money market mutual funds	$	3,839		$	3,839	$	—		$	—
U.S. government agency debentures	409,391			—		409,391			—
U.S. States and political subdivisions	296,728			—		296,728			—
Residential mortgage-backed securities:
U.S. government agencies	1,512,520			—		1,512,520			—
Residential collateralized mortgage-backed securities:
U.S. government agencies	1,013,356			—		1,013,356			—
Non-agency	77,609			—		3			77,606
Commercial collateralized mortgage-backed securities:
U.S. government agencies	—			—		—			—
Corporate debt securities	49,308			—		—			49,308
Total available-for-sale securities	3,362,751			3,839		3,231,998			126,914
Residential loans held for sale	13,443			—		13,443			—
Derivative assets:
Interest rate swaps - fair value hedges	—			—		—			—
Interest rate swaps - nondesignated	39,108			—		39,108			—
Mortgage loan commitments	1,432			—		1,432			—
Forward sale contracts	(170		)	—		(170		)	—
Foreign exchange	10			—		10			—
Total derivative assets	40,380			—		40,380			—
Total fair value of assets (a)	$	3,416,574		$	3,839	$	3,285,821		$	126,914
Derivative liabilities:
Interest rate swaps - fair value hedges	24,465			—		24,465			—
Interest rate swaps - nondesignated	39,108			—		39,108			—
Foreign exchange	10			—		10			—
Other	340			—		340			—
Total derivative liabilities	63,923			—		63,923			—
True-up liability	11,601			—		11,601			—
Total fair value of liabilities (a)	$	75,524		$	—	$	75,524		$	—
Nonrecurring fair value measurement
Mortgage servicing rights (b)	$	—		$	—	$	—		$	—
Impaired loans (c)	84,212			—		—			84,212
Other property (d)	10,468			—		—			10,468
Other real estate covered by loss share (e)	42,235			—		—			42,235
Total fair value	$	136,915		$	—	$	—		$	136,915

(a) - There were no transfers between levels 1 and 2 of the fair value hierarchy during the quarter ended March 31, 2011.

(b) - Recorded at carrying value of $21.5 million as of March 31, 2011.

(c) - Collateral dependent impaired loans with a recorded investment of $99.7 million were reduced by specific valuation allowance allocations totaling $15.5 million to a reported net carrying value of $84.2 million.

(d) - Amounts do not include assets held at cost at March 31, 2011. During the quarter ended March 31, 2011, the re-measurement of foreclosed assets at fair value subsequent to initial recognition resulted in losses of $2.2 million included in noninterest expense.

(e) Amounts do not include assets held at cost at March 31, 2011. During the quarter ended March 31, 2011, the re-measurement of covered foreclosed assets at fair value subsequent to initial recognition resulted in losses of $0.3 million included in noninterest expense.

The following section describes the valuation methodologies used by the Corporation to measure financial assets and liabilities at fair value. During the quarters ended March 31, 2012 and 2011, there were no significant changes to the valuation techniques used by the Corporation to measure fair value.

Available-for-sale securities. When quoted prices are available in an active market, securities are valued using the quoted price and are classified as Level 1. The quoted prices are not adjusted. Level 1 instruments are predominantly money market mutual funds and represent less than 1% of the available-for-sale portfolio.

Securities are classified as Level 2 if quoted prices for identical securities are not available, and fair value is determined using pricing models by a third-party pricing service. Approximately 97% of the available-for-sale portfolio is Level 2. For the majority of available-for sale securities, the Corporation obtains fair value measurements from an independent third party pricing service. These instruments include municipal bonds; bonds backed by the U.S. government; corporate bonds; MBSs; securities issued by the U.S. Treasury; and certain agency and corporate collateralized mortgage obligations. The independent pricing service uses industry-standard models to price U.S. Government agencies and MBSs that consider various assumptions, including time value, yield curves, volatility factors, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Obligations of state and political subdivisions are valued using a type of matrix, or grid, pricing in which securities are benchmarked against the treasury rate based on credit rating. For collateralized mortgage securities, depending on the characteristics of a given tranche, a volatility driven multidimensional static model or Option-Adjusted Spread model is generally used. Substantially all assumptions used by the independent pricing service for securities classified as Level 2 are observable in the marketplace, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace.

Securities are classified as Level 3 when there is limited activity in the market for a particular instrument and fair value is determined by obtaining broker quotes. Less than 3% of the available-for-sale portfolio is Level 3 and consists of mortgage-backed securities issued and guaranteed by the National Credit Union Administration and single issuer trust preferred securities. These instruments are measured at unadjusted prices obtained from the independent pricing service. The independent pricing service prices these instruments through a broker quote when sufficient information, such as cash flows or other security structure or market information, is not available to produce an evaluation. Broker-quoted securities are adjusted by the independent pricing service based solely on the receipt of updated quotes from market makers or broker-dealers recognized as market participants. A list of such issues is compiled by the independent pricing service daily. For broker-quoted issues, the independent pricing service applies a zero spread relationship to the bid-side valuation, resulting in the same values for the mean and ask.

On a monthly basis, Management validates the pricing methodologies utilized by our independent pricing service to ensure the fair value determination is consistent with the applicable accounting guidance and that the investments are properly classified in the fair value hierarchy. Management substantiates the fair values determined for a sample of securities held in portfolio by reviewing the key assumptions used by the independent pricing service to value the securities and comparing the fair values to prices from other independent sources for the same and similar securities. Management analyzes variances and conducts additional research with the independent pricing service, if necessary, and takes appropriate action based on its findings.

Loans held for sale. These loans are regularly traded in active markets through programs offered by the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association, and observable pricing information is available from market participants. The prices are adjusted as necessary to include any embedded servicing value in the loans and to take into consideration the specific characteristics of certain loans. These adjustments represent unobservable inputs to the valuation but are not considered significant to the fair value of the loans. Accordingly, residential real estate loans held for sale are classified as Level 2.

Impaired loans. Certain impaired collateral dependent loans are reported at fair value less costs to sell the collateral. Collateral values are estimated using Level 3 inputs, consisting of third party appraisals or price opinions and internal adjustments necessary in the judgment of Management to reflect current market conditions and current operating results for the specific collateral. Collateral may be in the form of real estate or personal property including equipment and inventory. The vast majority of the collateral is real estate. When impaired collateral dependent loans are individually re-measured and reported at fair value of the collateral, less costs to sell, a direct loan charge off to the allowance for loan losses and / or a specific valuation allowance allocation is recorded.

Other Property. Certain other property which consists of foreclosed assets and properties securing residential and commercial loans, upon initial recognition and transfer from loans, are re-measured and reported at fair value less costs to sell to the property through a charge-off to the allowance for loan losses based on the fair value of the foreclosed assets. The fair value of a foreclosed asset, upon initial recognition, is estimated using Level 3 inputs, consisting of third party appraisals or price opinions and internal adjustments necessary in the judgment of Management to reflect current market conditions and current operating results for the specific collateral. Subsequent to foreclosure, valuations are updated periodically, and the assets may be written down further through a charge to noninterest expense.

Mortgage Servicing Rights. The Corporation carries its mortgage servicing rights at lower of cost or fair value, and therefore, are subject to fair value measurements on a nonrecurring basis. Since sales of mortgage servicing rights tend to occur in private transactions and the precise terms and conditions of the sales are typically not readily available, there is a limited market to refer to in determining the fair value of mortgage servicing rights. As such, like other participants in the mortgage banking business, the Corporation relies primarily on a discounted cash flow model, incorporating assumptions about loan prepayment rates, discount rates, servicing costs and other economic factors, to estimate the fair value of its mortgage servicing rights. Since the valuation model uses significant unobservable inputs, the Corporation classifies mortgage servicing rights within Level 3.

The Corporation utilizes a third party vendor to perform the modeling to estimate the fair value of its mortgage servicing rights. The Corporation reviews the estimated fair values and assumptions used by the third party in the model on a quarterly basis. The Corporation also compares the estimates of fair value and assumptions to recent market activity and against its own experience. See Note 12 (Mortgage Servicing Rights and Mortgage Servicing Activity) for further information on mortgage servicing rights valuation assumptions.

Derivatives. The Corporation's derivatives include interest rate swaps and written loan commitments and forward sales contracts related to residential mortgage loan origination activity. Valuations for interest rate swaps are derived from third party models whose significant inputs are readily observable market parameters, primarily yield curves, with appropriate adjustments for liquidity and credit risk. These fair value measurements are classified as Level 2. The fair values of written loan commitments and forward sales contracts on the associated loans are based on quoted prices for similar loans in the secondary market, consistent with the valuation of residential mortgage loans held for sale. Expected net future cash flows related to loan servicing activities are included in the fair value measurement of written loan commitments. A written loan commitment does not bind the potential borrower to entering into the loan, nor does it guarantee that the Corporation will approve the potential borrower for the loan. Therefore, when determining fair value, the Corporation makes estimates of expected “fallout” (interest rate locked pipeline loans not expected to close), using models, which consider cumulative historical fallout rates and other factors. Fallout can occur for a variety of reasons including falling rate environments when a borrower will abandon a fixed rate loan commitment at one lender and enter into a new lower fixed rate loan commitment at another, when a borrower is not approved as an acceptable credit by the lender, or for a variety of other non-economic reasons. Fallout is not a significant input to the fair value of the written loan commitments in their entirety. These measurements are classified as Level 2.

Derivative assets are typically secured through securities with financial counterparties or cross collateralization with a borrowing customer. Derivative liabilities are typically secured through the Corporation pledging securities to financial counterparties or, in the case of a borrowing customer, by the right of setoff. The Corporation considers factors such as the likelihood of default by itself and its counterparties, right of setoff, and remaining maturities in determining the appropriate fair value adjustments. All derivative counterparties approved by the Corporation's Asset and Liability Committee are regularly reviewed, and appropriate business action is taken to adjust the exposure to certain counterparties, as necessary. Counterparty exposure is evaluated by netting positions that are subject to master netting agreements, as well as considering the amount of marketable collateral securing the position. This approach used to estimate impacted exposures to counterparties is also used by the Corporation to estimate its own credit risk on derivative liability positions. To date, no material losses have been incurred due to a counterparty's inability to pay any uncollateralized position. There was no significant change in value of derivative assets and liabilities attributed to credit risk for the quarter ended March 31, 2012.

True-up liability. In connection with the George Washington and Midwest acquisitions in 2010, the Bank has agreed to pay the FDIC should the estimated losses on the acquired loan portfolios as well as servicing fees earned on the acquired loan portfolios not meet thresholds as stated in the loss sharing agreements (the "true-up liability"). This contingent consideration is classified as a liability within accrued taxes, expenses and other liabilities on the consolidated balance sheets and is remeasured at fair value each reporting date until the contingency is resolved. The changes in fair value are recognized in earnings in the current period.

An expected value methodology is used as a starting point for determining the fair value of the true-up liability based on the contractual terms prescribed in the loss sharing agreements. The resulting values under both calculations are discounted over 10 years (the period defined in the loss sharing agreements) to reflect the uncertainty in the timing and payment of the true-up liability by the Bank to arrive at a net present value. The discount rate used to value the true-up liability was 3.56% and 4.64% as of March 31, 2012 and 2011, respectively. Increasing or decreasing the discount rate by 1 percentage point would change the liability by $1.0 million and $0.9 million, respectively, as of March 31, 2012.

In accordance with the loss sharing agreements governing the Midwest acquisition, on July 15, 2020 (the “Midwest True-Up Measurement Date”), the Bank has agreed to pay to the FDIC half of the amount, if positive, calculated as: (1) 20% of the intrinsic loss estimate of the FDIC (approximately $152 million); minus (2) the sum of (A) 25% of the asset premium paid in connection with the Midwest acquisition (approximately $20 million), plus (B) 25% of the cumulative shared-loss payments (as defined below) plus (C) the cumulative servicing amount (as defined below). The fair value of the true-up liability associated with the Midwest acquisition was $7.4 million, $7.2 million and $7.4 million as of March 31, 2012, December 31, 2011 and March 31, 2011, respectively.

In accordance with the loss sharing agreements governing the George Washington acquisition, on April 14, 2020, (the “George Washington True-Up Measurement Date”), the Bank has agreed to pay to the FDIC 50% of the excess, if any, of (1) 20% of the stated threshold ($172.0 million) less (2) the sum of (A) 25% of the asset discount ($47.0 million) received in connection with the George Washington acquisition plus (B) 25% of the cumulative shared-loss payments (as defined below) plus (C) the cumulative servicing amount (as defined below). The fair value of the true-up liability associated with the George Washington acquisition was $4.3 million, $4.3 million and $4.2 million as of March 31, 2012, December 31, 2011 and March 31, 2011, respectively.

For the purposes of the above calculations, cumulative shared-loss payments means: (i) the aggregate of all of the payments made or payable to the Bank under the loss sharing agreements; minus (ii) the aggregate of all of the payments made or payable to the FDIC. The cumulative servicing amount means the period servicing amounts (as defined in the loss sharing agreements) for every consecutive twelve-month period prior to and ending on the Midwest and George Washington True-Up Measurement Dates. The cumulative loss share payments and cumulative service amounts components of the true-up calculations are estimated each period end based on the expected amount and timing of cash flows of the acquired loan portfolios. See Note 4 (Loans and Allowance for Loan and Lease Losses) for additional information on the estimated cash flows of the acquired loan portfolios.

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



	Three months ended
	March 31, 2012					March 31, 2011
	Available-for-sale securities			True-up liability		Available-for-sale securities		True-up liability
Balance at beginning of period	$	87,539		$	11,551	$	60,344	$	12,061
(Gains) losses included in earnings	—			174		—		(460		)
Unrealized gains (losses) (a)	2,419			—		2,694		—
Purchases	—			—		63,876		—
Sales	—			—		—		—
Settlements	(1,471		)	—		—		—
Net transfers into (out of) Level 3	—			—		—		—
Balance at ending of period	$	88,487		$	11,725	$	126,914	$	11,601

(a) Reported in other comprehensive income (loss)

Fair Value Option

Residential mortgage loans held for sale are recorded at fair value under fair value option accounting guidance. The election of the fair value option aligns the accounting for these loans with the related hedges. It also eliminates the requirements of hedge accounting under U.S. GAAP.

Interest income on loans held for sale is accrued on the principal outstanding primarily using the “simple-interest” method. None of these loans were 90 days or more past due, nor were any on nonaccrual status as of March 31, 2012, December 31, 2011 and March 31, 2011. The aggregate fair value, contractual balance and gains on loans held for sale are as follows:



	Quarter ended		Year ended		Quarter ended
	March 31, 2012		December 31, 2011		March 31, 2011
Aggregate fair value	$	42,447	$	30,077	$	13,443
Contractual balance	41,542		28,948		13,008
Gain (a)	905		1,129		434

(a) Included in loan sales and servicing income.

Disclosures about Fair Value of Financial Instruments

The carrying amount and estimated fair value of the Corporation’s financial instruments that are carried at either fair value or cost as of March 31, 2012, December 31, 2011 and March 31, 2011 are shown in the tables below.



	March 31, 2012
	Carrying Amount		Fair Value
	Carrying Amount		Total		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	489,985	$	489,985	$	—	$	489,985	$	—
Available for sale securities	3,491,647		3,491,647		3,308		3,399,852		88,487
Held to maturity securities	100,840		103,865		—		103,865		—
Other securities	140,713		140,713		—		140,713		—
Loans held for sale	42,447		42,447		—		42,447		—
Net noncovered loans	7,759,360		7,496,821		—		—		7,496,821
Net covered loans and loss share receivable	1,337,080		1,337,080		—		—		1,337,080
Accrued interest receivable	45,270		45,270		—		45,270		—
Derivatives	60,115		60,115		—		60,115		—
Financial liabilities:
Deposits	$	11,648,165	$	11,659,976	$	—	$	11,659,976	$	—
Federal funds purchased and securities sold under agreements to repurchase	928,760		928,760		—		928,760		—
Wholesale borrowings	176,611		184,640		—		184,640		—
Accrued interest payable	3,350		3,350		—		3,350		—
Derivatives	80,174		80,174		—		80,174		—



	December 31, 2011
	Carrying Amount		Fair Value
	Carrying Amount		Total		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	377,319	$	377,319	$	—	$	377,319	$	—
Available for sale securities	3,353,553		3,353,553		3,299		3,262,715		87,539
Held to maturity securities	82,764		85,112		—		85,112		—
Other securities	140,726		140,726		—		140,726		—
Loans held for sale	30,077		30,077		—		30,077		—
Net noncovered loans	7,641,245		7,373,801		—		—		7,373,801
Net covered loans and loss share receivable	1,460,723		1,460,723		—		—		1,460,723
Accrued interest receivable	42,274		42,274		—		42,274		—
Derivatives	62,056		62,056		—		62,056		—
Financial liabilities:
Deposits	$	11,431,609	$	11,445,777	$	—	$	11,445,777	$	—
Federal funds purchased and securities sold under agreements to repurchase	866,265		866,265		—		866,265		—
Wholesale borrowings	203,462		211,623		—		211,623		—
Accrued interest payable	3,915		3,915		—		3,915		—
Derivatives	86,106		86,106		—		86,106		—



	March 31, 2011
	Carrying Amount		Fair Value
	Carrying Amount		Total		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	638,781	$	638,781	$	—	$	638,781	$	—
Available for sale securities	3,362,751		3,362,751		3,839		3,231,998		126,914
Held to maturity securities	65,923		67,903		—		67,903		—
Other securities	160,818		160,818		—		160,818		—
Loans held for sale	13,443		13,443		—		13,443		—
Net noncovered loans	7,071,534		6,673,608		—		—		6,673,608
Net covered loans and loss share receivable	1,841,850		1,841,850		—		—		1,841,850
Accrued interest receivable	41,418		41,418		—		41,418		—
Derivatives	40,380		40,380		—		40,380		—
Financial liabilities:
Deposits	$	11,395,946	$	11,416,463	$	—	$	11,416,463	$	—
Federal funds purchased and securities sold under agreements to repurchase	952,995		956,975		—		956,975		—
Wholesale borrowings	325,046		328,006		—		328,006		—
Accrued interest payable	5,834		5,834		—		5,834		—
Derivatives	63,923		63,923		—		63,923		—

The following methods and assumptions were used to estimate the fair value of the remaining classes of financial instruments not measured at fair value on a recurring or nonrecurring basis:

Cash and due from banks – For these short-term instruments, the carrying amount is considered a reasonable estimate of fair value.

Held to maturity securities - The held to maturity portfolio was segmented based on security type and repricing characteristics. Carrying values are used to estimate fair values of variable rate securities. A discounted cash flow method was used to estimate the fair value of fixed-rate securities. Discounting was based on the contractual cash flows, and discount rates are based on the year-end yield curve plus a spread that reflects current pricing on securities with similar characteristics. If applicable, prepayment assumptions are factored into the fair value determination based on historical experience and current economic conditions.

Other securities - Other securities is mainly composed of FRB and FHLB stock. The carrying amount of this stock is a reasonable fair value estimate given their restricted nature.

Net noncovered loans – The loan portfolio was segmented based on loan type and repricing characteristics. Carrying values are used to estimate fair values of variable rate loans. A discounted cash flow method was used to estimate the fair value of fixed-rate loans. Discounting was based on the contractual cash flows, and discount rates are based on the year-end yield curve plus a spread that reflects current pricing on loans with similar characteristics. If applicable, prepayment assumptions are factored into the fair value determination based on historical experience and current economic conditions.

Net covered loans and loss share receivable – Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and current discount rates. Loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques. The discount rates used for loans are based on current market rates for new originations of comparable loans and include adjustments for liquidity concerns. The discount rate does not include a factor for credit losses as that has been included in the estimated cash flows.

Loss share receivable – This loss sharing asset is measured separately from the related covered assets as it is not contractually embedded in the covered assets and is not transferable with the covered assets should the Bank choose to dispose of them. Fair value was estimated using projected cash flows related to the Loss Share Agreements based on the expected reimbursements for losses and the applicable loss sharing percentages. These cash flows were discounted to reflect the uncertainty of the timing and receipt from the FDIC.

Accrued interest receivable – The carrying amount is considered a reasonable estimate of fair value.

Deposits – The estimated fair value of deposits with no stated maturity, which includes demand deposits, money market accounts and other savings accounts, are established at carrying value because of the customers’ ability to withdraw funds immediately. A discounted cash flow method is used to estimate the fair value of fixed rate time deposits. Discounting was based on the contractual cash flows and the current rates at which similar deposits with similar remaining maturities would be issued.

Federal funds purchased and securities sold under agreements to repurchase and wholesale borrowings – The carrying amount of variable rate borrowings including federal funds purchased is considered to be their fair value. Quoted market prices or the discounted cash flow method was used to estimate the fair value of the Corporation’s long-term debt. Discounting was based on the contractual cash flows and the current rate at which debt with similar terms could be issued.

Accrued interest payable – The carrying amount is considered a reasonable estimate of fair value.