Fair Value Measurements

6 Months Ended

Jun. 30, 2016

The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, we utilize valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. ASC Topic 820 establishes a three-level fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. See our 2015 Form 10-K for additional information regarding the fair value hierarchy and a description of our valuation techniques.

Financial Assets and Financial Liabilities. The table below summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015, segregated by the level of the valuation inputs within the fair value hierarchy of ASC Topic 820 utilized to measure fair value.



	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
June 30, 2016
Securities available for sale:
U.S. Treasury	$	4,120,017	$	—	$	—	$	4,120,017
Residential mortgage-backed securities	—		908,185		—		908,185
States and political subdivisions	—		4,973,354		—		4,973,354
Other	—		42,477		—		42,477
Trading account securities:
U.S. Treasury	13,381		—		—		13,381
States and political subdivisions	—		14,553		—		14,553
Derivative assets:
Interest rate swaps, caps and floors	—		61,344		—		61,344
Commodity swaps and options	—		8,335		—		8,335
Foreign currency forward contracts	21		—		—		21
Derivative liabilities:
Interest rate swaps, caps and floors	—		63,929		—		63,929
Commodity swaps and options	—		8,013		—		8,013
Foreign currency forward contracts	15		—		—		15



December 31, 2015
Securities available for sale:
U.S. Treasury	$	3,994,520	$	—	$	—	$	3,994,520
Residential mortgage-backed securities	—		1,041,432		—		1,041,432
States and political subdivisions	—		4,127,959		—		4,127,959
Other	—		42,447		—		42,447
Trading account securities:
U.S. Treasury	16,443		—		—		16,443
States and political subdivisions	—		136		—		136
Derivative assets:
Interest rate swaps, caps and floors	—		38,948		—		38,948
Commodity swaps and options	—		13,564		—		13,564
Foreign currency forward contracts	46		—		—		46
Derivative liabilities:
Interest rate swaps, caps and floors	—		40,693		—		40,693
Commodity swaps and options	—		13,355		—		13,355
Foreign currency forward contracts	28		—		—		28

Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Financial assets measured at fair value on a non-recurring basis during the reported periods include certain impaired loans reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. The following table presents impaired loans that were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for loan losses based upon the fair value of the underlying collateral during the reported periods.



	Six Months Ended June 30, 2016					Six Months Ended June 30, 2015
	Level 2		Level 3			Level 2			Level 3
Carrying value of impaired loans before allocations	$	—	$	11,183		$	163		$	2,039
Specific valuation allowance (allocations) reversals of prior allocations	—		(2,944		)	(71		)	(437		)
Fair value	$	—	$	8,239		$	92		$	1,602

Non-Financial Assets and Non-Financial Liabilities. We do not have any non-financial assets or non-financial liabilities measured at fair value on a recurring basis. Non-financial assets measured at fair value on a non-recurring basis during the reported periods include certain foreclosed assets which, upon initial recognition, were remeasured and reported at fair value through a charge-off to the allowance for loan losses and certain foreclosed assets which, subsequent to their initial recognition, were remeasured at fair value through a write-down included in other non-interest expense. The following table presents foreclosed assets that were remeasured and reported at fair value during the reported periods:



	Six Months Ended June 30, 2016
	2016			2015
Foreclosed assets remeasured at initial recognition:
Carrying value of foreclosed assets prior to remeasurement	$	425		$	161
Charge-offs recognized in the allowance for loan losses	(3		)	—
Fair value	$	422		$	161
Foreclosed assets remeasured subsequent to initial recognition:
Carrying value of foreclosed assets prior to remeasurement	$	—		$	205
Write-downs included in other non-interest expense	—			(36		)
Fair value	$	—		$	169

Financial Instruments Reported at Amortized Cost. The estimated fair values of financial instruments that are reported at amortized cost in our consolidated balance sheets, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value, were as follows:



	June 30, 2016				December 31, 2015
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Level 2 inputs:
Cash and cash equivalents	$	3,365,223	$	3,365,223	$	3,591,523	$	3,591,523
Securities held to maturity	2,339,602		2,414,383		2,663,009		2,710,685
Cash surrender value of life insurance policies	176,345		176,345		175,191		175,191
Accrued interest receivable	141,009		141,009		139,986		139,986
Level 3 inputs:
Loans, net	11,434,468		11,455,089		11,350,672		11,396,158
Financial liabilities:
Level 2 inputs:
Deposits	24,287,451		24,287,739		24,343,595		24,344,007
Federal funds purchased and repurchase agreements	733,160		733,160		893,522		893,522
Junior subordinated deferrable interest debentures	136,098		137,115		136,069		137,115
Subordinated notes payable and other borrowings	99,930		99,750		99,870		99,000
Accrued interest payable	1,073		1,073		1,014		1,014

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details