Fair Value of Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2019

Balances of assets and liabilities measured at fair value on a recurring basis

The table below presents the balances of assets and liabilities measured at fair value on a recurring basis as of December 31, 2019, and December 31, 2018:



(dollars in thousands)	Quoted Prices In Active Markets for Identical Assets or Liabilities (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total
December 31, 2019
Assets:
Investment Securities Available-for-Sale
Debt Securities Issued by the U.S. Treasury and Government Agencies		$	1,155		$	219,976		$	—	$	221,131
Debt Securities Issued by States and Political Subdivisions		—			55,097			—		55,097
Debt Securities Issued by U.S. Government-Sponsored Enterprises		—			22,147			—		22,147
Debt Securities Issued by Corporations		—			336,321			—		336,321
Mortgage-Backed Securities:
Residential - Government Agencies		—			1,172,826			—		1,172,826
Residential - U.S. Government-Sponsored Enterprises		—			586,761			—		586,761
Commercial - Government Agencies		—			224,720			—		224,720
Total Mortgage-Backed Securities		—			1,984,307			—		1,984,307
Total Investment Securities Available-for-Sale		1,155			2,617,848			—		2,619,003
Loans Held for Sale		—			39,062			—		39,062
Mortgage Servicing Rights		—			—			1,126		1,126
Other Assets		41,464			—			—		41,464
Derivatives¹		—			308			28,623		28,931
Total Assets Measured at Fair Value on a Recurring Basis as of December 31, 2019		$	42,619		$	2,657,218		$	29,749	$	2,729,586

Liabilities:
Derivatives¹		$	—		$	327		$	6,050	$	6,377
Total Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2019		$	—		$	327		$	6,050	$	6,377

December 31, 2018
Assets:
Investment Securities Available-for-Sale
Debt Securities Issued by the U.S. Treasury and Government Agencies		$	972		$	391,429		$	—	$	392,401
Debt Securities Issued by States and Political Subdivisions		—			563,996			—		563,996
Debt Securities Issued by U.S. Government-Sponsored Enterprises		—			56			—		56
Debt Securities Issued by Corporations		—			223,140			—		223,140
Mortgage-Backed Securities:
Residential - Government Agencies		—			190,442			—		190,442
Residential - U.S. Government-Sponsored Enterprises		—			578,527			—		578,527
Commercial - Government Agencies		—			59,380			—		59,380
Total Mortgage-Backed Securities		—			828,349			—		828,349
Total Investment Securities Available-for-Sale		972			2,006,970			—		2,007,942
Loans Held for Sale		—			10,987			—		10,987
Mortgage Servicing Rights		—			—			1,290		1,290
Other Assets		31,871			—			—		31,871
Derivatives¹		—			812			13,792		14,604
Total Assets Measured at Fair Value on a Recurring Basis as of December 31, 2018		$	32,843		$	2,018,769		$	15,082	$	2,066,694

Liabilities:
Derivatives¹		$	—		$	371		$	9,376	$	9,747
Total Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2018		$	—		$	371		$	9,376	$	9,747

¹The fair value of each class of derivatives is shown in Note 17 Derivative Financial Instruments.

Changes in Level 3 assets and liabilities measured at fair value on a recurring basis

For the years ended December 31, 2019, and December 31, 2018, the changes in Level 3 assets and liabilities measured at fair value on a recurring basis were as follows:



(dollars in thousands)	Mortgage Servicing Rights ¹				Net Derivative Assets and Liabilities ²
Year Ended December 31, 2019
Balance as of January 1, 2019		$	1,290			$	4,416
Realized and Unrealized Net Gains (Losses):
Included in Net Income		(164		)		12,138
Transfers to Loans Held for Sale		—				(11,776		)
Variation Margin Payments		—				17,795
Balance as of December 31, 2019		$	1,126			$	22,573
Total Unrealized Net Gains (Losses) Included in Net Income Related to Assets Still Held as of December 31, 2019		$	—			$	22,573

Year Ended December 31, 2018
Balance as of January 1, 2018		$	1,454			$	894
Realized and Unrealized Net Gains (Losses):
Included in Net Income		(164		)		3,534
Transfers to Loans Held for Sale		—				(3,451		)
Variation Margin Payments		$	—			$	3,439
Balance as of December 31, 2018		$	1,290			$	4,416
Total Unrealized Net Gains (Losses) Included in Net Income Related to Assets Still Held as of December 31, 2018		$	—			$	4,416


¹	Realized and unrealized gains and losses related to mortgage servicing rights are reported as a component of mortgage banking income in the Company’s consolidated statements of income.

Realized and unrealized gains and losses related to interest rate lock commitments are reported as a component of mortgage banking income in the Company’s consolidated statements of income. Realized and unrealized gains and losses related to interest rate swap agreements are reported as a component of other noninterest income in the Company’s consolidated statements of income.

Summary of the significant unobservable inputs

For Level 3 assets and liabilities measured at fair value on a recurring or nonrecurring basis as of December 31, 2019, and December 31, 2018, the significant unobservable inputs used in the fair value measurements were as follows:



		Significant Unobservable Inputs (weighted-average)					Fair Value
			December 31,				December 31,
(dollars in thousands)	Valuation Technique	Description	2019		2018		2019		2018
Mortgage Servicing Rights	Discounted Cash Flow	Constant Prepayment Rate ¹	10.76	%	7.01	%	$	26,840	$	30,508
		Discount Rate ²	7.33	%	9.59	%

Net Derivative Assets and Liabilities:
Interest Rate Lock Commitments	Pricing Model	Closing Ratio	92.24	%	89.00	%	$	1,280	$	871
Interest Rate Swap Agreements	Discounted Cash Flow	Credit Factor	0.20	%	0.06	%	$	21,293	$	3,545

¹Represents annualized loan prepayment rate assumption.

²Derived from multiple interest rate scenarios that incorporate a spread to a market yield curve and market volatilities.

Assets and liabilities measured at fair value on a nonrecurring basis

For the year ended December 31, 2019, the Company recorded a $0.2 million impairment charge to fully write-down the net book value of aircraft parts that were previously on lease agreements. An impairment charge (included in other noninterest expense in the Company's consolidated statements of income) was recorded in the third quarter of 2019 to reduce the carrying value to estimated fair value less cost to sell based on recent appraisals, market conditions, and management judgment. Due to the use of significant unobservable inputs combined with significant management judgment regarding the fair value of the equipment held for sale, the carrying value was deemed a Level 3 measurement. For the year ended December 31, 2018, there were no material adjustments to fair value for the Company’s assets and liabilities measured at fair value on a nonrecurring basis in accordance with GAAP.

Schedule of difference between the aggregate fair value and the aggregate unpaid principal balance of the Company's residential mortgage loans held for sale

The following table reflects the difference between the aggregate fair value and the aggregate unpaid principal balance of the Company’s residential mortgage loans held for sale as of December 31, 2019, and December 31, 2018.



(dollars in thousands)	Aggregate Fair Value		Aggregate Unpaid Principal			Aggregate Fair Value Less Aggregate Unpaid Principal
December 31, 2019
Loans Held for Sale	$	39,062		$	38,293		$	769

December 31, 2018
Loans Held for Sale	$	10,987		$	10,656		$	331

Schedule of carrying amount, fair value, and fair value hierarchy of financial instruments

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments not recorded at fair value on a recurring basis as of December 31, 2019, and December 31, 2018. This table excludes financial instruments for which the carrying amount approximates fair value. For short-term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For non-marketable equity securities such as Federal Home Loan Bank and Federal Reserve Bank stock, the carrying amount is a reasonable estimate of fair value as these securities can only be redeemed or sold at their par value and only to the respective issuing government supported institution or to another member institution. For financial liabilities such as noninterest-bearing demand, interest-bearing demand, and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity.



					Fair Value Measurements
(dollars in thousands)	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2019
Financial Instruments – Assets
Investment Securities Held-to-Maturity	$	3,042,294	$	3,062,882	$	275,663	$	2,787,219	$	—
Loans	10,664,885		10,873,208		—		—		10,873,208

Financial Instruments – Liabilities
Time Deposits	1,802,431		1,800,773		—		1,800,773		—
Securities Sold Under Agreements to Repurchase	604,306		627,780		—		627,780		—
Other Debt ¹	75,000		75,581		—		75,581		—

December 31, 2018
Financial Instruments – Assets
Investment Securities Held-to-Maturity	$	3,482,092	$	3,413,994	$	352,216	$	3,061,778	$	—
Loans	10,084,527		10,008,417		—		—		10,008,417

Financial Instruments – Liabilities
Time Deposits	1,745,522		1,734,447		—		1,734,447		—
Securities Sold Under Agreements to Repurchase	504,296		504,288		—		504,288		—
Other Debt ¹	125,000		124,559		—		124,559		—

Excludes finance lease obligations.