Fair Value (Tables)

6 Months Ended

Jun. 30, 2017

Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which we have elected the fair value option, are summarized below:


			Fair Value Measurements at June 30, 2017 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Trading securities	$	5,235	$	5,235	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury		5,634		5,634		—		—
U.S. government-sponsored entities and agencies		580,624		—		580,624		—
Mortgage-backed securities—Agency		1,462,111		—		1,462,111		—
States and political subdivisions		431,874		—		431,874
Pooled trust preferred securities		8,097		—		—		8,097
Other securities		325,998		31,198		294,800		—
Residential loans held for sale		27,425		—		27,425		—
Derivative assets		16,802		—		16,802		—
Financial Liabilities
Derivative liabilities		18,992		—		18,992		—

			Fair Value Measurements at December 31, 2016 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Trading securities	$	4,982	$	4,982	$	—	$	—
Investment securities available-for-sale:
U.S. Treasury		7,103		7,103		—		—
U.S. government-sponsored entities and agencies		493,956		—		493,956		—
Mortgage-backed securities—Agency		1,525,019		—		1,525,019		—
States and political subdivisions		436,684		—		436,684
Pooled trust preferred securities		8,119		—		—		8,119
Other securities		326,293		30,905		295,388		—
Residential loans held for sale		90,682		—		90,682		—
Derivative assets		17,701		—		17,701		—
Financial Liabilities
Derivative liabilities		23,574		—		23,574		—

Reconciliation of All Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

The table below presents a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):


(dollars in thousands)	2017			2016
Balance at January 1,	$	8,119		$	7,900
Accretion of discount		8			9
Sales/payments received		(212	)		(270	)
Increase (decrease) in fair value of securities		182			(919	)

Balance at June 30,	$	8,097		$	6,720

Quantitative Information about Significant Unobservable Inputs Used in Fair Value Measurements

The table below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy at June 30, 2017 and December 31, 2016:

Valuation

Unobservable

Range (Weighted

(dollars in thousands)

Fair Value

Techniques

Input

Average)

June 30, 2017

Pooled trust preferred securities

8,097

Discounted cash flow

Constant prepayment rate (a)

0.00%

Additional asset defaults (b)

3.1% - 4.4% (4.1%)

Expected asset recoveries (c)

0.0% - 4.1% (0.6%)

December 31, 2016

Pooled trust preferred securities

8,119

Discounted cash flow

Constant prepayment rate (a)

0.00%

Additional asset defaults (b)

4.5% - 10.0% (7.9%)

Expected asset recoveries (c)

0.0% - 6.1% (0.9%)

(a)	Assuming no prepayments.

(b)	Each currently performing pool asset is assigned a default probability based on the banking environment, which is adjusted for specific issuer evaluation, of 0%, 50%, or 100%.

(c)	Each currently defaulted pool asset is assigned a recovery probability based on specific issuer evaluation of 0%, 25%, or 100%.

The table below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 of the fair value hierarchy:

Valuation

Unobservable

Range (Weighted

(dollars in thousands)

Fair Value

Techniques

Input

Average)

June 30, 2017

Collateral Dependent Impaired Loans

Commercial loans

3,427

Fair value of
collateral

Discount for type of property, age of appraisal, and current status

0% - 74% (38%

)

Commercial real estate loans

28,997

Fair value of
collateral

Discount for type of property, age of appraisal and current status

10% - 67% (32%

)

Foreclosed Assets

Commercial real estate

2,452

Fair value of
collateral

Discount for type of property, age of appraisal, and current status

16% - 55% (26%

)

December 31, 2016

Collateral Dependent Impaired Loans

Commercial loans

6,771

Fair value of
collateral

Discount for type of property, age of appraisal, and current status

0% - 99% (53%

)

Commercial real estate loans

11,632

Fair value of
collateral

Discount for type of property, age of appraisal, and current status

10% - 67% (36%

)

Foreclosed Assets

Commercial real estate

1,352

Fair value of
collateral

Discount for type of property, age of appraisal, and current status

4% - 80% (39%

)

Residential

394

Fair value of
collateral

Discount for type of property, age of appraisal, and current status

7% - 60% (30%

)

Assets Measured at Fair Value on a Non-Recurring Basis

Assets measured at fair value on a non-recurring basis at June 30, 2017 are summarized below:

Fair Value Measurements at June 30, 2017 Using

Significant

Quoted Prices in

Other

Significant

Active Markets for

Observable

Unobservable

Carrying

Identical Assets

Inputs

(dollars in thousands)

Value

(Level 1)

(Level 2)

(Level 3)

Collateral Dependent Impaired Loans

Commercial loans

3,427

—

3,427

Commercial real estate loans

28,997

—

28,997

Foreclosed Assets

Commercial real estate

2,452

—

2,452

Assets measured at fair value on a non-recurring basis at December 31, 2016 are summarized below:


			Fair Value Measurements at December 31, 2016 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Collateral Dependent Impaired Loans
Commercial loans	$	6,771	$	—	$	—	$	6,771
Commercial real estate loans		11,632		—		—		11,632
Foreclosed Assets
Commercial real estate		1,352		—		—		1,352
Residential		394		—		—		394

Schedule of Difference Between the Aggregate Fair Value and the Aggregate Remaining Principal Balance

The difference between the aggregate fair value and the aggregate remaining principal balance for loans for which the fair value option has been elected at June 30, 2017 and December 31, 2016 was as follows:


	Aggregate				Contractual
(dollars in thousands)	Fair Value		Difference		Principal
June 30, 2017
Residential loans held for sale	$	27,425	$	832	$	26,593

December 31, 2016
Residential loans held for sale	$	90,682	$	133	$	90,549

Accrued interest at period end is included in the fair value of the instruments.

The following table presents the amount of gains and losses from fair value changes included in income before income taxes for financial assets carried at fair value:


							Total Changes
							in Fair Values
	Other						Included in
	Gains and		Interest		Interest		Current Period
(dollars in thousands)	(Losses)		Income		(Expense)		Earnings
Three months ended June 30, 2017
Residential loans held for sale	$	279	$	1	$	—	$	280

Three months ended June 30, 2016
Residential loans held for sale	$	846	$	1	$	—	$	847

Six months ended June 30, 2017
Residential loans held for sale	$	697	$	2	$	—	$	699

Six months ended June 30, 2016
Residential loans held for sale	$	1,218	$	—	$	—	$	1,218

Carrying Amounts and Estimated Fair Values of Financial Instruments, Not Previously Presented

The carrying amounts and estimated fair values of financial instruments, not previously presented in this note, at June 30, 2017 and December 31, 2016 were as follows:

Fair Value Measurements at June 30, 2017 Using

Significant

Quoted Prices in

Other

Significant

Active Markets for

Observable

Unobservable

Carrying

Identical Assets

Inputs

(dollars in thousands)

Value

(Level 1)

(Level 2)

(Level 3)

Financial Assets

Cash, due from banks, federal funds sold, and money market investments

262,741

—

Investment securities held-to-maturity:

Mortgage-backed securities—Agency

8,576

—

8,884

—

State and political subdivisions

686,563

—

740,479

—

Federal Home Loan Bank/Federal Reserve Bank stock

109,715

N/A

Loans, net:

Commercial

1,981,256

—

2,064,230

Commercial real estate

3,239,344

—

3,526,468

Residential real estate

2,097,563

—

2,227,567

Consumer credit

1,862,891

—

1,981,858

Accrued interest receivable

79,830

22,425

57,390

Financial Liabilities

Deposits:

Noninterest-bearing demand deposits

3,011,156

—

NOW, savings, and money market deposits

6,236,893

—

Time deposits

1,435,665

—

1,427,388

—

Federal funds purchased and interbank borrowings

227,029

Securities sold under agreements to repurchase

298,094

273,094

25,281

—

Federal Home Loan Bank advances

1,515,628

—

1,521,632

Other borrowings

219,167

—

221,144

—

Accrued interest payable

5,988

—

5,988

—

Standby letters of credit

323

—

323

Off-Balance Sheet Financial Instruments

Commitments to extend credit

—

3,245

N/A	= not applicable


			Fair Value Measurements at December 31, 2016 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash, due from banks, federal funds sold, and money market investments	$	255,519	$	255,519	$	—	$	—
Investment securities held-to-maturity:
U.S. government-sponsored entities and agencies		40,131		—		40,558		—
Mortgage-backed securities—Agency		10,640		—		10,940		—
State and political subdivisions		694,319		—		732,674		—
Federal Home Loan Bank/Federal Reserve Bank stock		101,716		N/A		N/A		N/A
Loans, net:
Commercial		1,895,618		—		—		1,971,296
Commercial real estate		3,112,680		—		—		3,400,365
Residential real estate		2,085,887		—		—		2,228,542
Consumer credit		1,866,519		—		—		1,974,180
Accrued interest receivable		81,381		16		22,880		58,485
Financial Liabilities
Deposits:
Noninterest-bearing demand deposits	$	3,016,093	$	3,016,093	$	—	$	—
NOW, savings, and money market deposits		6,259,052		6,259,052		—		—
Time deposits		1,468,108		—		1,460,778		—
Federal funds purchased and interbank borrowings		213,003		213,003
Securities sold under agreements to repurchase		367,052		317,052		50,612		—
Federal Home Loan Bank advances		1,353,092		—		—		1,360,599
Other borrowings		218,939		—		217,647		—
Accrued interest payable		5,979		—		5,979		—
Standby letters of credit		315		—		—		315
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	—	$	—	$	—	$	2,527

N/A	= not applicable

- Definition

Tabular disclosure of the application of the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected, provide the aggregate carrying amount of ineligible items included in each line item in the balance sheet, if any; (b) the difference between the aggregate fair value and the aggregate unpaid principal balance (assuming contractual principal amounts and fair value option elected) of: (i) loans and long-term receivables (other than securities otherwise reported at fair value) and (ii) long-term debt instruments; (c) for loans held as assets for which the fair value option has been elected: (i) the aggregate fair value of loans that are 90 days or more past due, (ii) if the policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status, and (iii) the difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both; (2) for items included in the income statement: (a) the amounts of gains and losses from fair value changes included in earnings and in which line in the income statement those gains and losses are reported whether or not combined with gains and losses from items required to be accounted for at fair value; (b) for loans and other receivables held as assets, the estimated amount of gains or losses included in earnings attributable to changes in instrument-specific credit risk; (c) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk, the estimated amount of gains and losses from fair value changes included in earnings that are attributable to changes in the instrument-specific credit risk; and (3) certain other disclosures as required or determined to be provided.

+ References + Details