Fair Value Measurement of Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2014

Assets and Liabilities Measured at Fair Value on Recurring and Non-Recurring Basis

The following tables present the assets and liabilities that are measured at fair value on a recurring and nonrecurring basis by level within the fair value hierarchy as reported on the consolidated statements of financial condition at March 31, 2014 and December 31, 2013. The assets presented under “nonrecurring fair value measurements” in the table below are not measured at fair value on an ongoing basis but are subject to fair value adjustments under certain circumstances (e.g., when an impairment loss is recognized).



	March 31, 2014		Fair Value Measurements at Reporting Date Using:
	March 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Recurring fair value measurements:
Assets
Investment securities:
Available for sale:
U.S. Treasury securities	$	88,871	$	88,871	$	—	$	—
U.S. government agency securities	47,531		—		47,531		—
Obligations of states and political subdivisions	37,824		—		37,824		—
Residential mortgage-backed securities	495,604		—		472,656		22,948
Trust preferred securities	19,606		—		15,643		3,963
Corporate and other debt securities	84,090		27,421		56,669		—
Equity securities	23,057		1,872		21,185		—
Total available for sale	796,583		118,164		651,508		26,911
Trading securities	14,255		—		14,255
Loans held for sale (1)	5,057		—		5,057		—
Other assets (2)	10,731		—		10,731		—
Total assets	$	826,626	$	118,164	$	681,551	$	26,911
Liabilities
Other liabilities (2)	$	18,510	$	—	$	18,510	$	—
Total liabilities	$	18,510	$	—	$	18,510	$	—
Non-recurring fair value measurements:
Non-performing loans held for sale	$	13,782	—		$	13,782	$	—
Collateral dependent impaired loans (3)	16,113		—		—		16,113
Loan servicing rights	3,465		—		—		3,465
Foreclosed assets (4)	19,619		—		—		19,619
Total	$	52,979	$	—	$	13,782	$	39,197



			Fair Value Measurements at Reporting Date Using:
	December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Recurring fair value measurements:
Assets
Investment securities:
Available for sale:
U.S. Treasury securities	$	84,665	$	84,665	$	—	$	—
U.S. government agency securities	48,627		—		48,627		—
Obligations of states and political subdivisions	37,700		—		37,700		—
Residential mortgage-backed securities	508,029		—		483,277		24,752
Trust preferred securities	19,215		—		15,444		3,771
Corporate and other debt securities	83,398		27,273		56,125		—
Equity securities	48,058		26,905		21,153		—
Total available for sale	829,692		138,843		662,326		28,523
Trading securities	14,264		—		14,264		—
Loans held for sale (1)	10,488		—		10,488		—
Other assets (2)	15,122		—		15,122		—
Total assets	$	869,566	$	138,843	$	702,200	$	28,523
Liabilities
Other liabilities (2)	$	20,586	$	—	$	20,586	$	—
Total liabilities	$	20,586	$	—	$	20,586	$	—
Non-recurring fair value measurements:
Collateral dependent impaired loans (3)	$	35,700	$	—	$	—	$	35,700
Loan servicing rights	3,677		—		—		3,677
Foreclosed assets (4)	25,929		—		—		25,929
Total	$	65,306	$	—	$	—	$	65,306


(1)	Loans held for sale carried at fair value (which consist of residential mortgages) had contractual unpaid principal balances totaling approximately $4.9 million and $10.4 million at March 31, 2014 and December 31, 2013, respectively.


(2)	Derivative financial instruments are included in this category.


(3)	Excludes PCI loans.


(4)	Includes covered real estate owned totaling $8.4 million and $7.6 million at March 31, 2014 and December 31, 2013, respectively.

Changes in Level 3 Assets Measured at Fair Value on Recurring Basis

The changes in Level 3 assets measured at fair value on a recurring basis for the three months ended March 31, 2014 and 2013 are summarized below:



	Available for Sale Securities
	Three Months Ended March 31,
	2014			2013
	(in thousands)
Balance, beginning of the period	$	28,523		$	71,674
Total net gains for the period included in other comprehensive income	48			8,033
Settlements	(1,660		)	(1,787		)
Balance, end of the period	$	26,911		$	77,920

Schedule of Quantitative Information about Level 3 Inputs Used to Measure Fair Value of Available for Sale Securities

The following table presents quantitative information about Level 3 inputs used to measure the fair value of these securities at March 31, 2014:



Security Type	Valuation Technique	Unobservable Input	Range	Weighted Average

Private label mortgage-backed securities	Discounted cash flow	Prepayment rate	12.5 - 27.4	19.0	%
		Default rate	2.8 - 22.51	8.0
		Loss severity	40.0 - 52.90	49.0

Schedule of Gains and Losses from Fair Value Changes

The following table presents the amount of gains and losses from fair value changes included in income before income taxes for financial assets and liabilities carried at fair value for the three months ended March 31, 2014 and 2013:



Reported in Consolidated Statements of Financial Condition	Reported in Consolidated Statements of Income	Gains (Losses) on Change in Fair Value
		Three Months Ended March 31,
		2014			2013
		(in thousands)
Assets:
Trading securities	Trading losses, net	$	(9	)	$	(30	)
Loans held for sale	Gains on sales of loans, net	913			15,060
Liabilities:
Junior subordinated debentures issued to capital trusts	Trading losses, net	—			(2,172		)
		$	904		$	12,858

Carrying Amounts and Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values of financial instruments not measured and not reported at fair value on the consolidated statements of financial condition at March 31, 2014 and December 31, 2013 were as follows:



	Fair Value Hierarchy	March 31, 2014				December 31, 2013
	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(in thousands)
Financial assets
Cash and due from banks	Level 1	$	296,557	$	296,557	$	234,253	$	234,253
Interest bearing deposits with banks	Level 1	83,045		83,045		134,915		134,915
Investment securities held to maturity:
U.S. Treasury securities	Level 1	139,227		146,896		139,255		144,307
U.S. government agency securities	Level 2	14,454		14,488		4,427		4,365
Obligations of states and political subdivisions	Level 2	531,931		539,658		545,886		543,151
Residential mortgage-backed securities	Level 2	971,361		966,050		886,043		871,021
Trust preferred securities	Level 2	98,450		86,435		103,458		91,489
Corporate and other debt securities	Level 2	57,673		62,522		52,668		57,094
Total investment securities held to maturity		1,813,096		1,816,049		1,731,737		1,711,427
Net loans	Level 3	11,587,885		11,411,963		11,453,995		11,294,348
Accrued interest receivable	Level 1	54,286		54,286		53,964		53,964
Federal Reserve Bank and Federal Home Loan Bank stock (1)	Level 1	141,734		141,734		137,234		137,234
Financial liabilities
Deposits without stated maturities	Level 1	9,155,468		9,155,468		9,139,993		9,139,993
Deposits with stated maturities	Level 2	2,112,517		2,139,016		2,179,269		2,206,427
Short-term borrowings	Level 1	537,110		537,110		281,455		281,455
Long-term borrowings	Level 2	2,795,239		3,037,960		2,792,306		3,036,953
Junior subordinated debentures issued to capital trusts	Level 2	41,130		45,228		41,089		45,261
Accrued interest payable (2)	Level 1	13,323		13,323		16,442		16,442


(1)	Included in other assets.


(2)	Included in accrued expenses and other liabilities.

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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