Fair Value Measurement of Assets and Liabilities (Tables)

12 Months Ended

Dec. 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 December 31, 2014 and 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).



			Fair Value Measurements at Reporting Date Using:
	December 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	$	49,443	$	49,443	$	—	$	—
U.S. government agency securities	33,825		—		33,825		—
Obligations of states and political subdivisions	44,051		—		44,051		—
Residential mortgage-backed securities	644,276		—		629,696		14,580
Trust preferred securities	20,537		—		15,808		4,729
Corporate and other debt securities	74,012		18,241		55,771		—
Equity securities	20,826		1,337		19,489		—
Total available for sale	886,970		69,021		798,640		19,309
Trading securities	14,233		—		14,233		—
Loans held for sale ⁽¹⁾	17,165		—		17,165		—
Other assets ⁽²⁾	20,987		—		20,987		—
Total assets	$	939,355	$	69,021	$	851,025	$	19,309
Liabilities
Other liabilities ⁽²⁾	$	33,330	$	—	$	33,330	$	—
Total liabilities	$	33,330	$	—	$	33,330	$	—
Non-recurring fair value measurements:
Non-performing loans held for sale	$	7,130	$	—	$	—	$	7,130
Collateral dependent impaired loans ⁽³⁾	13,985		—		—		13,985
Loan servicing rights	3,987		—		—		3,987
Foreclosed assets ⁽⁴⁾	18,098		—		—		18,098
Total	$	43,200	$	—	$	—	$	43,200



			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 (which consist of residential mortgages) are carried at fair value and had contractual unpaid principal balances totaling approximately $16.9 million and $10.4 million at December 31, 2014 and 2013, respectively.


⁽²⁾	Amount represents derivative financial instruments.


⁽³⁾	Excludes PCI loans.


⁽⁴⁾	Includes covered other real estate owned totaling $3.2 million and $7.6 million at December 31, 2014 and 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 years ended December 31, 2014 and 2013 are summarized below:



	Available For Sale Securities
	2014			2013			2012
	(in thousands)
Balance, beginning of the period	$	28,523		$	71,674		$	77,311
Total net gains (losses) for the period included in:
Net income	—			—			(5,247		)
Other comprehensive income	1,648			657			18,482
Sales	(7,718		)	(36,681		)	(9,146		)
Settlements	(3,144		)	(7,127		)	(9,726		)
Balance, end of the period	$	19,309		$	28,523		$	71,674
Change in unrealized losses for the period included in earnings for assets held at year end *	$	—		$	—		$	(5,247	)

* Represents the net impairment losses on securities recognized in earnings for the period.

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 December 31, 2014:



Security Type	Valuation Technique	Unobservable Input	Range	Weighted Average
Private label mortgage-backed securities	Discounted cash flow	Prepayment rate	0.2 - 19.8%	12.9	%
		Default rate	3.0 - 21.6	8.7
		Loss severity	41.3 - 62.0	56.5

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 years ended December 31, 2014, 2013 and 2012:



		Gains (Losses) on Change in Fair Value
Reported in Consolidated Statements of Financial Condition	Reported in Consolidated Statements of Income	2014			2013		2012
		(in thousands)
Assets:
Available for sale securities	Net impairment losses on securities	$	—		$	—	$	(5,247	)
Trading securities	Trading (losses) gains, net	(31		)	28		219
Loans held for sale	Gains on sales of loans, net	1,731			33,695		46,998
Liabilities:
Junior subordinated debentures issued to capital trusts	Trading (losses) gains, net	—			881		2,574
Total		$	1,700		$	34,604	$	44,544

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 December 31, 2014 and 2013 were as follows:



		December 31,
		2014				2013
	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
		(in thousands)
Financial assets
Cash and due from banks	Level 1	$	462,569	$	462,569	$	234,253	$	234,253
Interest bearing deposits with banks	Level 1	367,838		367,838		134,915		134,915
Investment securities held to maturity:
U.S. Treasury securities	Level 1	139,121		151,300		139,255		144,307
U.S. government agency securities	Level 2	14,081		14,385		4,427		4,365
Obligations of states and political subdivisions	Level 2	500,018		519,693		545,886		543,151
Residential mortgage-backed securities	Level 2	986,992		998,981		886,043		871,021
Trust preferred securities	Level 2	98,456		86,243		103,458		91,489
Corporate and other debt securities	Level 2	39,648		45,374		52,668		57,094
Total investment securities held to maturity		1,778,316		1,815,976		1,731,737		1,711,427
Net loans	Level 3	13,371,560		13,085,830		11,453,995		11,294,348
Accrued interest receivable	Level 1	57,333		57,333		53,964		53,964
Federal Reserve Bank and Federal Home Loan Bank stock ⁽¹⁾	Level 1	133,117		133,117		137,234		137,234
Financial liabilities
Deposits without stated maturities	Level 1	11,291,648		11,291,648		9,139,993		9,139,993
Deposits with stated maturities	Level 2	2,742,468		2,807,522		2,179,269		2,206,427
Short-term borrowings	Level 1	146,781		146,781		281,455		281,455
Long-term borrowings	Level 2	2,526,408		2,738,122		2,792,306		3,036,953
Junior subordinated debentures issued to capital trusts	Level 2	41,252		44,584		41,089		45,261
Accrued interest payable ⁽²⁾	Level 1	15,526		15,526		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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