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Fair Value Measurements (Tables)
3 Months Ended
Mar. 31, 2018
Fair Value Disclosures [Abstract]  
Assets and liabilities measured at fair value on a recurring basis
Assets and liabilities measured at fair value on a recurring and nonrecurring basis were as follows as of the dates indicated:
 
 
 
Fair Value Measurements at Reporting Date Using
 
Balance
 
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
March 31, 2018
 
(Dollars in thousands)
Recurring fair value measurements
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Trading securities
$
1,601

 
$
1,601

 
$
—

 
$
—

Equity securities
20,075

 
20,075

 
—

 
—

Securities available for sale
 
 
 
 
 
 
 
U.S. Government agency securities
34,943

 
—

 
34,943

 
—

Agency mortgage-backed securities
223,211

 
—

 
223,211

 
—

Agency collateralized mortgage obligations
135,192

 
—

 
135,192

 
—

State, county, and municipal securities
2,254

 
—

 
2,254

 
—

Single issuer trust preferred securities issued by banks and insurers
2,005

 
—

 
2,005

 
—

Pooled trust preferred securities issued by banks and insurers
1,655

 
—

 
—

 
1,655

Small business administration pooled securities
46,490

 
—

 
46,490

 
—

Loans held for sale
3,937

 
—

 
3,937

 
—

Derivative instruments
21,040

 
—

 
21,040

 
—

Liabilities
 
 
 
 
 
 
 
Derivative instruments
18,891

 
—

 
18,891

 
—

Total recurring fair value measurements
$
473,512

 
$
21,676

 
$
450,181

 
$
1,655

 
 
 
 
 
 
 
 
Nonrecurring fair value measurements
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Collateral dependent impaired loans
$
32,113

 
$
—

 
$
—

 
$
32,113

Other real estate owned and other foreclosed assets
358

 
—

 
—

 
358

Total nonrecurring fair value measurements
$
32,471

 
$
—

 
$
—

 
$
32,471


 
 
 
Fair Value Measurements at Reporting Date Using
 
Balance
 
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
December 31, 2017
 
(Dollars in thousands)
Recurring fair value measurements
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Trading securities
$
1,324

 
$
1,324

 
$
—

 
$
—

Equity securities
20,584

 
20,584

 
—

 
—

Securities available for sale
 
 
 
 
 
 
 
U.S. Government agency securities
35,430

 
—

 
35,430

 
—

Agency mortgage-backed securities
215,764

 
—

 
215,764

 
—

Agency collateralized mortgage obligations
122,012

 
—

 
122,012

 
—

State, county, and municipal securities
2,274

 
—

 
2,274

 
—

Single issuer trust preferred securities issued by banks and insurers
2,016

 
—

 
2,016

 
—

Pooled trust preferred securities issued by banks and insurers
1,640

 
—

 
—

 
1,640

Small business administration pooled securities
47,778

 
—

 
47,778

 
—

Loans held for sale
4,768

 
—

 
4,768

 
—

Derivative instruments
17,476

 
—

 
17,476

 
—

Liabilities
 
 
 
 
 
 
 
Derivative instruments
15,693

 
—

 
15,693

 
—

Total recurring fair value measurements
$
455,373

 
$
21,908

 
$
431,825

 
$
1,640

 
 
 
 
 
 
 
 
Nonrecurring fair value measurements:
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Collateral dependent impaired loans
$
33,567

 
$
—

 
$
—

 
$
33,567

Other real estate owned and other foreclosed assets
612

 
—

 
—

 
612

Total nonrecurring fair value measurements
$
34,179

 
$
—

 
$
—

 
$
34,179

Reconciliation for all assets and liabilities measured at fair value on a recurring basis
The table below presents a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), which were valued using pricing models and discounted cash flow methodologies, as of the dates indicated:
 
Three Months Ended
 
March 31
 
2018
 
2017
 
(Dollars in thousands)
Pooled Trust Preferred Securities
 
 
 
Beginning balance
$
1,640

 
$
1,584

Gains and (losses) (realized/unrealized)
 
 
 
Included in other comprehensive income
21

 
11

Settlements
(6
)
 
1

Ending balance
$
1,655

 
$
1,596


Investments in securities that are classified as level 3
The following table sets forth certain unobservable inputs regarding the Company’s investment in securities that are classified as Level 3 for the periods indicated:
 
 
March 31
2018
 
December 31
2017
 
 
 
March 31
2018
 
December 31
2017
 
March 31
2018
 
December 31
2017
Valuation Technique
 
Fair Value
 
Unobservable Inputs
 
Range
 
Weighted Average
 
 
(Dollars in thousands)
 
 
Discounted cash flow methodology
 
 
 
 
 
 
 
 
 
 
Pooled trust preferred securities
 
$
1,655

 
$
1,640

 
Cumulative prepayment
 
0% - 60%
 
0% - 61%
 
2.4%
 
2.5%
 
 
 
 
 
 
Cumulative default
 
5% - 100%
 
5% - 100%
 
12.3%
 
12.4%
 
 
 
 
 
 
Loss given default
 
85% - 100%
 
85% - 100%
 
94.4%
 
94.3%
 
 
 
 
 
 
Cure given default
 
0% - 75%
 
0% - 75%
 
60.9%
 
60.9%
Appraisals of collateral(1)
 
 
 
 
 
 
 
 
 
 
Collateral dependent impaired loans
 
$
32,113

 
$
33,567

 
 
 
 
 
 
 
 
 
 
Other real estate owned and foreclosed assets
 
$
358

 
$
612

 
 
 
 
 
 
 
 
 
 
 
(1)
Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable. Appraisals may be adjusted by management for qualitative factors such as economic factors and estimated liquidation expenses. The range of these possible adjustments may vary.
The estimated fair values and related carrying amounts for assets and liabilities
The estimated fair values and related carrying amounts for assets and liabilities for which fair value is only disclosed are shown below as of the periods indicated:
 
 
 
 
 
Fair Value Measurements at Reporting Date Using
 
Carrying
Value
 
Fair
Value
 
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
  
March 31, 2018
 
(Dollars in thousands)
Financial assets
 
 
 
Securities held to maturity(a)
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
$
1,005

 
$
1,021

 
$
—

 
$
1,021

 
$
—

Agency mortgage-backed securities
192,961

 
190,409

 
—

 
190,409

 
—

Agency collateralized mortgage obligations
306,395

 
297,818

 
—

 
297,818

 
—

Single issuer trust preferred securities issued by banks
1,500

 
1,521

 
—

 
1,521

 
—

Small business administration pooled securities
27,000

 
26,786

 
—

 
26,786

 
—

Loans, net of allowance for loan losses(b)
6,269,081

 
6,103,312

 
—

 
—

 
6,103,312

Federal Home Loan Bank stock(c)
13,027

 
13,027

 
—

 
13,027

 
—

Cash surrender value of life insurance policies(d)
152,568

 
152,568

 
—

 
152,568

 
—

Financial liabilities
 
 
 
 
 
 
 
 
 
Deposit liabilities, other than time deposits(e)
$
6,096,756

 
$
6,096,756

 
$
—

 
$
6,096,756

 
$
—

Time certificates of deposits(f)
654,755

 
646,819

 
—

 
646,819

 
—

Federal Home Loan Bank borrowings(f)
53,257

 
52,176

 
—

 
52,176

 
—

Customer repurchase agreements and other short-term borrowings(f)
137,914

 
137,914

 
—

 
—

 
137,914

Junior subordinated debentures(g)
73,075

 
72,283

 
—

 
72,283

 
—

Subordinated debentures(f)
34,693

 
32,429

 
—

 
—

 
32,429

 

 
 
 
 
 
Fair Value Measurements at Reporting Date Using
 
Carrying
Value
 
Fair
Value
 
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
  
December 31, 2017
 
(Dollars in thousands)
Financial assets
 
Securities held to maturity(a)
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
$
1,006

 
$
1,035

 
$
—

 
$
1,035

 
$
—

Agency mortgage-backed securities
204,768

 
205,823

 
—

 
205,823

 
—

Agency collateralized mortgage obligations
262,998

 
258,408

 
—

 
258,408

 
—

Single issuer trust preferred securities issued by banks
1,500

 
1,529

 
—

 
1,529

 
—

Small business administration pooled securities
27,416

 
27,399

 
—

 
27,399

 
—

Loans, net of allowance for loan losses(b)
6,261,343

 
6,116,051

 
—

 
—

 
6,116,051

Federal Home Loan Bank stock(c)
11,597

 
11,597

 
—

 
11,597

 
—

Cash surrender value of life insurance policies(d)
151,528

 
151,528

 
—

 
151,528

 
—

Financial liabilities
 
 
 
 
 
 
 
 
 
Deposit liabilities, other than time deposits(e)
$
6,084,952

 
$
6,084,952

 
$
—

 
$
6,084,952

 
$
—

Time certificates of deposits(f)
644,301

 
639,060

 
—

 
639,060

 
—

Federal Home Loan Bank borrowings(f)
53,264

 
52,111

 
—

 
52,111

 
—

Customer repurchase agreements and other short-term borrowings(f)
162,679

 
162,679

 
—

 
—

 
162,679

Junior subordinated debentures(g)
73,073

 
74,680

 
—

 
74,680

 
—

Subordinated debentures(f)
34,682

 
32,707

 
—

 
—

 
32,707


(a)
The fair values presented are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments and/or discounted cash flow analysis.
(b)
In accordance with recent accounting guidance, the fair value of loans as of March 31, 2018 was measured using the exit price valuation method, determined primarily by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities or cash flows, while incorporating liquidity and credit assumptions. Previously the fair value of loans as of December 31, 2017 was estimated solely by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities or cash flows. Additionally, this amount excludes collateral dependent impaired loans, which are deemed to be marked to fair value on a nonrecurring basis.
(c)
FHLB stock has no quoted market value and is carried at cost, therefore the carrying amount approximates fair value.
(d)
Cash surrender value of life insurance is recorded at its cash surrender value (or the amount that can be realized upon surrender of the policy), therefore carrying amount approximates fair value.
(e)
Fair value of demand deposits, savings and interest checking accounts and money market deposits is the amount payable on demand at the reporting date.
(f)
Fair value was determined by discounting anticipated future cash payments using rates currently available for instruments with similar remaining maturities.
(g)
Fair value was determined based upon market prices of securities with similar terms and maturities.