Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2019

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)
	September 30, 2019
	(Dollars in thousands)
Recurring fair value measurements
Assets
Trading securities	$	1,963	$	1,963	$	—	$	—
Equity securities	21,021		21,021		—		—
Securities available for sale
U.S. Government agency securities	33,302		—		33,302		—
Agency mortgage-backed securities	200,603		—		200,603		—
Agency collateralized mortgage obligations	94,538		—		94,538		—
State, county, and municipal securities	1,736		—		1,736		—
Single issuer trust preferred securities issued by banks and insurers	720		—		720		—
Pooled trust preferred securities issued by banks and insurers	1,106		—		—		1,106
Small business administration pooled securities	59,970		—		59,970		—
Loans held for sale	55,937		—		55,937		—
Derivative instruments	106,601		—		106,601		—
Liabilities
Derivative instruments	75,134		—		75,134		—
Total recurring fair value measurements	$	502,363	$	22,984	$	478,273	$	1,106
Nonrecurring fair value measurements
Assets
Collateral dependent impaired loans	$	32,645	$	—	$	—	$	32,645
Other real estate owned and other foreclosed assets	2,500		—		—		2,500
Total nonrecurring fair value measurements	$	35,145	$	—	$	—	$	35,145

			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, 2018
	(Dollars in thousands)
Recurring fair value measurements
Assets
Trading securities	$	1,504	$	1,504	$	—	$	—
Equity securities	19,477		19,477		—		—
Securities available for sale
U.S. Government agency securities	32,038		—		32,038		—
Agency mortgage-backed securities	220,105		—		220,105		—
Agency collateralized mortgage obligations	134,911		—		134,911		—
State, county, and municipal securities	1,735		—		1,735		—
Single issuer trust preferred securities issued by banks and insurers	707		—		707		—
Pooled trust preferred securities issued by banks and insurers	1,329		—		—		1,329
Small business administration pooled securities	51,927		—		51,927		—
Loans held for sale	6,431		—		6,431		—
Derivative instruments	26,310		—		26,310		—
Liabilities
Derivative instruments	17,523		—		17,523		—
Total recurring fair value measurements	$	478,951	$	20,981	$	456,641	$	1,329
Nonrecurring fair value measurements:
Assets
Collateral dependent impaired loans	$	29,109	$	—	$	—	$	29,109
Total nonrecurring fair value measurements	$	29,109	$	—	$	—	$	29,109

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
	September 30
	2019			2018
	(Dollars in thousands)
Pooled Trust Preferred Securities
Beginning balance	$	1,281		$	1,751
Gains and (losses) (realized/unrealized)
Included in other comprehensive income	(14		)	55
Settlements	(161		)	(6		)
Ending balance	$	1,106		$	1,800
	Nine Months Ended
	September 30
	2019			2018
	(Dollars in thousands)
Pooled Trust Preferred Securities
Beginning balance	$	1,329		$	1,640
Gains and (losses) (realized/unrealized)
Included in other comprehensive income	(38		)	180
Settlements	(185		)	(20		)
Ending balance	$	1,106		$	1,800

Investments in securities that are classified as level 3

The following table sets forth certain unobservable inputs regarding the Company’s financial instruments that are classified as Level 3 for the periods indicated:

	September 30 2019		December 31 2018			September 30 2019	December 31 2018	September 30 2019	December 31 2018
Valuation Technique	Fair Value				Unobservable Inputs	Range		Weighted Average
	(Dollars in thousands)
Discounted cash flow methodology
Pooled trust preferred securities	$	1,106	$	1,329	Cumulative prepayment	0% - 58%	0% - 59%	2.7%	2.1%
					Cumulative default	2% - 100%	5% - 100%	13.6%	16.2%
					Loss given default	85% - 100%	85% - 100%	92.6%	94.8%
					Cure given default	0% - 75%	0% - 75%	60.9%	60.9%
Appraisals of collateral(1)
Collateral dependent impaired loans	$	32,645	$	29,109

 

(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)
	September 30, 2019
	(Dollars in thousands)
Financial assets
Securities held to maturity(a)
U.S. government agency securities	$	12,853	$	12,999	$	—	$	12,999	$	—
U.S. Treasury securities	1,003		1,022		—		1,022		—
Agency mortgage-backed securities	418,350		427,211		—		427,211		—
Agency collateralized mortgage obligations	310,352		315,522		—		315,522		—
Single issuer trust preferred securities issued by banks	1,500		1,490		—		1,490		—
Small business administration pooled securities	33,212		33,919		—		33,919		—
Loans, net of allowance for loan losses(b)	8,813,914		8,638,200		—		—		8,638,200
Federal Home Loan Bank stock(c)	14,976		14,976		—		14,976		—
Cash surrender value of life insurance policies(d)	195,883		195,883		—		195,883		—
Financial liabilities
Deposit liabilities, other than time deposits(e)	$	7,855,975	$	7,855,975	$	—	$	7,855,975	$	—
Time certificates of deposits(f)	1,470,116		1,470,062		—		1,470,062		—
Federal Home Loan Bank borrowings(f)	70,708		70,850		—		70,850		—
Long-term borrowings(f)	74,894		72,497		—		72,497		—
Junior subordinated debentures(g)	62,848		65,835		—		65,835		—
Subordinated debentures(f)	84,341		87,884		—		—		87,884

 

					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, 2018
	(Dollars in thousands)
Financial assets
Securities held to maturity(a)
U.S. Treasury securities	$	1,004	$	1,015	$	—	$	1,015	$	—
Agency mortgage-backed securities	252,484		250,928		—		250,928		—
Agency collateralized mortgage obligations	332,775		326,724		—		326,724		—
Single issuer trust preferred securities issued by banks	1,500		1,490		—		1,490		—
Small business administration pooled securities	23,727		23,483		—		23,483		—
Loans, net of allowance for loan losses(b)	6,812,792		6,635,209		—		—		6,635,209
Federal Home Loan Bank stock(c)	15,683		15,683		—		15,683		—
Cash surrender value of life insurance policies(d)	160,456		160,456		—		160,456		—
Financial liabilities
Deposit liabilities, other than time deposits(e)	$	6,716,017	$	6,716,017	$	—	$	6,716,017	$	—
Time certificates of deposits(f)	711,103		703,728		—		703,728		—
Federal Home Loan Bank borrowings(f)	147,806		147,603		—		147,603		—
Junior subordinated debentures(g)	76,173		73,827		—		73,827		—
Subordinated debentures(f)	34,728		32,509		—		—		32,509

(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) Fair value of loans is 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. 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.