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Fair Value Measurements (Tables)
3 Months Ended
Mar. 31, 2020
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, 2020
 
(Dollars in thousands)
Recurring fair value measurements
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Trading securities
$
2,247

 
$
2,247

 
$

 
$

Equity securities
19,439

 
19,439

 

 

Securities available for sale
 
 
 
 
 
 
 
U.S. government agency securities
24,292

 

 
24,292

 

Agency mortgage-backed securities
258,784

 

 
258,784

 

Agency collateralized mortgage obligations
87,210

 

 
87,210

 

State, county, and municipal securities
1,144

 

 
1,144

 

Single issuer trust preferred securities issued by banks and insurers
436

 

 
436

 

Pooled trust preferred securities issued by banks and insurers
1,009

 

 

 
1,009

Small business administration pooled securities
64,421

 

 
64,421

 

Loans held for sale
43,756

 

 
43,756

 

Derivative instruments
205,815

 

 
205,815

 

Liabilities
 
 
 
 
 
 
 
Derivative instruments
149,539

 

 
149,539

 

Total recurring fair value measurements
$
559,014

 
$
21,686

 
$
536,319

 
$
1,009

 
 
 
 
 
 
 
 
Nonrecurring fair value measurements
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Individually assessed collateral dependent loans
$
39,444

 
$

 
$

 
$
39,444

Total nonrecurring fair value measurements
$
39,444

 
$

 
$

 
$
39,444


 
 
 
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, 2019
 
(Dollars in thousands)
Recurring fair value measurements
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Trading securities
$
2,179

 
$
2,179

 
$

 
$

Equity securities
21,261

 
21,261

 

 

Securities available for sale
 
 
 
 
 
 
 
U.S. government agency securities
33,115

 

 
33,115

 

Agency mortgage-backed securities
247,000

 

 
247,000

 

Agency collateralized mortgage obligations
88,511

 

 
88,511

 

State, county, and municipal securities
1,396

 

 
1,396

 

Single issuer trust preferred securities issued by banks and insurers
493

 

 
493

 

Pooled trust preferred securities issued by banks and insurers
1,114

 

 

 
1,114

Small business administration pooled securities
54,795

 

 
54,795

 

Loans held for sale
33,307

 

 
33,307

 

Derivative instruments
78,385

 

 
78,385

 

Liabilities
 
 
 
 
 
 
 
Derivative instruments
53,923

 

 
53,923

 

Total recurring fair value measurements
$
507,633

 
$
23,440

 
$
483,079

 
$
1,114

 
 
 
 
 
 
 
 
Nonrecurring fair value measurements:
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Collateral dependent impaired loans
$
25,515

 
$

 
$

 
$
25,515

Total nonrecurring fair value measurements
$
25,515

 
$

 
$

 
$
25,515


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
 
2020
 
2019
 
(Dollars in thousands)
Pooled Trust Preferred Securities
 
 
 
Beginning balance
$
1,114

 
$
1,329

Gains and (losses) (realized/unrealized)
 
 
 
Included in earnings

 

Included in other comprehensive income
(60
)
 
3

Settlements
(45
)
 
(18
)
Ending balance
$
1,009

 
$
1,314



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:
 
 
March 31
2020
 
December 31
2019
 
 
 
March 31
2020
 
December 31
2019
 
March 31
2020
 
December 31
2019
Valuation Technique
 
Fair Value
 
Unobservable Inputs
 
Range
 
Weighted Average
 
 
(Dollars in thousands)
 
 
Discounted cash flow methodology
 
 
 
 
 
 
 
 
 
 
Pooled trust preferred securities
 
$
1,009

 
$
1,114

 
Cumulative prepayment
 
0% - 57%
 
0% - 57%
 
2.4%
 
2.6%
 
 
 
 
 
 
Cumulative default
 
4% - 100%
 
2% - 100%
 
13.5%
 
13.5%
 
 
 
 
 
 
Loss given default
 
85% - 100%
 
85% - 100%
 
93.6%
 
93.6%
 
 
 
 
 
 
Cure given default
 
0% - 75%
 
0% - 75%
 
60.9%
 
60.9%
Appraisals of collateral(1)
 
 
 
 
 
 
 
 
 
 
Individually assessed collateral dependent loans
 
$
39,444

 
n/a

 
 
 
 
 
 
 
 
 
 
Collateral dependent impaired loans
 
n/a

 
$
25,515

 
 
 
 
 
 
 
 
 
 
 
(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, 2020
 
(Dollars in thousands)
Financial assets
 
 
 
Securities held to maturity(a)
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
$
4,029

 
$
4,139

 
$

 
$
4,139

 
$

Agency mortgage-backed securities
463,632

 
482,363

 

 
482,363

 

Agency collateralized mortgage obligations
277,921

 
289,902

 

 
289,902

 

Single issuer trust preferred securities issued by banks
1,500

 
1,490

 

 
1,490

 

Small business administration pooled securities
30,716

 
31,461

 

 
31,461

 

Loans, net of allowance for credit losses(b)
8,784,610

 
8,626,697

 

 

 
8,626,697

Federal Home Loan Bank stock(c)
23,274

 
23,274

 

 
23,274

 

Cash surrender value of life insurance policies(d)
197,772

 
197,772

 

 
197,772

 

Financial liabilities
 
 
 
 
 
 
 
 
 
Deposit liabilities, other than time deposits(e)
$
8,146,490

 
$
8,146,490

 
$

 
$
8,146,490

 
$

Time certificates of deposits(f)
1,269,708

 
1,279,983

 

 
1,279,983

 

Federal Home Loan Bank borrowings(f)
358,591

 
359,249

 

 
359,249

 

Long-term borrowings(f)
74,920

 
73,572

 

 
73,572

 

Junior subordinated debentures(g)
62,849

 
61,528

 

 
61,528

 

Subordinated debentures(f)
49,625

 
51,896

 

 

 
51,896

 

 
 
 
 
 
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, 2019
 
(Dollars in thousands)
Financial assets
 
Securities held to maturity(a)
 
 
 
 
 
 
 
 
 
U.S. government agency securities
$
12,874

 
$
12,997

 
$

 
$
12,997

 
$

U.S. Treasury securities
4,032

 
4,053

 
$

 
4,053

 
$

Agency mortgage-backed securities
397,414

 
405,802

 

 
405,802

 

Agency collateralized mortgage obligations
293,662

 
297,314

 

 
297,314

 

Single issuer trust preferred securities issued by banks
1,500

 
1,490

 

 
1,490

 

Small business administration pooled securities
31,324

 
31,607

 

 
31,607

 

Loans, net of allowance for credit losses(b)
8,780,384

 
8,613,635

 

 

 
8,613,635

Federal Home Loan Bank stock(c)
14,424

 
14,424

 

 
14,424

 

Cash surrender value of life insurance policies(d)
197,372

 
197,372

 

 
197,372

 

Financial liabilities
 
 
 
 
 
 
 
 
 
Deposit liabilities, other than time deposits(e)
$
7,752,052

 
$
7,752,052

 
$

 
$
7,752,052

 
$

Time certificates of deposits(f)
1,395,315

 
1,396,760

 

 
1,396,760

 

Federal Home Loan Bank borrowings(f)
115,748

 
115,881

 

 
115,881

 

Long-term borrowings (f)
74,906

 
72,219

 

 
72,219

 

Junior subordinated debentures(g)
62,848

 
65,603

 

 
65,603

 

Subordinated debentures(f)
49,601

 
52,870

 

 

 
52,870


(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.