Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2018

Fair value, assets measured on recurring basis

The following tables present information on the assets and liabilities measured and recorded at fair value on a recurring basis as of the dates indicated:



	Fair Value Measurements as of
	September 30, 2018
Measured on a Recurring Basis	Total		Level 1		Level 2		Level 3
	(In thousands)
Securities available‑for‑sale:
Residential MBS and CMOs:
Agency MBS	$	249,831	$	—	$	249,831	$	—
Agency CMOs	569,605		—		569,605		—
Private label CMOs	110,450		—		97,327		13,123
Municipal securities	1,271,583		—		1,271,583		—
Agency commercial MBS	1,077,005		—		1,077,005		—
U.S. Treasury securities	397,631		397,631		—		—
SBA securities	67,586		—		67,586		—
Asset-backed securities	58,452		—		29,353		29,099
Corporate debt securities	18,190		—		18,190		—
Total securities available-for-sale	3,820,333		397,631		3,380,480		42,222
Equity warrants	4,962		—		—		4,962
Other derivative assets	2,072		—		2,072		—
Equity investments with readily determinable fair values	6,552		6,552		—		—
Total recurring assets	$	3,833,919	$	404,183	$	3,382,552	$	47,184
Derivative liabilities	$	468	$	—	$	468	$	—



	Fair Value Measurements as of
	December 31, 2017
Measured on a Recurring Basis	Total		Level 1		Level 2		Level 3
	(In thousands)
Securities available‑for‑sale:
Residential MBS and CMOs:
Agency MBS	$	246,274	$	—	$	246,274	$	—
Agency CMOs	275,709		—		275,709		—
Private label CMOs	125,987		—		103,113		22,874
Municipal securities	1,680,068		—		1,680,068		—
Agency commercial MBS	1,163,969		—		1,163,969		—
SBA securities	160,334		—		160,334		—
Asset-backed securities	88,710		—		46,601		42,109
Corporate debt securities	19,295		—		19,295		—
Collateralized loan obligations	7,015		—		7,015		—
Equity investments ⁽¹⁾	7,070		5,922		1,148		—
Total securities available-for-sale	3,774,431		5,922		3,703,526		64,983
Equity warrants	5,161		—		—		5,161
Other derivative assets	1,873		—		1,873		—
Total recurring assets	$	3,781,465	$	5,922	$	3,705,399	$	70,144
Derivative liabilities	$	1,379	$	—	$	1,379	$	—

____________________________

(1) In connection with our adoption of ASU 2016-01 and ASU 2018-03 on January 1, 2018, we reclassified $7.1 million of equity investments from securities available-for-sale to other assets in the first quarter of 2018. The reclassification was applied prospectively without prior period amounts being restated.

Fair value, assets and liabilities measured on nonrecurring basis, valuation techniques

The following table presents information about quantitative inputs and assumptions used to determine the fair values provided by our third party pricing service for our Level 3 private label CMOs and asset-backed securities available-for-sale measured at fair value on a recurring basis as of the date indicated:



	September 30, 2018
	Private Label CMOs		Asset-Backed Securities
		Weighted		Weighted
	Range	Average	Range	Average
Unobservable Inputs	of Inputs	Input	of Inputs	Input
Voluntary annual prepayment speeds	4.8% - 30.5%	9.4%	5% - 15%	14.2%
Annual default rates	0.0% - 25.3%	2.2%	1% - 2%	1.9%
Loss severity rates	5.2% - 135.5%	47.3%	10% - 60%	55.9%
Discount rates	2.2% - 10.5%	6.2%	3.2% - 4.3%	3.6%

Fair value, quantitative inputs and assumptions used to determine fair value

The following table presents information about quantitative inputs and assumptions used in the modified Black-Scholes option pricing model to determine the fair value for our Level 3 equity warrants measured at fair value on a recurring basis as of the date indicated:



	September 30, 2018
	Equity Warrants
	Weighted
	Average
Unobservable Inputs	Input
Volatility	16.3%
Risk-free interest rate	2.9%
Remaining life assumption (in years)	3.6

Fair value, assets measured on recurring basis, significant unobservable inputs (level 3) reconciliation

The following table summarizes activity for our Level 3 private label CMOs available-for-sale, asset-backed securities available-for-sale, and equity warrants measured at fair value on a recurring basis for the period indicated:



	Private			Asset-Backed			Equity
	Label CMOs			Securities			Warrants
	(In thousands)
Balance, December 31, 2017	$	22,874		$	42,109		$	5,161
Total included in earnings	595			(35		)	5,291
Total included in other comprehensive income	(511		)	220			—
Issuances	—			—			557
Salesand dispositions ⁽¹⁾	—			—			(5,972		)
Net settlements	(9,835		)	(13,195		)	—
Transfers to Level 1	—			—			(75		)
Balance, September 30, 2018	$	13,123		$	29,099		$	4,962

Assets carried at fair value on a nonrecurring basis

The following tables present assets measured at fair value on a non‑recurring basis as of the dates indicated:



	Fair Value Measurement as of
	September 30, 2018
Measured on a Non‑Recurring Basis	Total		Level 1		Level 2		Level 3
	(In thousands)
Impaired loans	$	41,103	$	—	$	15,423	$	25,680
OREO	953		—		953		—
Total non-recurring	$	42,056	$	—	$	16,376	$	25,680



	Fair Value Measurement as of
	December 31, 2017
Measured on a Non‑Recurring Basis	Total		Level 1		Level 2		Level 3
	(In thousands)
Impaired Non‑PCI loans	$	61,095	$	—	$	5,143	$	55,952
Loans held for sale	483,563		—		483,563		—
Total non-recurring	$	544,658	$	—	$	488,706	$	55,952

Net losses (gains) on nonrecurring assets

The following table presents losses recognized on assets measured on a nonrecurring basis for the periods indicated:



	Three Months Ended				Nine Months Ended
Losses on Assets	September 30,				September 30,
Measured on a Non‑Recurring Basis	2018		2017		2018		2017
	(In thousands)
Impaired loans ⁽¹⁾	$	14,347	$	4,427	$	31,351	$	17,895
OREO	—		2,124		65		2,124
Total losses	$	14,347	$	6,551	$	31,416	$	20,019

__________________________


(1)	Losses for 2018 periods relate to total loans. Losses for 2017 periods relate to Non-PCI loans.

Fair value inputs, assets, quantitative information

The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a nonrecurring basis as of the date indicated:

September 30, 2018

Valuation

Unobservable

Weighted

Asset

Fair Value

Technique

Inputs

Range

Average

(In thousands)

Impaired loans

12,531

Discounted cash flows

Discount rates

3.75% - 7.75%

6.81%

Impaired loans

6,819

Internal enterprise value methodology

(1)

Impaired loans

6,330

Third party appraisals

No discounts

Total non-recurring Level 3

25,680

Fair value, by balance sheet grouping

The following tables present carrying amounts and estimated fair values of certain financial instruments as of the dates indicated:



	September 30, 2018
	Carrying		Estimated Fair Value
	Amount		Total		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets:
Cash and due from banks	$	196,502	$	196,502	$	196,502	$	—	$	—
Interest‑earning deposits in financial institutions	185,284		185,284		185,284		—		—
Securities available‑for‑sale	3,820,333		3,820,333		397,631		3,380,480		42,222
Investment in FHLB stock	31,077		31,077		—		31,077		—
Loans and leases held for investment, net	17,088,226		16,876,611		—		15,423		16,861,188
Equity warrants	4,962		4,962		—		—		4,962
Other derivative assets	2,072		2,072		—		2,072		—
Equity investments with readily determinable fair values	6,552		6,552		6,552		—		—

Financial Liabilities:
Core deposits	15,512,742		15,512,742		—		15,512,742		—
Non-core non-maturity deposits	483,528		483,528		—		483,528		—
Time deposits	1,883,273		1,894,024		—		1,894,024		—
Borrowings	1,513,166		1,513,163		1,503,000		10,163		—
Subordinated debentures	452,944		435,505		—		435,505		—
Derivative liabilities	468		468		—		468		—



	December 31, 2017
	Carrying		Estimated Fair Value
	Amount		Total		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets:
Cash and due from banks	$	233,215	$	233,215	$	233,215	$	—	$	—
Interest‑earning deposits in financial institutions	165,222		165,222		165,222		—		—
Securities available‑for‑sale	3,774,431		3,774,431		5,922		3,703,526		64,983
Investment in FHLB stock	20,790		20,790		—		20,790		—
Loans held for sale	481,100		483,563		—		483,563		—
Loans and leases held for investment, net	16,833,287		17,023,098		—		5,143		17,017,955
Equity warrants	5,161		5,161		—		—		5,161
Other derivative assets	1,873		1,873		—		1,873		—

Financial Liabilities:
Core deposits	15,937,012		15,937,012		—		15,937,012		—
Non-core non-maturity deposits	863,202		863,202		—		863,202		—
Time deposits	2,065,322		2,055,104		—		2,055,104		—
Borrowings	467,342		467,342		467,000		342		—
Subordinated debentures	462,437		444,383		—		444,383		—
Derivative liabilities	1,379		1,379		—		1,379		—