Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2018

Assets and Liabilities Carried at Fair Value on Recurring Basis

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



	Fair Value Measurements as of
	December 31, 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	$	281,088	$	—	$	281,088	$	—
Agency CMOs	632,850		—		632,850		—
Private label CMOs	101,205		—		93,917		7,288
Municipal securities	1,312,194		—		1,312,194		—
Agency commercial MBS	1,112,704		—		1,112,704		—
U.S. Treasury securities	403,405		403,405		—		—
Asset-backed securities	81,385		—		41,440		39,945
SBA securities	67,047		—		67,047		—
Corporate debt securities	17,553		—		17,553		—
Total securities available-for-sale	4,009,431		403,405		3,558,793		47,233
Equity warrants	4,793		—		—		4,793
Other derivative assets	3,292		—		3,292		—
Equity investments with readily determinable fair values	4,891		4,891		—		—
Total recurring assets	$	4,022,407	$	408,296	$	3,562,085	$	52,026
Derivative liabilities	$	142	$	—	$	142	$	—



	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 Measurements, Recurring and Nonrecurring, Valuation Techniques

The following table presents information about the 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:



	December 31, 2018
	Private Label CMOs		Asset-Backed Securities
		Weighted	Input or	Weighted
	Range of	Average	Range of	Average
Unobservable Inputs	Inputs	Input	Inputs	Input
Voluntary annual prepayment speeds	6.1% - 31.1%	10.2%	12% - 15%	6.9%
Annual default rates ⁽¹⁾	0.6% - 82.0%	1.9%	2%	2.0%
Loss severity rates ⁽¹⁾	5.3% - 135.2%	53.0%	60%	60.0%
Discount rates	2.4% - 9.7%	6.4%	3.2% - 5.2%	2.1%

The following table presents information about the 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:



	December 31, 2018
	Equity Warrants
	Weighted
	Average
Unobservable Inputs	Input
Volatility	16.6%
Risk-free interest rate	2.5%
Remaining life assumption (in years)	3.5

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 measured at fair value on a recurring basis for the years indicated:



	Year Ended December 31,
Level 3 Private Label CMOs	2018			2017			2016
	(In thousands)
Balance, beginning of year	$	22,874		$	56,902		$	81,241
Total included in earnings	1,737			2,256			1,636
Total unrealized loss in comprehensive income	(1,146		)	(742		)	(1,648		)
Sales	(4,880		)	(4,732		)	—
Transfer from Level 2	—			574			—
Transfers to Level 2	—			(21,165		)	—
Net settlements	(11,297		)	(10,219		)	(24,327		)
Balance, end of year	$	7,288		$	22,874		$	56,902

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

The following table summarizes activity for our Level 3 equity warrants measured at fair value on a recurring basis for the years indicated:



	Year Ended December 31,
Level 3 Equity Warrants	2018			2017			2016
	(In thousands)
Balance, beginning of year	$	5,161		$	5,497		$	4,914
Total included in earnings	7,478			2,532			1,402
Exercises ⁽¹⁾	(8,589		)	(3,093		)	(1,894		)
Issuances	821			1,407			1,911
Transfers to Level 1 (equity investments with readily
determinable fair values)	(78		)	(1,182		)	(836		)
Balance, end of year	$	4,793		$	5,161		$	5,497

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
	December 31, 2018
Measured on a Non‑Recurring Basis	Total		Level 1		Level 2		Level 3
	(In thousands)
Impaired loans	$	24,432	$	—	$	1,800	$	22,632
OREO	1,136		—		1,136		—
Total non-recurring	$	25,568	$	—	$	2,936	$	22,632



	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 [Table Text Block]

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



	Year Ended December 31,
Loss on Assets Measured on a Non‑Recurring Basis	2018		2017		2016
	(In thousands)
Impaired loans	$	9,198	$	20,422	$	43,240
Loans held for sale	—		957		—
OREO	74		14		2,576
Total net loss	$	9,272	$	21,393	$	45,816

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:



	December 31, 2018
			Valuation	Unobservable		Weighted
Asset	Fair Value		Technique	Inputs	Range	Average
	(In thousands)
Impaired loans	$	11,931	Discounted cash flows	Discount rates	3.75% - 8.00%	6.92%
Impaired loans	5,000		Negotiated discounted payoff from investors
Impaired loans	5,701		Third party appraisals	No discounts
Total non-recurring Level 3	$	22,632

Fair Value, by Balance Sheet Grouping



	December 31, 2018
	Carrying		Estimated Fair Value
	Amount		Total		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets:
Cash and due from banks	$	175,830	$	175,830	$	175,830	$	—	$	—
Interest‑earning deposits in financial institutions	209,937		209,937		209,937		—		—
Securities available‑for‑sale	4,009,431		4,009,431		403,405		3,558,793		47,233
Investment in FHLB stock	32,103		32,103		—		32,103		—
Loans and leases held for investment, net	17,825,241		17,013,860		—		1,800		17,012,060
Equity warrants	4,793		4,793		—		—		4,793
Other derivative assets	3,292		3,292		—		3,292		—
Equity investments with readily determinable fair values	4,891		4,891		4,891		—		—

Financial Liabilities:
Core deposits	16,346,671		16,346,671		—		16,346,671		—
Non-core non-maturity deposits	518,192		518,192		—		518,192		—
Time deposits	2,005,638		2,017,137		—		2,017,137		—
Borrowings	1,371,114		1,371,114		1,371,000		114		—
Subordinated debentures	453,846		435,251		—		435,251		—
Derivative liabilities	142		142		—		142		—



	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		—

- Definition

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

+ References + Details