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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2019

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, 2019
Measured on a Recurring Basis	Total		Level 1		Level 2		Level 3
	(In thousands)
Securities available‑for‑sale:
Agency residential CMOs	$	1,172,555	$	—	$	1,172,555	$	—
Agency commercial MBS	1,100,017		—		1,100,017		—
Municipal securities	721,981		—		721,981		—
Agency residential MBS	324,929		—		324,929		—
Asset-backed securities	214,151		—		182,783		31,368
Collateralized loan obligations	113,874		—		113,874		—
Private label residential CMOs	93,868		—		87,273		6,595
SBA securities	49,746		—		49,746		—
Corporate debt securities	21,024		—		21,024		—
U.S. Treasury securities	5,203		5,203		—		—
Total securities available-for-sale	3,817,348		5,203		3,774,182		37,963
Equity warrants	3,532		—		—		3,532
Other derivative assets	2,297		—		2,297		—
Equity investments with readily determinable fair values	4,715		4,715		—		—
Total recurring assets	$	3,827,892	$	9,918	$	3,776,479	$	41,495
Derivative liabilities	$	1,446	$	—	$	1,446	$	—



	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:
Municipal securities	$	1,312,194	$	—	$	1,312,194	$	—
Agency commercial MBS	1,112,704		—		1,112,704		—
Agency residential CMOs	632,850		—		632,850		—
U.S. Treasury securities	403,405		403,405		—		—
Agency residential MBS	281,088		—		281,088		—
Private label residential CMOs	101,205		—		93,917		7,288
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, 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, 2019
	Private Label CMOs		Asset-Backed Securities
		Weighted	Input or	Weighted
	Range	Average	Range	Average
Unobservable Inputs	of Inputs	Input	of Inputs	Input
Voluntary annual prepayment speeds	2.9% - 18.2%	11.4%	12.0% - 15.0%	13.7%
Annual default rates ⁽¹⁾	0.0% - 11.1%	1.8%	2.0%	2.0%
Loss severity rates ⁽¹⁾	24.1% - 117.6%	58.5%	60.0%	60.0%
Discount rates	2.5% - 9.2%	6.3%	3.2% - 5.2%	4.3%

____________________


(1)	The annual default rates and loss severity rates were the same for all of the asset-backed securities.

Fair value inputs, assets, quantitative information

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, 2019
	Equity Warrants
	Weighted
	Average
Unobservable Inputs	Input
Volatility	17.0%
Risk-free interest rate	1.6%
Remaining life assumption (in years)	3.27

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, 2019

Valuation

Unobservable

Weighted

Asset

Fair Value

Technique

Inputs

Range

Average

(In thousands)

Impaired loans

21,543

Discounted cash flows

Discount rates

3.75% - 8.77%

7.58%

Impaired loans

5,047

Third party appraisals

No discounts

OREO

128

Third party appraisals

Discount (1)

31.91%

Total non-recurring Level 3

26,718

____________________

(1)

Relates to one OREO property at September 30, 2019.

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, 2018	$	7,288		$	39,945		$	4,793
Total included in earnings	340			(66		)	7,429
Total included in other comprehensive income	(160		)	646			—
Issuances	—			—			226
Salesand dispositions ⁽¹⁾	—			—			(8,808		)
Net settlements	(873		)	(9,157		)	—
Transfers to Level 1	—			—			(108		)
Balance, September 30, 2019	$	6,595		$	31,368		$	3,532

______________________

(1)

Includes the exercise of warrants that upon exercise become equity securities in public companies. These are often subject to lock-up restrictions that must be met before the equity security can be sold, during which time they are reported as equity investments with readily determinable fair values.

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, 2019
Measured on a Non‑Recurring Basis	Total		Level 1		Level 2		Level 3
	(In thousands)
Impaired loans	$	29,552	$	—	$	2,962	$	26,590
OREO	128		—		—		128
Total non-recurring	$	29,680	$	—	$	2,962	$	26,718



	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

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	2019		2018		2019		2018
	(In thousands)
Impaired loans	$	8,339	$	14,347	$	10,091	$	31,351
OREO	54		—		54		65
Total losses	$	8,393	$	14,347	$	10,145	$	31,416

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, 2019
	Carrying		Estimated Fair Value
	Amount		Total		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets:
Cash and due from banks	$	252,596	$	252,596	$	252,596	$	—	$	—
Interest‑earning deposits in financial institutions	483,405		483,405		483,405		—		—
Securities available‑for‑sale	3,817,348		3,817,348		5,203		3,774,182		37,963
Investment in FHLB stock	26,865		26,865		—		26,865		—
Loans and leases held for investment, net	18,596,991		18,751,105		—		2,962		18,748,143
Equity warrants	3,532		3,532		—		—		3,532
Other derivative assets	2,297		2,297		—		2,297		—
Equity investments with readily determinable fair values	4,715		4,715		4,715		—		—

Financial Liabilities:
Core deposits	16,471,264		16,471,264		—		16,471,264		—
Non-core non-maturity deposits	479,732		479,732		—		479,732		—
Time deposits	2,782,207		2,781,713		—		2,781,713		—
Borrowings	1,253,031		1,253,031		953,000		300,031		—
Subordinated debentures	456,145		439,895		—		439,895		—
Derivative liabilities	1,446		1,446		—		1,446		—



	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		—