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Fair Value Measurements (Tables)
 6 Months Ended
Jun. 30, 2020
Fair Value Disclosures [Abstract]  
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
June 30, 2020
Measured on a Recurring BasisTotalLevel 1Level 2Level 3
(In thousands)
Securities available-for-sale:
Agency commercial MBS$1,133,086  $—  $1,133,086  $—  
Agency residential CMOs1,049,742  —  1,049,742  —  
Municipal securities888,338  —  888,338  —  
Agency residential MBS248,934  —  248,934  —  
Asset-backed securities227,206  —  193,513  33,693  
Collateralized loan obligations136,663  —  136,663  —  
Private label residential CMOs96,775  —  91,639  5,136  
SBA securities44,576  —  44,576  —  
Corporate debt securities20,458  —  20,458  —  
U.S. Treasury securities5,363  5,363  —  —  
Total securities available-for-sale$3,851,141  $5,363  $3,806,949  $38,829  
Equity investments with readily determinable fair values$2,688  $2,688  $—  $—  
Derivatives (1):
Equity warrants 4,781  —  —  4,781  
Other derivative assets 3,185  —  3,185  —  
Derivative liabilities 129  —  129  —  
Fair Value Measurements as of
December 31, 2019
Measured on a Recurring BasisTotalLevel 1Level 2Level 3
(In thousands)
Securities available-for-sale:
Agency commercial MBS$1,108,224  $—  $1,108,224  $—  
Agency residential CMOs1,136,397  —  1,136,397  —  
Municipal securities735,159  —  735,159  —  
Agency residential MBS305,198  —  305,198  —  
Asset-backed securities214,783  —  198,348  16,435  
Collateralized loan obligations123,756  —  123,756  —  
Private label residential CMOs99,483  —  93,219  6,264  
SBA securities48,258  —  48,258  —  
Corporate debt securities20,748  —  20,748  —  
U.S. Treasury securities5,181  5,181  —  —  
Total securities available-for-sale$3,797,187  $5,181  $3,769,307  $22,699  
Equity investments with readily determinable fair values$2,998  $2,998  $—  $—  
Derivatives (1):
Equity warrants 3,434  —  —  3,434  
Other derivative assets 1,234  —  1,234  —  
Derivative liabilities 755  —  755  —  
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 residential CMOs and asset-backed securities available-for-sale measured at fair value on a recurring basis as of the date indicated:
June 30, 2020
Private Label Residential CMOsAsset-Backed Securities
Weighted
Input or
Weighted
Range
Average
Range
Average
Unobservable Inputsof Inputs
Input (1)
of Inputs
Input (2)
Voluntary annual prepayment speeds 6.1% - 17.7%11.7%10.0% - 15.0%12.0%
Annual default rates (3)
0.3% - 35.5%2.2%2.0%2.0%
Loss severity rates (3)
2.3% - 242.7%53.8%60.0%60.0%
Discount rates2.1% - 9.9%6.8%3.0% - 5.1%3.7%
____________________
(1) Unobservable inputs for private label residential CMOs were weighted by the relative fair values of the instruments.
(2) Voluntary annual prepayment speeds and discount rates for asset-backed securities were weighted by the relative fair values of the instruments.
(3) 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:
June 30, 2020
Equity Warrants
Weighted
RangeAverage
Unobservable Inputsof Inputs
Input (1)
Volatility23.4% - 147.4%28.4%
Risk-free interest rate0.1% - 0.3%0.2%
Remaining life assumption (in years)0.10 - 4.972.98
____________________
(1) Unobservable inputs for equity warrants were weighted by the relative fair values of the instruments.
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:
June 30, 2020
ValuationUnobservableInput or
Weighted
Asset
Fair Value
TechniqueInputsRange
Average
(In thousands)
Individually evaluated
loans and leases$72,972  Discounted cash flowsDiscount rates2.25% - 10.46%7.57%
Individually evaluated Discount from
loans and leases57,252  Third party appraisalappraisal 23.00% - 54.06%36.07%
Individually evaluated
loans and leases442  Third party appraisalsNo discounts
Discount from
OREO (1)
28  Third party appraisalappraisal20.00%20.00%
Total non-recurring Level 3$130,694  
____________________
(1) Relates to one OREO at June 30, 2020.
Fair value, assets measured on recurring basis, significant unobservable inputs (level 3) reconciliation
The following table summarizes activity for our Level 3 private label residential 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 LabelAsset-BackedEquity
Residential CMOsSecuritiesWarrants
(In thousands)
Balance, December 31, 2019$6,264  $16,435  $3,434  
Total included in earnings244  78  2,810  
Total included in other comprehensive income(574) (473) —  
Purchases—  20,100  —  
Issuances—  —  201  
Sales
—  —  (1,659) 
Net settlements(798) (2,447) —  
Transfers to Level 1 (equity investments with readily
determinable fair values)—  —  (5) 
Balance, June 30, 2020$5,136  $33,693  $4,781  
Unrealized net gains (losses) for the period included in other
comprehensive income for securities held at quarter-end$1,112  $(276) 
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
June 30, 2020
Measured on a Non-Recurring BasisTotalLevel 1Level 2Level 3
(In thousands)
Individually evaluated loans and leases (1)
$134,012  $—  $3,346  $130,666  
OREO28  —  —  28  
Total non-recurring$134,040  $—  $3,346  $130,694  
______________________
(1) Includes nonaccrual loans and leases and performing TDRs with balances greater than $250,000.
Fair Value Measurement as of
December 31, 2019
Measured on a Non-Recurring BasisTotalLevel 1Level 2Level 3
(In thousands)
Impaired loans and leases (1)
$28,706  $—  $1,083  $27,623  
OREO105  —  —  105  
Total non-recurring$28,811  $—  $1,083  $27,728  
_____________________
(1) Includes all nonaccrual loans and leases and performing TDRs.
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 EndedSix Months Ended
Losses on Assets June 30,June 30,
Measured on a Non-Recurring Basis2020201920202019
(In thousands)
Individually evaluated loans and leases (1)
$9,483  $1,842  $29,317  $3,038  
OREO5  —  110  —  
Total losses$9,488  $1,842  $29,427  $3,038  
_____________________
(1) For 2019, losses are based on impaired loans and leases.
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:
June 30, 2020
Carrying
Estimated Fair Value
AmountTotalLevel 1Level 2Level 3
(In thousands)
Financial Assets:
Cash and due from banks$174,059  $174,059  $174,059  $—  $—  
Interest-earning deposits in financial institutions1,747,077  1,747,077  1,747,077  —  —  
Securities available-for-sale3,851,141  3,851,141  5,363  3,806,949  38,829  
Investment in FHLB stock17,250  17,250  —  17,250  —  
Loans and leases held for investment, net19,393,581  19,603,897  —  3,346  19,600,551  
Equity warrants4,781  4,781  —  —  4,781  
Other derivative assets3,185  3,185  —  3,185  —  
Equity investments with readily determinable fair values2,688  2,688  2,688  —  —  
Financial Liabilities:
Core deposits19,535,814  19,535,814  —  19,535,814  —  
Non-core non-maturity deposits1,217,266  1,217,266  —  1,217,266  —  
Time deposits2,175,499  2,184,874  —  2,184,874  —  
Borrowings60,000  59,976  50,000  9,976  —  
Subordinated debentures460,772  443,945  —  443,945  —  
Derivative liabilities129  129  —  129  —  

December 31, 2019
Carrying
Estimated Fair Value
AmountTotalLevel 1Level 2Level 3
(In thousands)
Financial Assets:
Cash and due from banks$172,585  $172,585  $172,585  $—  $—  
Interest-earning deposits in financial institutions465,039  465,039  465,039  —  —  
Securities available-for-sale3,797,187  3,797,187  5,181  3,769,307  22,699  
Investment in FHLB stock40,924  40,924  —  40,924  —  
Loans and leases held for investment, net18,708,087  19,055,004  —  1,083  19,053,921  
Equity warrants3,434  3,434  —  —  3,434  
Other derivative assets1,234  1,234  —  1,234  —  
Equity investments with readily determinable fair values2,998  2,998  2,998  —  —  
Financial Liabilities:
Core deposits16,187,287  16,187,287  —  16,187,287  —  
Non-core non-maturity deposits496,407  496,407  —  496,407  —  
Time deposits2,549,342  2,549,260  —  2,549,260  —  
Borrowings1,759,008  1,759,008  1,759,000  8  —  
Subordinated debentures458,209  441,617  —  441,617  —  
Derivative liabilities755  755  —  755  —